cynthia chua
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Asia Pacific – two sides to the coin
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Economic powerhouse
Vast majority live below the poverty line
Polluted environments
Social and Financial Objectives
Philanthropic donations
Program-related
investingImpact Investing ESG Investments
Socially-Responsible Investments
Traditional Investments
Venture Philanthropy
• Pure charitable giving with no expectation of financial return
• Return of at least principal expected and possibility of market return, as well as achievement of social performance
• Investments in companies whose primary goal is delivering social and environmental good, whilst also delivering market to competitive market returns
• Limiting investments to companies who track and evaluate their performance against key environment, social and governance metrics
• “Do no harm” investing in listed stocks that avoid ethically and environmentally questionable companies (e.g. tobacco, coal, casinos)
• 100% driven by maximization of short term financial gain
• Donations are given as seed capital with the expectation an organization will reach operational sustainability through mentoring by investors
Type
Investment Approach
Pure Social Pure Profit
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Level of Complexity
Expected Risk Adj. ReturnNo ReturnBelow Market Lower Risk Higher Risk
Donations
Grants Loan Guarantee
Commercial Loan
Public Equity
Private Equity
Social Impact Bond
Venture Philanthropy
Program Related Investments
Patient Capital
Crowd Funding
Sponsorship
Prizes
Micro Loans
Grant with a put
Convertible Bond
Trade Finance
Market Rate
Under utilized by social finance
Already utilized by social finance
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History of Social Finance
USA – Acumen – grant model
UK – Social Finance – pay for success/PPP model
Impact Investment Intermediaries
Social Stock Exchanges
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Sustainable Agri-business
Energy Access
Alternate & Clean Energy
Access to healthcare
Job creation
Special Needs
PrimaryVocational
Ageing Population
Poverty Alleviation
Urban Migration
Resource Conservation
Waste Management
Asia-Pacific – diversity of needs6
Asia-Pacific – Sectors of opportunity
Affordable Housing
Water & Sanitation
Rural Energy
Rural & Elderly Health Care
Primary & Special Needs Education
Agriculture & Agribusiness
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JPMorgan November 2010 report classifies impact investing as an emerging asset class globally
Market Size and Opportunity
AV Report of September 2011 ‘estimates an investment opportunity of between $40 billion and $70 billion within Asia-Pacific’
Where is impact investing most needed ?
Small, Medium Enterprises
Small and medium enterprises (SMEs) account for 90% of Asia’s businesses and 60% of its employment.
Many social enterprises find themselves in the “Missing Middle” investment range of USD500,000 and USD3 million –a critical financing gap that has yet to be tapped into.
Social Enterprises – small, medium enterprises with that have explicit social/environmental missions and development strategies.
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Sample Projects1111
Sample Impact Investment
LangLang School for Dyslexic Children
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Sample Impact Investment
Canyou Software Company
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Factors to Consider:
Measuring Financial Impact
Measuring Social Impact IRIS GIIRS
Direct investment vs fund-of-funds
Peer learning through industry associations (GIIN, ANDE)
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Impact Investing in Asia The total amount of capital needed by social
enterprises in the six key sectors is between USD44 and USD74 billion.
Vibrant social entrepreneurship ecosystem
Invest to ensure balance in the emerging economics of Asia continues to grow
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