Photo: Shivani Sahai
By operationalizing our impact management efforts, we have a more quantitative and unbiased understanding of the impact potential of our investments.
Interview with Shivani Sahai
Head of Impact and ESG, Quadria Capital, South Delhi, India
Yielding strong financial returns in the health sector while driving social impact are complementary goals. In fact, they are the path to achieving true health security in Asia and South Asia, says Shivani Sahai, who heads the impact strategy at Quadria Capital. In an interview with IFC, she explains the steps Quadria has taken to quantify and maintain impact across its engagements, how they improve patient outcomes, and the trends that hold the most promise for expanding access to high-quality, affordable care, and investing with purpose.
Asia has seen rapid growth in the healthcare sector. What are the primary drivers of this growth?
Demographics, economics, and epidemiological shifts are powering the rapid growth of this industry in Asia. Asia accounts for about 60 percent of the world’s population and about 60 percent of the global disease burden. Yet, the average Asian country spends only about 3 percent of its gross domestic product on healthcare compared to European countries, where the average is about 12 percent. So, we are seeing a significant shortage of healthcare infrastructure. There is also an affordability issue — healthcare is expensive, and many patients make out-of-pocket healthcare payments. Lastly, life expectancy has increased to about 70 years in the region, which requires medical care for a more extended period, and most countries in the region are experiencing an increase in non-communicable diseases. These factors have necessitated investment in healthcare, infrastructure, and services to meet the rising demand in the Asian healthcare market.
Quadria focuses on investment opportunities that drive accessibility, affordability, quality, and awareness in healthcare. Can you talk more about generating awareness and its role in your investment activities?
When considering an investment, a crucial part of our evaluation process is ensuring that a company collaborates with the right partners to educate a patient population, mainly in rural districts and villages, about their services. I have two great examples. The first is MediBuddy, one of India’s largest integrated digital healthcare platforms offering online consultations, diagnostics, and pharmaceuticals. With over 18 million users, it provides over 40 percent of pharmacy deliveries and health checkups among underserved populations and undertakes campaigns to generate awareness around prioritizing health in India. One of our new investments, Maxivision, based in India, provides affordable, quality eye care nationwide through its extensive network of over 50 centers, primarily in tier 2 and 3 cities, the poorest, most underserved communities. In addition to diagnosing patients and referring them for advanced treatment, Maxivision technicians also provide free screenings and generate awareness about eye health and avoidable blindness in tier 3 cities and rural areas. Promoting awareness of health-seeking behaviors is essential to developing a positive impact and, therefore, a key factor in considering a prospective investee.
How have Quadria Capital investments improved health outcomes? Can you share an example?
Before investing in any company, we analyze the challenges, opportunities, and trends within the healthcare markets. This evaluation serves as a cornerstone of our investments in healthcare enterprises, where we ensure that impact is intrinsically interwoven into the company's business model. We apply our Impact Management and Measurement (IMM) framework to measure impact in four areas of healthcare: accessibility, affordability, quality, and awareness.
I have two examples to illustrate this. Quadria exited an investment in The Asian Institute of Gastroenterology (AIG) in 2022 after facilitating sustained growth and advancing the services offered by the India-based hospital. AIG improved access to specialized and affordable gastric services by adding a state-of-the-art hospital with 700 beds in the Telangana region and improved the quality of care through specialized training and healthcare accreditations, including NABH and Joint Commission International (JCI). Another example is Nobel Hygiene, India’s leading disposable hygiene products company. Quadria invested in Nobel in 2021 to strengthen its presence in tier 2 and 3 regions. Through Quadria’s active engagement, Nobel has increased its production capacity to 800 million diapers with two manufacturing plants and is reducing social stigma by driving campaigns to normalize the use of adult diapers.
We are particularly interested in understanding the primary challenges in impact data collection and how you address them.
Data quality, inadequate insight into common measurement practices, and limited standardization of impact metrics are roadblocks in impact data management. We now have a more rigorous and standardized approach, ensuring we report more transparently to investors. Using the IMM framework as a guide, we sit with investees to discuss targets and metrics that will lead to long-term impact. We use a scorecard linked to the four pillars we discussed, each with key performance indicators specific to that healthcare sub-sector.
Further, we evaluate our companies annually to see if they are performing in line with our expectations. Identifying and addressing performance gaps as they occur is easier and less expensive than ignoring potential issues that might be damaging down the road.
Quadria helps portfolio companies expand access to quality, affordable care through rapid expansion plans. How do you achieve that while prioritizing environmental stewardship?
Before we invest, we ensure that each deal is supported by an impact thesis and impact score detailing our assessment; we also identify the material environment, social, and governance (ESG) risks through third-party due diligence. If we identify any shortcomings upfront from an ESG perspective, our consultants develop action plans with defined timelines that we expect our investees to adhere to and are a part of the legal contract that binds our partnership.
Let me give you an example. Last year, we invested in Straits Orthopaedics, a leading contract development and manufacturing organization based in Malaysia. Private companies are not mandated to monitor their emissions in Asia, but we are working with Straits to establish emission reduction targets and explore renewable energy options for its manufacturing facility. The company is also actively working on resource efficiency measures, and while one might not refer to these efforts as “environmental stewardship,” we consider these small incremental changes important.
Similarly, how do you balance between return-on-investment potential and impact?
As a fund, we partner with large, scalable healthcare businesses and entrepreneurs to meet the surging demand for quality, affordable healthcare across Asia. We firmly believe that partnering with leading companies will enable us to positively influence many more lives while achieving strong financial returns for our investors. As for impact, Quadria’s investment strategy is anchored to enterprises in which at least one of the four impact pillars is linked to the business model with the premise that the impact grows as the business scales. By operationalizing our impact management efforts, we have a more structured and unbiased approach to understand the impact potential of our investments.
What rising trends in healthcare in Asia do you feel hold the most significant potential to increase access to high-quality, affordable care?
COVID-19 disrupted traditional healthcare delivery models and created new investment opportunities in the health sector. For instance, I think the industry overall has benefitted from the mainstreaming of telemedicine, remote diagnostics, and changes in healthcare financing. The pandemic also accentuated the need to de-risk the supply chain by focusing on self-sufficiency for essential medical products and services, which created new job opportunities. So, I think localization and moving away from the traditional healthcare delivery models will open access to high-quality, affordable care. Technological innovations will also have a significant role in transforming the way healthcare is being delivered in Asia. In particular, I am excited about the technology being deployed to fast-track drug discovery and the solutions hospitals are deploying to provide better operational efficiencies.
This interview has been edited for length and clarity.
Published in June 2024
Shivani Sahai is leading the impact and ESG initiatives for Quadria Capital, a private equity firm focused on the healthcare sector across South and Southeast Asia. She is responsible for applying the fund’s proprietary Impact Management and Measurement (IMM) framework across all investments and portfolio monitoring and reporting on ESG and impact. Shivani has 12 years of work experience and a strong professional and academic background in environmental, social, and governance (ESG) practices, having worked across the ESG value chain. She was previously part of KPMG’s ESG and Sustainability Practice, where she was leading a team responsible for the management and execution of projects in the ESG strategy and advisory space.