Gates Foundation Backs Global Health Fund

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Sept. 25 (Bloomberg) –- JPMorgan Social Finance Vice President Glenn Rockman and Bloomberg’s Olivia Sterns discuss JPMorgan and the Gates Foundation partnering to fund new health initiatives. They speak with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

Olivia sterns also joins me.

Lex this is really exciting.

Basically it is a whole new model for impact investing.

The gates foundation is building a nice big cushion to limit the downside risk.

I also spoke to lions head.

The portfolio manager.

They will target a return on investment between five and men percent.

Modest, but not bad.

Great if you consider the risk profile.

As for the fees, similar to a hedge fund.

A fraction of the management cost.

For investors, that sounds like a pretty good return.

In the meantime, the interest of fighting deadly disease, particularly in low income countries.

How did you get involved with this?

Not surprisingly, the gates foundation is an important client of jpmorgan.

In 2010 they called social financing and said we have a challenge for you.

He has spent 10-15 years pouring billions of dollars of grant funding into clinical trial work for new drugs and vaccines for low income countries.

Over that time we have built a huge portfolio, by some estimates close to 100 of late stage products.

They say is there a way to modernize that?

These products are close to commercialization but the products are very expensive.

We alone cannot have enough to get it out the market, can the private sector play a role?

He looked at the portfolio and said we think the private sector can play a role, but i am not sure the market for malaria treatments will deliver the types of returns that traditional venture capital is looking for.

But if we target people who really care about the social impact of the products and throw in downside detection, we think we can actually get the private sector excited about this and get capital flow.

That is what this is all about you actually have big pharma on your board.

I understand why a new company or non-profit would need money to tip the scale and pay for this but why does the pharma need your money?

-- big pharma need your money?

They bring expertise, capital and expertise for the fund.

They have deep pockets and a big r&d budget, but historically they have done these things with grant capital and have been asked to deliver the products at low margin and though cost.

This gives opportunity to develop a new model or you are generating a financial return from the product.

We are investing along sign the

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