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8/7/2019 Impact Investing Intro March 2011
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6440 S. Wasatch Blvd, Suite 260
Salt Lake City, Utah 84121
Phone: 801 274 6010
www.altacapital.com
An introduction to...Impact Investing
Prepared By:
Kurt BrownPrincipal
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investing to generate positive
environmental or social return
along with financial return.
Impact investments aim to solve social or environmental
challenges while generating financial profit.
Actively placing capital in businesses and
funds that generate social and / or
environmental good.
What is Impact Investing?
An investment strategy whichseeks to maximize both financial
return and social good.
...using profit-seeking investment
to generate social and
environmental good."
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Blended Value Investing
Mission Driven Investing
Mission Related Investing
Triple Bottom Line Investing
Social Investing
Values Based Investing
Program Related Investing
Sustainable and Responsible Investing
Responsible Investing
Ethical Investing
Source: Monitor Institute
Impact Investing travels by many names...
Impact Investing is also known as...
Impact Investing is closely allied
to but differentiated from
Socially Responsible Investing(SRI), which generally employs
negative screening to avoid
investing in harmful companies.
Investments that unintentionally
result in social good are notregarded as Impact Investments.
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In the U.S., community investment* has grown
to a total of $26 billion invested, with a
compound annual growth rate of 22 percent
between 2001 and 2007.
The microfinance field globally has grown
even faster, with the total volume of
microloans growing at a 44 percent annual
rate from 2001 and 2006 to reach $25
billion.
The volume of money coming into clean
technology investments has quickly
become a flood, growing to $148.4 billionof new investments in 2007, up 60 percent
from the year before.
If the market grows to even 1 percent of the
global managed asset allocation, it would
create a market of approximately $500 billion.
How big is the market?
Source: Monitor Institute. * Refers to the provision of financial services to underserved
communities and includes banks, credit unions, loan funds, and venture capital funds.
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Using profit-seeking investment to generate social
and environmental good is moving from a peripheryof activist investors to the core of mainstream
financial institutions.
-Monitor Institute
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From the NY Times this past weekend...
There is a true moral hunger for a new asset class.
a recent study showing that some $120 billion of investment capital much of it from wealthy families
is looking for a socially productive, and profitable, home.
There is a huge
community interested in
doing business in a
different kind of way.
the notion that for-profit companies with a
social mission at their core could constitute an
asset class is fairly new. And though there are
myriad challenges in making it real, there is
genuine progress.
a handful of investment funds recently
established to finance businesses that address
social problems, especially in the developing
world. Emboldened in part by the success of themicro-finance industry, which provides loans for
small-scale businesses
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Source: Hope Consulting Survey4,000 respondents
Individuals are most interested in the
Investments with a Social Bonusconcept
The public wants access to these opportunities...
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56% of money would come
from investments
23% of money would be new
to an investment advisor or
broker (charitable donations
+ discretionary spending)
The risk of cannibalizingcharitable donations seems
minimal (10%)
Source: Hope Consulting Survey4,000 respondents
The new investment dollars would come principally from investments
(with limited cannibalization of charitable dollars)
Investors are willing to divert funds...
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Source: Hope Consulting Survey4,000 respondents
Lack of track record 55%
Dont know where to find 52% Financial Advisor hasnt recommended 50%
Limited information available 49%
Insufficient ratings or benchmarks 47%
Too risky 40%
Not effective way to make financial returns 39%
Want to keep charity and investments separate 38% Not enough time to research 37%
Hard to measure social impact 33%
Why potential investors have not invested in Socially Responsible
Investments
Why is the industry not larger?
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Source: Hope Consulting Survey4,000 respondents
If/when investors make Impact Investments, their priorities are
Guarantees principal back 21%
Addresses a cause I care about 20%
Has a track record of success 12% Has a business model I believe in 10%
Offered by a well-known company 6%
What are potential investors looking for?
Our mission is to:
1) Invest in companies...producing significant impact2) Generate commercial returns
3) Mobilize capital markets and create new asset classes
Huntsman Gay Capital Impact
Mission Statement
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The larger ecosystem...
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Investment Profiles
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Loans to Indias rural and urban poor
Typical Loan -
Size: $125 loan
Duration: 50 weeks
Interest Rate: 22 26% APR
99% repayment rate
Mid-2002 5,000 clients Mar 2010 6.8M clientsUpcoming IPO scheduled at USD $1 -2 billion
SKS MicrofinanceHyderabad, India
Example 1: Microfinance Bank...
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Micro Benefits China
Market Size: 300 500 million low-income factory workers
Product Offering: Loan distribution through a deduction-
secured benefits card that acts like a credit card and isadministered and issued by established Chinese banks
Functions through Visa, MasterCard, or China Union Pay
Benefits:
Low interest rates
Benefit provided by employer
Easy to access cash on demand
No credit history needed
Automatic payments - no late fees
Goal: Set the responsible lending benchmark for low-income
populations in China and other export-driven economies
Example 2: Private Company...
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Unitus Equity Fund
In 2003, Unitus realized that the micro-finance institutions they
assisted needed large amounts of capital to grow. These MFIs were led
by solid management teams, had upgraded their business systems,
and simply needed more capital to extend additional loans to more
clients at the bottom of the economic pyramid. But the current market
conditions made it extremely difficult to raise and obtain the capital
they required through non-profit donations.To solve this problem, Geoff Woolley and Bob Gay assisted Unitus in
forming Unitus Equity Fund, a for-profit private equity investment fund
primarily focused on providing growth capital to micro-finance banks.
UEF equity investments created an immediate social impact as
investee MFIs were able to provide micro-loans to more than one
million additional low-income clients using the UEFs capital
contributions.
Meanwhile, what began as a socially-driven fund turned out to be
incredibly profitable, as UEF realized returns exceeding 4x and
generated tremendous investor demand for a second, larger fund.
Perhaps most importantly, the proven success of this type of
investment brought billions of investment dollars into the worldwide
microfinance industry. Today, the worlds largest investment banks and
private equity funds have invested large amounts of capital into
microfinance.
Example 3: Fund Structure...
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Market Conditions:
27 million unit housing shortage in urban India
Increases yearly by 2 million units
Low-income Indians live in unsanitary, unsafe, andunstable conditions
Product:
Apartments ranging from USD $6k - $20k
160-500 sq.ft. apartments
Running water
Private toilet & bath
20-30% down, 12-15% mortgage, 15-year term
Market Opportunity: USD $270 billion
Investment Strategy:
Build the affordable housing ecosystem by
investing in
(i) construction companies,
(ii) affordable housing projects, and
(iii) housing finance companies
Sorenson Housing
Opportunity Fund
Example 4: Fund Structure...
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Microfinance:
Impact Investings First Success
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Mohammed Yunus:
Considered the founder of the microfinancemodel
Founded the Grameen Bank in Bangladesh in
1976
Awarded the Nobel Peace Prize for his effortsin 2006.
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Grameens growth...
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India
Africa
The Explosion of Microcredit...
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The Explosion of Microcredit...
Azerbaijan
Cameroon
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