Beyond the Margin: Redirecting Asia’s Capitalism 35th ADFIAP Annual Meeting, 25th April 2012

Yvonne Li, Avantage Venturesyli@avantageventures.com

Asia based

Supports key development sectors in Asia Pacific which address the most pressing challenges and opportunities of our times.

committed to addressing social & environmental challenges

long term investments of USD2 to 5 million

Early exposure to investments in socio-economic solutions underpinning Asia’s development

To create a sustainable future for everyone in Asia

Avantage Ventures

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Regional Trends in Asia

Ageing Population

Social Marginalization

• Longer lifespan• Falling fertility rates in China• Policy-driven demographic changes (e.g. single

child policy in China)

• Income inequality leading to worsening wealth gap• Large communities are economically left behind• Under-provision of public services for groups at

the margin

• Elderly homes and residential care services

• Training geriatric care workers

• Special needs education and vocational training

• Affordable housing• Employment designed for

disenfranchised communities

Limited Resources

• Consumption demand of 4.2bn Asians• Emerging middle-class driven consumptions• Persistent industrialisation and urbanisation• Concerns with food and water security

• Sustainable agribusinesses• Recycling facilities• Waste management

Climate Change

• Environmental challenges in water, air and ecological conditions

• Global imperative to cut greenhouse gas emission• Governments adopt low carbon growth strategy

• Affordable clean energy• Energy efficiency• Water management

Beijing LangLang School

Qingdao Yanguang Elderly Home

Big Tree Farm

Spectrum of Social & Financial Objectives

ESG (environmental, social and governance) is a generic term used in capital markets and used by investors to evaluate corporate behavior and to determine the future financial performance of companies. They are a subset of non financial performance indicators that includes sustainable, ethical and corporate governance issues such as managing the company’s carbon footprint and ensuring there are systems in place to ensure accountability.

DFIs and Impact Investing9

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Traditional DFI Investments Impact Investing

Profit Maximisation Profit and social impact maximisation in social enterprises

Invests in theme based funds such as SMEs, clean technology, infrastructureOverlay with ESG principles

Invests in social enterprises - SMEs with positive externalities and with an explicit social mission through innovative business models

Track financial performance as key indicator

Track social and environmental performance on top of financial performance

Development Finance Institutions10

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Uniquely placed to spur private sector dollars to finance:•Global public goods – climate change remedies/micro energy efficient solutions•Narrowing income divide in frontier countries•Strengthening financially successful social enterprises•Building healthcare and education infrastructure and networks

DFIs can achieve this by:• Changing the risk perception of social enterprises in Asia Pacific by providing

“stamp of approval”• Knowledge sharing through linkage programmes• Integrating social enterprises into global supply chains• Leveraging field experience and knowledge of intermediaries to further

investment and outreaching to social enterprises who offer sustainable and innovative solutions to social and environmental issues

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Market Size and Opportunity

JPMorgan November 2010 report classifies impactinvesting as an emerging asset class globally. Theirreport looks at impact investing opportunities at BOPand estimates a potential market of $400 billion to $1trillion.

Avantage Ventures September2011 report estimates aninvestment opportunity ofbetween $52 billion and $158billion within Asia-Pacific’ Refer to ‘Beyond the Margin: Redirecting Asia’s Capitalism’.

Market Size of Impact Investing in Asia

Source: Avantage Ventures Analysis 2011

Social /Environmental Impact

Financial Impact

Triple Bottom Line

Enhance local communities’ livelihoods

Community empowerment

Promote sustainable agricultural practices

Preserve scarce natural resources

Use clean energy and reduce harmful greenhouse gases

Balance financial returns with social and environmental ones

Grow sustainably Generate profits to

scale impact Create disposable

incomes thereby stimulating vibrant local economies

“If social enterprises are nurtured and their

activities and investments allowed to grow both

in scope and reach, societies are likely to

change their views about how business and

investment can be best used for the betterment

of the entire population. In this way, investors

can directly shape the course of progress in the

Asia-Pacific region.”

Yvonne Li