understanding the opportunity for impact investing in africa june 5, 2013
TRANSCRIPT
Understanding the Opportunity for Impact
Investing in Africa
June 5, 2013
Our Panelists
Niamani MutimaAfrica Grantmakers’
Affinity Group
Daryn DodsonWallace Global Fund
Scott WallaceWallace Global Fund
Cynthia MullerArabella Advisors
Impact investing uses return-seeking investments to help
accomplish social and environmental goals.
Industry Timeline
1790
1968
1980-2000
2007
2010+
Franklin establishes
1st fund
PRIs included in Tax Code
Socially Responsible Investing Movement
Global Financial Crisis
Development of market infrastructure
4
Projected market size of Impact Investing
5
Impact Investing5-10 year projection
~$650 billion
Philanthropy (U.S. only)~$300 billion
Total Investing~$60 trillion
Impact Investing in 2013~$9 billion
Mapping the Impact Investing Industry
6
USA
CHINA (HONG KONG)NETHERLANDS UK
INDIA
BRAZIL SOUTH AFRICA
KENYA
MEXICO
GERMANY
SINGAPORE
AUSTRALIA
The Sterling Group
Cynthia Muller
Director, Impact InvestingArabella Advisors
Impact Investing
Commercial Investors
FoundationsHigh Net
Worth Individuals
Development Institutions &
Banks
Where Does the Capital Come From?
Source: F.B. Heron Foundation Mission-Related Investing Continuum
Impact Investment Continuum
Below Market-Rate Hybrid Market-Rate
Grant Support Equity Subordinated
LoansSenior Loans Cash Guarantees Cash Fixed
IncomePublic Equity
Private Equity
Higher Risk Lower Risk Lower Risk Higher Risk
Below Market-Rate Investments(Impact First)
Market-Rate Investments(Finance First)
Mission Related Investments
Investing with social or
environmental screens
Market rate expected return
“Double or Triple Bottom
Line Investing”The 95%
Program Related Investments
IRS Tax Code –can be counted
toward 5% payout
Below Market Returns
Foundation Impact Investing
Impact Investing in Africa
• Size of African impact investing market between $300-400 million per year
• Sub-Saharan Africa represents a large area of growth with the continent
• Kenya and South Africa represent large areas of interest and growth
• Challenges around transparency and general uncertainty about business and political environment
SOUTH AFRICA
KENYA
GHANA
Examples of Impact Investing in Practice
Scott Wallace
Co-chairWallace Global Fund
Background on Wallace Global Fund and Impact Investing
• WGF progressive family philanthropy • Henry A. Wallace• Programs in environment, democracy, women’s
human rights, media and corporate power • Funds globally and domestically
• Work in Africa• History of supporting women’s human rights in Africa,
reproductive rights and abandonment of FGM/C• Support for civil society in Southern Africa• Example: Zimbabwe Alliance, donor collaborative
Mission Related Investing
% Return 2012Wallace Global Fund II 11.80%Custom Index (1) 10.58%
(1) Custom Index reflects a blended return composed of various indices: 25% S&P500, 30% BGCI, 15% MSCI EAFE, 8% TBills, 7% R2000, 5% MSCI Emerging and 10% HFRI.
Past performance not indicative of future returns.
• Commitment to breaking down the wall between 95-5%
• 2009-2011 – Process begins to align program and assets
• New investment committee, advisors and managers, with substantial savings in overall management cost to Fund
• 2012 first year of performance – 11.8% beating benchmarks
• Screening goal is 100% positive + negative screens, currently over 90%
• Example of Environment Program alignment – fossil fuels and climate solutions/clean tech
• 99% fossil fuel free• 5% + in clean tech
Portfolio Screening System
Impact Investing • 5% of fund minimum for impact investments, will
increase• Early interest: Shared Interest• Board set criteria for impact investment
– Benefit marginalized communities, potential for scale
– Women– Sustainability and climate solutions
• Engaged consultant to research impact opportunities
Daryn Dodson
ConsultantWallace Global Fund
Q&A
Niamani MutimaAfrica Grantmakers’
Affinity Group
Daryn DodsonWallace Global Fund
Scott WallaceWallace Global Fund
Cynthia MullerArabella Advisors
Sampling of AGAG Membership with an Impact Investing
Strategy
Opportunity for AGAG Funders
• Help to build networks and awareness• Seek opportunities where Grants and or PRIs
can help to reduced transactional risk and costs
• Cultivate strong entrepreneurs• Don’t forget about public policy• Share your results and experiences
Impact Investing Resources
• The Global Impact Investing Network (The GIIN)
• Mission Investors Exchange• Council on Philanthropy• Publications
– Impact Investing in West Africa (Dalhberg)– Case Study: Mtanga Farms– Special Report: This is Africa
Stay in Touch
• Web– www.ArabellaAdvisors.com– www.AfricaGrantmakers.org – www.WGF.org
• Twitter– @ArabellaAdvisor & @CynMull – @AGAGAfrica
• Email– [email protected]
Niamani Mutima
Executive DirectorAfrica Grantmakers’ Affinity Group