Impact Investing views from across
‘The Ditch’
July 2016
Funding Investment Advice
Trusted partner to
funders and
providers
Practical
knowledge about
disadvantage
Outstanding
team
Financially
sustainable
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SVA works to improve the lives of people in need.
Accountability Integrity Respect Humility
More effective funding More effective services Reduction in disadvantage
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Impact Investing
Impact Investing
Impact FundsSocial Impact
Bonds
Social & Affordable
Housing
Returns =
Social
+Financial
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Impact Investing: Who’s who in the zoo
Stage of
developmentConceptual /
early stage
“Investment
ready”
At scale /
“bankable”
Key
players
Capital
type
“Capacity building” SEDIF Funds • VC
• Mainstream banks
• “Specialist” banks
• Grants / donations
• “In-kind” support
• Family / friends
• Social business angels
• The gap where
banks don’t play
• Debt and quasi-
equity
• Commercial
debt and equity
Other
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Social Impact Fund #1
SVA Social Impact
Fund - $8mFund Manager
35 x Sophisticated
investors
1 x Superannuation fund
Private Investors – $5m
Investors
• Returns 6.6%-8% to
date
9 Other
InvestmentsFuture
Investments
Medical social
enterprise
Disability social
enterprise Investments
• [See next slide]
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SIF investment criteria
• Social enterprises, NGOs and CHP
• For profits or not-for-profits
• $250k-$1.5m+ deal size
• Debt or equity
Meet deal criteria
• Strong business model
• Prefer trading recordFinancial sustainability
• Clear social mission focused on addressing disadvantage
• Predominantly serving Australian communitiesSocial impact
• Strong track record
• Clear evidence of commitmentManagers
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Social Impact Fund #2 - investment focus areas (~$10 - 15m)
Impact Theme Investment Focus
1Employment
opportunities
• Disadvantaged workforces (e.g. long-term unemployed,
disability, indigenous)
• Disadvantaged postcodes (e.g. Western Sydney)
2Under-served
markets
• ‘Bottom of pyramid’ businesses (e.g. low cost gyms in
disadvantaged postcodes)
• Community regeneration (e.g. public infrastructure)
3Social
services
• Disability (e.g. NDIS, Australian Disability Enterprises)
• Healthcare (e.g. primary health in underserved areas)
• Aged care (e.g. NFPs, underserved areas)
• Social sector organizations
• Aboriginal corporations
4Education
and skills
• Early childhood education
• K-12 alternative education (e.g. community colleges)
• Vocational education
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Social and affordable housing
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Super Funds – HESTA & beyond
Investment manager
(SVA)
Trust
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SVA credentials – social and affordable housing
Horizon Housing (“HH”) is a tier 1 community housing provider and one of Queensland’s largest providers of
affordable housing.
HH acquired the management rights over a portfolio of 995 NRAS properties and bought a controlling stake in
Australian Affordable Housing Securities (“AAHS”), a provider of NRAS compliance services.
Through the SVA-managed SIIT, SVA structured a debt finance package for both HH and AAHS. This transaction
was the first debt investment for HESTA, who are the sole investor in the SIIT.
Total debt facilities of $6.6M were provided via the SIIT and structured in the form of a secured cash flow loan.
Equity was provided by SVA, HH and Questus Pty Ltd (a listed affordable housing provider).
Sustain Community Housing is a not for profit developer of social and affordable housing with a focus on mixed
developments (private and social) to improve outcomes for tenants.
SVA jointly arranged debt facility with Social Enterprise Finance Australia to fund a residential property
development in Colyton, Western Sydney. The senior construction loan was part of the overall $2M financing for
the project which will deliver 2 dwellings into the social and affordable market in NSW.
The Colyton project is the first development under the Sustain Community Housing model.
Joint Senior Debt Arranger
December 2014
Sole Senior Debt Arranger
Equity Provider
Advisor
December 2015
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Social Impact Bonds
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Bonds: Newpin
Investors
GovernmentService Provider
Service Users
Newpin Social Impact Bond Structure
SPV
1. Program works with families to either safely return children in
care to their families or prevent them from entering care
2. $7m bond, key features:
1. Minimum 5% interest first 3 years
2. Principal protection 75% in years 1-3; 50% in years
4-7
3. FY16 results:
1. Achieved a ~62 per cent "restoration" rate
2. Paid 8-9% coupon to investors
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Bonds: Indicative economics
Example:• Expected future expenditure attributable to
“Intervention Group” $150m
• If reduce by 20%, $30m savings
• If savings split equally:
$10m investor
returns/bond costs
$10m service
provider costs
$10m net
government savings
Paid by
investors
$20m
payment
Government savings
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Bonds: Pipeline
South Australia
SVA working on first pilot SIB with
Hutt St Centre/Common Ground
Adelaide
Homelessness focus
Commonwealth
Minister spoken publicly about
SIBs
PwC actuarial approach
Victoria
Treasurer engaged for
SIB pilot - FY16/17
Queensland
Announcement by Treasurer
RFP shortlisted in May 2016
Recidivism/Out of Home Care
NSW
2 SBB pilots underway addressing Out of Home Care
– Newpin (SVA/UnitingCare), Benevolent Society
Office of Society Impact Investment established
• SVA working on a 'young people at risk' SBB
• SVA shortlisted on Mental Health & Chronic Illness
New Zealand
SVA advising Government on Social
Bond program
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Finally…
Ian Learmonth, Executive Director Impact Investing
Tel: 02 8004 6729
www.socialventures.com.au
Any questions?
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