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Environmental Finance: Palladium launches health-focused impact bond for India

A novel 'impact' bond has come to market that aims to reduce maternal and newborn mortality rates in Rajasthan, India.

Originally published in Environmental Finance on December 14th 2017.

The Rajasthan Development Impact Bond, or Utkrisht bond, has been structured by impact investment specialists Palladium. It will provide funding of up to $8 million, to as many as 440 private healthcare facilities in Rajasthan. If fully successful, Palladium estimates that up to 10,000 maternal and newborn deaths could be averted over five-years.

A cornerstone investor is the UBS Optimus Foundation, which is channelling up to $3.5 million from private clients of the Swiss bank. This initial working capital will enable work to begin in private healthcare facilities in Rajasthan.

Other partners, who are also investing in the bond, include: US AID, PSI – a US health charity, HLFPPT – an Indian non-profit, and MSD for Mothers, an initiative of the Merck pharmaceutical company.

These organisations are also working closely with the government of Rajasthan, Peter Vanderwal, who leads Palladium’s work on impact bonds, told Environmental Finance.

As for most impact bonds, the returns to investors depend on the outcomes achieved. In this case, if all the health improvement targets are met, investors could receive a maximum return of 8%, he added. If the projects fail, however, they could potentially lose some, or all, of their capital invested.

The aim is to ensure lessons are learned from this bond and to make it a replicable model for transferring risk from the public sector to the private sector, Vanderwal said.