The Fortunis UK impact investment VC fund’s expertise lies in evaluating not only financial viability but also their potential to create positive change.
BY RUAN JOOSTE Published 13 March 2024 on City Wire
Recent years have witnessed a significant paradigm shift, with a greater emphasis on sustainable and socially responsible endeavours such as impact investing, which is a strategy that seeks both financial returns and positive societal outcomes.
This is the proposition that Justin MacRae, who runs the Fortunis UK Impact VC fund, presents to target international independent financial advisers (IFAs), especially in the US and South Africa.
‘They are currently our biggest investors,’ he said.
Fortunis Capital is solely focussed on impact investing, and companies within the portfolio are in the femtech, fintech and Greentech spaces, one of them being Clementine, which has made cognitive hypnotherapy more accessible to especially women, with on-demand sessions available at a more affordable price than that of the cost of a physical therapist appointment.
iForm is another one of its investments. It is a British composite building specialist that formed successful partnerships across the island, including with the Royal National Lifeboat Institution, Royal Navy, Army and Air Force Institutes, and the British Police. iForm provides buildings made from 98% recycled plastic.
‘We hope that, specifically, with iForm, we could help solve more pressing global issues, such as aiding homelessness in the UK and other parts of the globe,’ said MacRae (pictured below).
‘These structures can provide clean and safe accommodation. We are already working with governments on the African continent to put more of these partnerships in place,’ he added.
The UK Department for Export Finance is providing the funding for MacRae and his team to conclude a few deals in SA and the rest of the continent to build much-needed housing and medical facilities.
‘Because of the thermal structure of the panelling and the walls, they are completely bonded, arrive on the spot without needing foundations, and can easily be moved and repurposed,’ he said.
‘They arrive completely formed and down on the ground, and this company has been doing this for 35 years.’
Another recent deal, which MacRae did not want to divulge too much detail on, involves stem cell therapies that hold promise to promote regeneration of healthy, functional skin tissue and limit the overhealing, scarring response. He said the announcement of the investment is imminent.
The VC fund aims to invest in early-stage, high-growth, potential-impact venture capital opportunities that aim to solve global problems via innovative tech and scientific applications and create high-value net returns for investors.
MacRae is the operations officer for the UK Impact Investment Fund. He said he focuses purely on tech and science that benefits society and the environment and has overseen a cumulative 566% increase in the value of this portfolio over the last 2.5 years.
Identifying opportunities
Deal flow selection is based on identifying opportunities with realisable early growth potential with proven concepts.
‘Portfolio companies must demonstrate obvious commercial viability, innovation and scalability.
‘The impact must be achieved as part of the innovation and commercialised at an early stage to qualify for further investment.’
‘Our investment committee is embedded with the portfolio companies and takes a day-to-day approach to manage quality investments over quality, he added.
According to the fund’s latest fact sheet, it is currently valued at over £335m (R7.9bn), which MacRae said is sure to grow this year.
‘We are super excited to see what 2024 will look like for Fortunis.’
The unit price at launch in January 2020 was around £100 and traded at around £697 at the end of January this year.
The Fortunis UK Impact investment VC fund’s performance metrics are governed by a third party that abides by the British Venture Capital Association rules, said MacRae.
‘They publish that. It’s double-checked. And we continue to do what we are good at in business.
‘Our investors come through wealth managers on global financial platforms that have assessed the viability of the investment and decided that it’s appropriate for their clients to invest with us.’
‘Venture capital round A is high risk, no doubt. And it should not make up someone’s entire portfolio, although that is not for us to say, but for the financial advisers to determine the risk tolerance of their own clients and base investment decisions on that.’
‘I think, in South Africa, they have an attitude towards risk, which is similar to ours. And it just needs a formula and a model to allow those who want to invest to do so through the IFA structures and the due diligence process that goes with it.’
MacRae said its significant focus on SA is because, despite the demand, retail or high-net-worth individuals do not understand venture capital.
‘And we believe in democratising venture capital and allowing everyone to participate in the good we’re trying to do.’
