Innovative structure for $94m fund for health innovations

Merchant bank Lion’s Head is moving fast forward with the Global Health Investment Fund (www.ghif.com), which will invest in and advance late-stage drugs, vaccines and other global health technologies. The aim is to have substantial global impact in the poorest countries while gaining financial returns from sales of products in developed markets.
The innovative fund structure was put together by JP Morgan Chase with LHGP Asset Management (www.lhgp.com) as the investment manager. The Bill & Melinda Gates Foundation and the Swedish International Development Cooperation Agency have provided investors with a partial guarantee.
The fund has attracted commitments of $94 million by pioneering investors including
• 3 government entities: Grand Challenges Canada (funded by the Government of Canada), the German Ministry for Economic Cooperation and Development (acting through KfW) and the International Finance Corporation (IFC)
• 10 family Foundations led by the Children’s Investment Fund Foundation
• 3 strategic partners: GlaxoSmithkline, Merck and the Pfizer Foundation, who also support the fund via a scientific advisory committee
• 2 institutional funds: JPMorgan Chase and Storebrand
LHGP Asset Management will be responsible for originating, structuring and managing GHIF portfolio investments in collaboration with two independent committees – the Investment Committee and the Charitability Oversight Committee.
According to Hon. Christian Paradis, Canada’s Minister of International Development: “Innovation and investment in global health research and development are the way forward in tackling pressing health challenges and delivering meaningful results for those most in need around the world. This Fund is blazing the trail, and Canada is proud to have played a key role in its establishment.”

Top backing – Gates, Dimon and Jim Yong Kim
The fund was launched on 23 September. In the press release, it notes that private financing for global health research and development are key: “Philanthropy, government funding and pharmaceutical industry support have built a remarkable pipeline of global health innovations—with as many as 200 new products currently under development—but late-stage clinical trials are costly and development expenses are outpacing charitable support. “Traditional investment capital can play a meaningful role in solving this problem, particularly when it is supplied by investors who include the expected social impact of their activities in their return calculations.
Key supporters include Bill Gates, co-chair of the Bill & Melinda Gates Foundation, who says: “We invest in global health because we know that when health improves, life improves by every measure.”
Jim Yong Kim, President of the World Bank, adds his endorsement: “This innovative fund is mobilizing financing for medical advances that could potentially save millions of lives. It shows that we can align the needs of investors with the need for cures for diseases which cause so much suffering in developing countries.”Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co added: “The Global Health Investment Fund demonstrates the potential for innovative collaborations and thoughtful financial structures to mobilize new sources of capital for social challenges. This product brings a diverse group of investors together around the shared objective of developing life-saving technologies in a financially sustainable way.”

More to follow
Lion’s Head was established in 2008 and is a specialized merchant bank with offices in London and Nairobi. It is a leader in designing and implementing innovative financing for sustainable development. Services also include advisory and structuring, corporate finance and asset management.
The fund managers are Labeeb M. Abboud and Christopher Egerton-Warburton, who says: “GHIF joins the family of innovative financing mechanisms in global health. Although this is the first investment fund dedicated to global health R&D, we hope this will serve as a pilot for future funds of this type in global health and other sectors.”

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