Impact Investing: Ommeed Sathe and the Business of Doing Good at Prudential
Impact Investing: Ommeed Sathe and the Business of Doing Good at Prudential
For Ommeed Sathe, investing is more than a way to make money.
It’s a way to make a difference, too.
As Vice President of Prudential’s Impact Investments group in the Office of Corporate Social Responsibility, he oversees a portfolio charged not only with turning a profit—but with advancing social good in measurable ways as well. It’s a portfolio currently valued at $500 million, although a recent commitment by Prudential promises to grow its assets under management to $1 billion by 2020.
Impact investing is the evolution of a philosophy that took root in the United States around 40 years ago. Since then, we’ve seen effective movements to divest from so-called “sin stocks,” and from businesses operating in countries with oppressive governments.
By taking those earlier strategies and expanding upon them, impact investing seeks opportunities offering both strong financial and social returns. Insight and patience are both essential skills in impact investing.
“The idea is you’re not only trying to avoid harm,” says the 38-year-old Ommeed. “You’re trying to create social good in addition to financial return.”
Prudential’s approach to impact investing has given Ommeed and his team the license to consider “earlier stage ideas” from potential investees. This helps them establish deeper relationships, add expertise to projects throughout the process—and cultivate new socially progressive, financially viable products and markets.
It’s an objective that has Ommeed and his team seeking opportunities in Prudential’s headquarters city of Newark, N.J., and in urban centers in the United States and abroad. “Our portfolio is 80 percent national and 20 percent international,” he says.
“We’ve done work in Newark, Hartford, Detroit, New Orleans and Washington, D.C., and we’re looking for opportunities in places like Baltimore, Oakland and parts of Los Angeles.”
Inspired by Service
Spend a few minutes with Ommeed and you realize he is passionate about public service. Casually dressed and affable, he greets visitors to his office with an authentic enthusiasm.
He grew up in Princeton. His father, Sanjay, a finance executive, devoted his spare time to charity and volunteerism. Ommeed’s grandfather, Ram, was a prominent statesman who served as India’s Foreign Secretary and in a series of ambassadorships.
He looks back at them as inspirations, his first exposure to the power of making a difference. “I grew up in a household where public service was fundamental,” he says.
Epiphany on the Mississippi
Ommeed’s professional journey didn’t truly take off until he found himself in an unlikely place: a disaster area.
In 2006, Ommeed—then just out of Harvard Law School—traveled to New Orleans for a wedding. The city was still reeling from Hurricane Katrina just a few months before.
As he toured the city, he instinctively conjured solutions to the lingering disaster. His brainstorm was fueled by studies he’d undertaken in urban planning at Columbia and at MIT.
Ommeed decided to find a way to apply his talents in restoring this beloved American city.
For the next four years, he worked for the New Orleans Redevelopment Authority (NORA), a quasi-governmental agency that implements crucial redevelopment projects in the city.
“New Orleans is a beautiful city with amazing people,” he says. “It would have been very difficult to not try and find a way to help.”
Ommeed’s work revitalized key commercial corridors like Oretha Castle Haley Boulevard—the historic Central City thoroughfare long reflective of New Orleans’ diversity. Altogether, Ommeed had a hand in redeveloping more than 1,000 properties.
From New Orleans to Newark
In his role with NORA, Ommeed dealt with institutions offering resources for the recovery. Prudential was among them.
“Prudential was one of the best financial partners we had,” he says. “Other companies had predefined boxes about what their community investments looked like. Prudential looked at the problems from the ground up and figured out how we could find solutions.” To his surprise, Prudential stayed in New Orleans for 10 years, in contrast to the “three or five years” typically spent by other corporations.
Because of Prudential’s commitment, “the opportunity to apply what I’d learned across the country and internationally was really attractive,” he says. That opportunity took shape at the company’s Impact Investments unit.
In his five years with Prudential, Ommeed has raised impact investing’s profile. “The support it takes to do something like this needs to be really deep at an institutional level. I think it speaks very well of Prudential.”
Because of that support, Impact Investments has built an organization comprised of professionals equally driven to create profit—and progress. “We have a phenomenal team at Prudential, and have been given incredible autonomy to pursue deals that will make a genuine impact,” he says. “I think that has a huge role in attracting talent.”
A Quest for "Quirky"
“I spend a big part of my day attending pitch meetings on prospective new investments, and working with a team that’s responsible for the initial due diligence,” he continues.
“We try to take a really strategic approach to portfolio construction. About 80 percent of what we have in the portfolio are more stable, predictable credits with established sponsors.”
The celebrated renovation of the long-vacant Hahne’s building in downtown Newark is one such project. When completed, this transformation will deliver a modernized, mixed-use building featuring housing, education space and a Whole Foods ® Market.
“Then, about 20 percent of our projects are far more risky and untested but have the potential to create significant social impact and to pioneer new markets,” he says.
“Those opportunities are often going to include new entrepreneurs and have really quirky structures.”
Often, when a promising idea feels underdeveloped—and thus unsuitable for investment—Prudential offers its professional assistance to help make the idea more bankable.
As an example, Ommeed points to AeroFarms, a start-up specializing in aeroponics—an indoor farming technology that grows crops without soil or water. AeroFarm’s 69,000-square- foot Newark facility is a testament to the combination of partners recruited by Prudential and to the funding secured through Ommeed’s team at Impact Investments.
Also in the pipeline is a recently formalized relationship with NatureVest, the impact investing unit of The Nature Conservancy, and Encourage Capital to fund innovations for capturing stormwater runoff in Washington, D.C. This project, which is keyed to heightened water retention requirements for new real estate developments in the nation’s capital, is aimed at helping alleviate a host of pressing environmental concerns and hopes to serve as a model for similar projects all over the country.
“By being able to play in this very early stage, you meet the transformative entrepreneurs. You see the sectors when they’re at their nascent stages, and you’re able to move them into the more traditional buckets very quickly.”
The Next Challenge
Ommeed believes bigger things lie ahead for Impact Investments—beyond the dramatic growth of its portfolio.
“The question now becomes, ‘How do we do what we’ve done for Prudential for other investors?’ If you or I wanted to put something in our 401(k) plan, there’s not much there.”
With attitudes shifting, one could imagine access to impact investing increasing over time. For instance, opportunities to get involved with impact investing could be included in retirement plans offered by employers, allowing employees to participate. Still, it remains to be seen how soon that will occur.
But given Ommeed’s enthusiasm and track record, it’s a prospect you’re inclined to believe in.