Archive for the 'Impact Investing' Category
May 4th, 2011 by Tom Minney
A private equity fund that invests in housing, agriculture, education and health says it has raised more than $250 million for its first fund, Vital Capital Fund I. Eytan Stibbe, founding managing partner at Vital Capital Investments LP (www.vital-capital.com) and chief investment officer was reported as telling Bloomberg yesterday (3 May) the fund aimed to invest in Angola, Ghana and Mozambique.
The fund includes retired U.S. Army General Wesley Clark among its advisory board members, is a proponent of “impact investing,” a strategy that places capital in ventures with social or environmental goals.
Stibbe says Vital Capital has already invested in Kora Housing, a developer of affordable housing in Angola. It aims to raise another $250 million.
December 31st, 2010 by Tom Minney
What are your wishes for improvements to the African securities markets, including markets for equities and bonds, in 2011?
Who are the key movers and shakers in our continent’s capital markets development and who should this blog ask for their opinions?
Is 2011 the year that impact investing will have an impact in Africa?
It would be much appreciated if you would kindly make your suggestions using the comments boxes below. Question 1 is your ideas on the changes and improvements you would like to see and question 2 who should we ask about what difference he or she aims to make to African capital in 2011, question 3 whether you know of impact investments that make a difference. You can also discuss on the African Securities Exchange discussion forum on Linked in. In the meantime, here are a few ideas from Rob Stangroom’s excellent African IR blog -8 ideas to improve African capital markets on www.africanir.com.
We wish all our loyal readers a very happy, successful 2011 full of joy and business success. May your bull runs be elephants and may crocodiles eat the bears. Thanks for your support which encourages the blog and we hope to give you useful posts in 2011.
December 20th, 2010 by Tom Minney
Two African stock exchanges are among leaders in requesting companies to report on Environmental, Social and Governance (ESG) issues, including South Africa’s JSE Ltd (www.jse.co.za) which this year became the first exchange in the world to require listed companies to move towards integrated reporting which includes ESG reports along with profit figures, as reported on this blog in June. The Egyptian Exchange (www.egyptse.com), Brazil, China, Indonesia and Malaysia are other exchanges discussing with the United Nations Principles for Responsible Investment initiative (www.unpri.org) through its sustainable stock exchanges dialogue.
According to an article in the Financial Times (www.ft.com) today (20 Dec), many investors are still slow to understand how to value the ESG reporting companies are giving them. Both Unilever and Rio Tinto have complained that investors are still only interested in short-term performance. Investors’ reasons for not taking interest could include because their holdings are very short-term, because they only work quantitatively, or because they believe that ESG is about imposing one’s own politics on the investee company. The article quotes John Wilcox, of corporate governance consultancy Sodali (www.sodali.com), as saying: “In the US, in particular, ESG is very politicized. Wall Street is not that comfortable with non-numerical issues, so it tends to focus on the financial results. Because these are half-yearly or quarterly, it tends to reinforce short-termism. Yet long-term success is a function of many things that do not lend themselves to quantification such as culture, long-term planning, environmental and social responsibility, human rights and even human resources issues.”
In general, it is more visible when investors penalize companies for poor ESG, such as when Deepwater Horizon, a BP oil rig, exploded. Some investors in India’s mining group Vedanta have publicly sold out their shares over concerns about the company’s human rights record (see for instance this article in the Guardian newspaper).
Wilcox is quoted that it is the wrong question if investors ask whether good corporate governance increases economic performance: “The real question is: does poor performance on governance increase risk – and the answer is clearly yes.”
However, there are cases where good governance is rewarded by investors. The example given is Brazil’s Novo Mercado of the Bovespa exchange (www.bmfbovespa.com.br), which demands higher governance standards than the main market. Wilcox says “Companies voluntarily agreed to higher governance standards to list on a more exclusive exchange on the basis that this would attract more capital. It worked extraordinarily well and is the best example we have that good governance is equted with better performance – companies listed on the Novo Mercado have tended to outperform their peers.”
In addition to ESG reporting to investors, there is also a requirement to be accountable where companies are stepping up sustainable procurement policies – the article cites governments, Tesco and Wal-Mart as examples.
Stock exchange and fund management investors are starting to believe that if they take more notice of ESG reporting, they will have a better understanding of how the company is run. Some funds believe there is a way to quantify ESG and Risk reporting as a contributor to excess returns, future competitiveness and long-term increase in relative value.
November 30th, 2010 by Tom Minney
Impact investment is a new asset class, according to a report titled Impact Investments: An Emerging Asset Class and released on 29 November. The report was by JP Morgan and the Rockefeller Foundation and includes the first large-scale data analysis of return expectations and, when available, realized returns for impact investments. It is compiled from data collected by the Global Impact Investing Network (GIIN) from more than 1,000 impact investments.
Impact investments are intended to create positive social or environmental impact beyond financial return and are typically made in private markets by providing debt or equity to mission-driven businesses. Impact investing has gained traction among a wide range of investors, including large-scale financial institutions, pension funds, family offices, private wealth managers, foundations, individuals, commercial banks, and development finance institutions.
The report also estimates the market opportunity for potential impact investment over the next 10 years. After analyzing selected segments of 5 sectors – affordable urban housing, rural access to clean water, maternal health, primary education, and microfinance – serving the population at the “base of the economic pyramid,” the authors estimate a potential investment opportunity between $400 billion and $1 trillion with potential profits between $183 billion and $667 billion for just these segments of the impact investing market.
The analysis shows that investors have broad expectations for financial returns on their impact investments, ranging from concessionary (lower financial returns but social impact) to market-beating financial returns. For those impact investments with realized returns, actual earnings were in line with expectations.
Nick O’Donohoe, Global Head of Research for J.P. Morgan and co-author of the report, said in a press release: “In 2007, J.P. Morgan launched its Social Finance business to provide capital, financial services, and research to the growing market for investments and businesses creating positive social impact. Since that time, we’ve seen the impact investment market gain significant momentum with the entry of greater numbers of mainstream investors.
“The development of uniquely skilled professionals and intermediaries, specialized industry associations and networks, and standardized metrics points to the emergence of impact investments as a burgeoning asset class in its own right.” J.P. Morgan (www.jpmorgan.com) is the investment banking arm of JPMorgan Chase & Co., a leading global financial services firm with assets of $2.1 trillion and operations in more than 60 countries.
Rockefeller Foundation (www.rockefellerfoundation.org) President Dr. Judith Rodin added: “Government funding, international aid and philanthropy alone are insufficient to solve the world’s most challenging problems. This is why the Rockefeller Foundation has committed $38.5 million to both standardize and harness the power of the impact investing industry – to help support the world’s poorest and most vulnerable citizens by enabling investors to direct their resources toward multiple bottom-line returns and social good. “This report highlights an important milestone in the growth of the industry as impact investing has evolved into an asset class, indicating an opportunity for the capital markets to create investment vehicles that enable both social and financial returns and create an avenue to direct more dollars toward helping those most in need.”
The GIIN (www.thegiin.org) is a not-for-profit organization dedicated to increasing the scale and effectiveness of impact investing, by building infrastructure and supporting activities, education, and research to help accelerate the development of a coherent impact investing industry. It is overseeing the development of IRIS, a common vocabulary and framework for measuring and reporting the social and environmental performance of impact investments, and is launching ImpactBase, a database of impact investment funds designed to reduce search and transaction costs across the impact investing industry.
Amit Bouri, Director of Strategy and Development at the GIIN says: “For quite some time, a diverse set of investors has targeted positive social and environmental impact with their investments. Recognizing impact investing as an asset class engages an even larger group of investors. We hope this analysis provides the necessary catalyst for investors who are interested in impact investing, but have been hesitant to act so far.”
The report can be downloaded here.
November 25th, 2010 by Tom Minney
There is an opportunity in providing banking services to a “Missing Middle”, by focusing on financial services for lower- and middle-income groups in Africa, both individuals and growing small- and medium-enterprises. This is the thesis behind the Botswana-registered Summit Development Group (www.summitdevgp.com) private equity fund, which is currently in the process of raising $125 million and heading towards its first $40 million close.
CEO Peter Hinton told African Capital Markets News: “The Missing Middle segment in Africa represents a tremendous untapped client base for financial services. The World Resources Institute (www.wri.org) estimates that the lower end of the market (those with incomes below US$3,000 in local purchasing power) is worth US$429 billion in Africa (GDP in Africa is approximately US$1.6 trillion according to McKinsey Global Institute) and represents the region’s dominant consumer market, with 71% aggregate purchasing power and encompassing 95% of the population.
“Growing incomes have led to expanding lower and middle classes that are pushing consumer demand upwards, yet to date these groups have been inadequately served by financial institutions. Only 15% of SMEs in sub-Saharan Africa are able to borrow from banks and, according to the World Bank, less than 20% of African households have any access to formal finance.”
SDG operates from offices in Johannesburg and London and has a pipeline of over $300 million of potential investments across 37 deals in 16 countries that the team has selected as priorities. It is actively in discussion with financial institutions for 7 deals for $41 mln of investments with US$ 574 mln total assets in 6 countries and hopes to start finalizing the first deals in the first half of 2011.
SDG sees an exciting opportunity for investment into banks, since many banks need capital now due to changing regulations and increased minimum capital requirements, declining asset prices in the current environment, less competition as big South African and Nigerian banks concentrate on domestic markets and more management talent is available.
The SDG management team has extensive hands-on experience including running financial institutions in Africa, practical management of businesses in a wide range of sectors, and successful private equity investing in emerging markets.
The first investor is the African Development Bank (www.afdb.org), which has committed $25 million, and talks are progressing well with a range of other institutions. The AfDB said in a press release: “SDG will be managed by capable fund managers well qualified and experienced in private equity, having successfully managed financial institutions in Africa. Its commercial approach renders its model and delivery approach sustainable, replicable and attractive to other commercial players and more likely to have a strong demonstrative impact on the market.
“The project has tremendous economic potential benefits in employment creation, poverty alleviation and government tax revenue enhancement among other benefits. The Bank’s involvement in the Fund will help to deepen the financial sector as well as bring much needed long-term capital to SMEs, a significant sector of Africa’s economies and the unbanked. It will also help to improve Sub-Saharan Africa’s economic development.” The bank will add its own expertise from investing in a range of African financial institutions.
The slogan of the fund is “Commercial Returns, Development Impact”. The fund says it will use its tried and tested expertise to build capacity and capital at financial institutions and SMEs, to reach some 5 mln people who do not have enough bank accounts, finance 190,000 SMEs through its investee institutions, and create 1,000 jobs in financial institutions and up to 1.4 mln jobs in SMEs by 2020.
Hinton says: “SME finance is the next frontier: it can build off the momentum of microfinance to create sustainable economic growth.”
November 22nd, 2010 by Tom Minney
Gold miner IAMGOLD Corporation (www.iamgold.com) was awarded for Corporate Social Responsibility at a dinner after a corporate social responsibility conference (www.ccsrconference.com) on 16 November in Canada. The conference is hosted by Algonquin College in Ottawa, with support from other Ontario academic institutions: Carleton University, La Cite Collegiale, the University of Ottawa and the University of Waterloo as well as Red River College in Manitoba.
According to a company press release: “The Conference singled out IAMGOLD as the winner of this award for its Zero Harm vision of maintaining the highest standards in human health, minimizing impact on the environment, and working co-operatively with host communities. IAMGOLD was recognized for having established over 28 community and NGO partnerships companywide, in Suriname, Botswana, Burkina Faso, Ecuador, Canada and French Guiana.
Algonquin College (www.algonquincollege.com) describes the conference in a press release as Canada’s largest Corporate and Community Social Responsibility Conference (CCSR). Its theme was “Achieving Social Innovation through Corporate and Community Collaboration.”
According to IAMGOLD “The award presentation highlighted the Company’s continuing commitment to social stewardship that has yielded sustainable projects centred on infrastructure, capacity building, education, health and livelihood improvement. Examples include: water supply projects, market garden development, new and improved schools and medical facilities, support for youth programs, capacity building, and improving agriculture techniques.”
IAMGOLD is listed on the Toronto, New York and Botswana Stock Exchanges. It describes itself as “a leading mid-tier gold mining company producing approximately one million ounces annually from 8 gold mines on 3 continents. IAMGOLD is uniquely positioned with a strong financial position and extensive management and operational expertise.
“To grow from this strong base, IAMGOLD has a pipeline of development and exploration projects and continues to assess accretive acquisition opportunities. IAMGOLD’s growth plans are strategically focused in West Africa, select countries in South America and in the Canadian provinces of Ontario and Quebec, where it also operates a niobium mine.
IAMGOLD President and CEO, Steve Letwin said: “IAMGOLD’s rapid rise to become a mid-tier gold producer has been coupled with an aggressive strategy in achieving exceptional health, safety and sustainability performance. With management’s full commitment to the vision of Zero Harm, success is not solely measured by financial success; management believes that production, financial strength, growth, shareholder return, reputation and health, safety and corporate social responsibility carry equal importance.”
October 31st, 2010 by Tom Minney
The Global Impact Investing Rating System (GIIRS) is proud to announce the 12 North American Pioneer Funds at the Social Capital Markets (www.socialcapitalmarkets.net) conference SOCAP 10, held 4-6 October in San Francisco. This is described as “the largest interdisciplinary gathering of individuals and institutions at the intersection of money and meaning”.
GIIRS (www.giirs.org) is a ratings agency that provides social and environmental impact ratings for companies and funds seeking to raise capital from impact investors. The 12 leading North American impact investing funds named as GIIRS Pioneer Funds last month join 13 leading emerging market funds named at the Presidential Summit on Entrepreneurship in April.
Collectively, the 25 GIIRS Pioneer fund managers represent $1.2 billion in assets under management and have investments in more than 200 high-impact companies in over 30 countries.
These Pioneer Funds will be the first funds to receive GIIRS ratings, starting a global population of GIIRS-rated funds that, for the first time, will give institutional investors the rigorous, comparable, independently-assured metrics they need to channel more capital into the emerging asset class of impact investments. GIIRS was created by the non-profit B Lab.
“By committing to a rigorous third party impact rating, these funds solidify their position as leaders in the emerging asset class of impact investing,” says GIIRS Managing Director and B Lab co-founder Andrew Kassoy in a press release. “The Pioneer funds are raising the bar, challenging other would-be impact investment funds to join them in differentiating those funds making a measurable impact from those simply telling a nice story.”
North American GIIRS Pioneer funds include City Light, Capital Core Innovation Capital, Equilibrium Capital, Good Capital, Mindful Investors, Murex Investments, Renewal Partners, RSF Social Finance, Satori Capital, SJF Ventures, SustainVC, and TBL Capital. A description of each of these innovative fund managers is attached.
GIIRS Fund Ratings are determined based on a roll-up of the ratings of each of the companies in a fund’s underlying investment portfolio. A beta version of GIIRS will be launched with the GIIRS Pioneer Funds starting in January 2011. GIIRS plans a public launch for Q2 2011. GIIRS builds on the B Impact Ratings System, the ratings system that B Lab developed to certify B Corporations and which has been used by over 6,000 companies to date.
GIIRS has received significant investment and philanthropic capital from Prudential Financial, Deloitte, the United States Agency for International Development (USAID), and the Rockefeller Foundation. GIIRS is the exclusive impact ratings partner for Investors’ Circle and is supported by other leading impact investing intermediaries such as Toniic, Mission Markets, the GIIN, and IRIS.
B Lab is a nonprofit organization dedicated to using the power of business to solve social and environmental problems. B Lab drives systemic change through three interrelated initiatives: 1) building a community of Certified B Corporations to make it easier for all of us to tell the difference between “good companies” and just good marketing; 2) accelerating the growth of the impact investing asset class through use of B Lab’s GIIRS impact rating system by institutional investors; and 3) promoting supportive public policies, including legislation creating a new corporate form and tax, procurement, and investment incentives for sustainable business.
October 31st, 2010 by Tom Minney
1. City Light Capital is a venture capital firm that invests in early stage companies which provide not only strong financial returns, but also positive contributions to our world. City Light invests in early stage businesses in the US that create solutions in Safety and Security, Education and Media, and Energy and the Environment.
2. Core Innovation Capital invests in the most innovative companies serving underbanked consumers in America. They focus scalable, technology-driven solutions delivering the highest value to underbanked people.
3. Equilibrium Capital Group is an investment management firm that is building a portfolio of asset management companies, each charged with executing a unique investment strategy in one of our key sectors: green built environment; land and natural resource management; agriculture; energy; and water.
4. Good Capital is an investment firm that accelerates the flow of capital to innovative ventures and initiatives that harness the power of the market to create sustainable solutions to some of society’s most challenging problems. In addition, Good Capital is committed to collaborating with peers, contributing thought leadership, sharing their experiences, and creating innovative products and processes that enables the market for socially minded capital to flourish.
5. Mindful Investors is an investment partnership focused exclusively on opportunities in the rapidly growing natural and organic consumer products market. Mindful Investors’ mission is to invest in sustainable companies which positively impact our health and the health of our planet.
6. Murex Investments invests venture capital in high-impact, early-stage software and technology companies. Their experience and interest is primarily in financial mobility, learning technology and energy efficiency, sectors that they believe to have unique transformational potential and integral broad benefits to society.
7. SustainVC invests in companies that apply for financing through Investors’ Circle, an association of accredited investors who provide “Patient Capital for a Sustainable Future.” Capital for SustainVC’s funds is provided by high net worth individuals, many of whom are successful business entrepreneurs and are leaders in the field of sustainability.
8. Renewal2 is a social venture fund dedicated to delivering financial returns by investing in some of North America’s leading environmental and social mission businesses. Renewal2′s focus sectors include organic & natural foods, green consumer products and green building products.
9. RSF Mezzanine Fund is the only mezzanine fund designed specifically for companies with high social impact. The RSF Mezzanine Fund provides capital to help an enterprise achieve growth through a mix of debt, warrants, royalty streams, fee notes, and/or convertible notes.
10. Satori Capital is a preferred capital partner for companies that are building significant long-term value through a sustainable approach. The firm makes majority investments in companies with $3m to $15m of EBITDA, across six sectors: Consumer, Financial Services, Manufacturing, Business Services, Mature Tech, and Retail (e-commerce). They partner with talented management teams to accelerate the growth of companies that are “built to last” and meet a set of criteria they describe as sustainability. These businesses deliver strong returns by operating with a long-term perspective, committing to their mission or purpose, and focusing on creating value for all stakeholders.
11. SJF Ventures is a venture capital partnership which provides equity financings to companies seeking expansion capital. SJF Ventures focuses on the cleantech, business and Web-enhanced services, and premium consumer products sectors. Representative investment areas include renewable energy and efficiency, recycling, grid and infrastructure technologies, organic and healthy consumer products, digital media and marketing services, and outsourced business services.
12. TBL Capital has developed an intentional, patient capital venture fund focused on the needs of the entrepreneur while aligning our investments with triple-bottom-line companies. TBL provides growth capital to companies in the consumer products, service providers, software, clean technology, green building, health and wellness, and retail sectors.
October 15th, 2010 by Tom Minney
Next month’s upcoming African Stock Exchanges Association conference (10-12 November, Zambia) could be a key event in shaping the future developments of African securities exchanges.
There will be scope for important interviews and news, blogged live from the conference meeting in Livingstone, Zambia and giving the world insight into running news of Africa’s booming securities exchanges for bonds and equities, as well as private equity and social impact investment.
Your organization could support the coverage and be at the forefront of the news. We are offering top billing advertising space on our widely-read blog and will use the money raised to support attending ASEA and to widen and deepen our high-quality coverage of Africa’s capital markets (currently written by a volunteer capital markets professional, see about us).
This is a key opportunity for your investment institution, bank, stockbroker or other company if you want to be identified as THE important role player shaping the future of investment on the world’s new frontier.
Interested advertisers are invited to bid for 1 month’s advertising on this blog, expected to start from a minimum of $500 per month. The top 2 or 3 may be accepted. We will also make sure you get well recognized in the ASEA coverage. The bidding closes on 22 October.
Please send bids by email to tom.minney[at]afrigrow.com.
October 7th, 2010 by Tom Minney
The 2010 Africa investor (Ai – www.africa-investor.com) Investment and Business Leader Awards will take place in Washington DC tomorrow (8 October), as part of the Africa activities planned for the World Bank Annual Meeting. The reception, which will recognize leaders at the forefront of improving Africa’s investment climate, will be in the Ritz-Carlton Hotel. Ai describes itself as “a leading international investment research and communications group”.
Earlier Ai will hold its annual Africa investor Investment Climate Summit held in partnership with the World Bank Group. Summit partners and sponsors include: The Department of Trade and Industry, South Africa; Interbrand Sampson; Thomson Reuters; Harith; Databank Group, the International Finance Corporation (IFC); First Bank of Nigeria Plc, the Multilateral Investment Guarantee Agency (MIGA); Corporate Council for Africa; Canada African Business Council; The NEPAD Business Group, Emerging Markets Private Equity Association; Afrika Verein Der Deutschen Wirtschaft; The China Africa Business Council, Bunengi Holdings and the Whitaker Group, says Ai.
The awards categories include: i) Best Initiative in Support of SMEs and the MDGs; ii) Investment Climate Initiative of the Year; iii) Bank of the Year; iv) Carbon Finance Initiative of the Year; v) Venture Capital/Private Equity Deal of the Year; vi) Employer and Human Capital Investor of the Year; vii) Institutional Investor of the Year; viii) Investment Promotion Agency of the Year; ix) Leadership in Sustainable Investment in Africa; x) Africa’s Innovation Leader of the Year; xi) Africa’s Leading Woman in Business; xii) International Business Leader of the Year; xiii) Up-and-Coming Future Leader of the Year and xiv) African Finance Minister of the Year.
Hubert Danso, Vice Chairman and Managing Director of Africa investor, said in a press release: “We feel it is critically important to showcase Africa’s investment successes with the same vigour we responsibly advise on potential investment risks. These Africa investor Awards, the longest-standing international awards of their kind, go a long way to ensuring that Africa’s investment achievements are publicized internationally and serve as inspiration to future African leaders.”