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Democratizing the Social Capital Markets
October 16, 2013
Aldaba Theater, University of the Philippines
Quezon City, Philippines
The State of Impact Investing Today
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Monitor Calvert JPM/Rockefeller
Impact Investment Market Size ($bn)
Estimated Near-term Potential Today
Page 3
Estimates of the Potential Size of the Impact Investing Market are large… but the potential has not yet been fully achieved
Impact Investment Market Size ($bn)
Source: “From the Margins to the Mainstream.” World Economic Forum. September 2013.
“Impact investing is currently growing linearly. In order for it to grow exponentially, we need to find a way to incorporate
mainstream investors into the mix.”
– Randall Kempner, Executive Director, Aspen Network of Development Entrepreneurs, Aspen Institute
Page 4
As quoted in “From the Margins to the Mainstream” by the World Economic Forum, September 2013.
Source: GIIN, J.P. Morgan.
Source of Funds for Impact Investment Fund Managers, 2012
Page 5
Impact Investing Landscape
Invest through Mutual Funds
Microfinance Investment Vehicles
Social Venture Capital Funds Private Loans
and Private Equity Investments
Publicly Traded Shares and
Bonds
DFIs
Retail Investors
Broad Range of Institutions
Foundations
Pioneering Institutions
Family Office / HNWIs
Page 6
Retail investors want to be involved in impact investing
U.S. Retail Market Study
$120 billion potential today
~50% of Americans interested in Impact Investing
Minimal cannibalization of charitable donations (~10%)
Increased investing activity after first impact investment
Source: Hope Consulting (2010)
Page 7
Shujog, IIX and the Impact Exchange
IIX aims to assist Social Enterprises to raise investment capital in order to grow
IIX's mission is to promote inclusive growth, economic development, and environmental sustainability. IIX connects Social Enterprises (SEs) with Investors and facilitates the investment process. In addition, IIX provides technical assistance to SEs in order to get them ready to receive investment.
Shujog is the non-profit sister entity of IIX. Its mission is to explore issues that impact the growth and sustainability of SEs and develop solutions through advocacy, research and assessment.
Shujog aims to create better understanding of the Social Enterprise space
IIX and Shujog: Working together to nurture the Social Enterprise and Impact Investing space
Page 9
SEs Seed-stage Early growth stage Mature
Type of investment
Seed capital Equity, quasi-equity Shares, bonds, funds
Investor Incubator HNWI, Family offices Retail, institutional
Capital raise
$ $$ $$$$$$
Impact
Building Social Capital Markets From seed funding to public listings
Page 10
Impact Exchange: A Partnership between IIX and SEM
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Leader in Asian Impact Investing sector
Global network of impact investors and other market participants
Pipeline of Asian SEs
Track record in impact investment deal facilitation
Impact Assessment expertise (Shujog)
• Established and innovative exchange operator
• Infrastructure and regulatory oversight
• African network / link to India
• Diversified global investor base
• Commitment to sustainability
Impact Investment Exchange Asia
Stock Exchange of Mauritius
Mission protection
Liquidity, transparency, efficiency
Increased impact
IIX conducts Impact screening and monitoring and will develop the market
SEM operates the Impact Exchange board on its platform under regulation of
the Financial Services Commission
Page 11
The promise of a Social Stock Exchange
The launch of Impact Exchange will democratize capital markets…
…providing widespread access to impact investment opportunities
…allowing SEs to move beyond private funding from foundations and wealthy individuals
…providing liquidity to investors, and promoting exits for early-stage investors
…and bringing transparency to the entire process
Mainstream
High-Net-Worth Individuals
Institutions
Social Venture Funds
Family Offices
Foundations
Current investors
+
Maximize impact and democratize capital markets
Page 12
What it is
• Impact Exchange is:
A dedicated board… …of an established,
regulated stock exchange…
…devoted to listing shares and bonds issued by social enterprises and
social impact funds…
…that meet stringent listing criteria relating to
social and environmental impact.
Page 13
What it is
• Impact Exchange is:
The world’s first social stock exchange
A single market where investors can find
opportunities to back leading SEs…
…and SEs can be assured of finding mission-aligned
investors…
…all in a market which provides liquidity and
transparency.
Page 14
Why Mauritius? Strategic location – Leading financial hub for investment in Asia and Africa
One of the leading exchanges in Africa – SEM is the third largest exchange in Africa and a full member of the World Federation of Exchanges
International – Very accommodating to foreign investors and issuers; multicurrency listing and trading
Financial hub - domicile for funds with AUM totalling ~$400Bn
Listing process - tailored to needs of relatively small firms
Innovation - “Most Innovative African Stock Exchange of the Year Award” in 2011, 2012
Commitment to Sustainability – strong supporter of government’s “Maurice, Ile Durable” initiative
Page 15
Impact Exchange Stakeholders
Investors in Public
Markets
Investors in Private
Placements
Brokers
Social Advisors
(AIRs)
Financial Advisors
Information Providers
Issuers
Page 16
Impact Exchange Stakeholders
Investors in Public
Markets
Investors in Private
Placements
Brokers
Social Advisors
(AIRs)
Financial Advisors
Information Providers
Issuers
Benefits
• Access to capital
• In large amounts
• At lower cost
• Liquidity
• Diversified shareholder base
• Mission-aligned investors
• Triple bottom-line value capture
• Transparency for Impact
• Benchmarking
Page 17
Impact Exchange Stakeholders
Investors in Public
Markets
Investors in Private
Placements
Brokers
Social Advisors
(AIRs)
Financial Advisors
Information Providers
Issuers
Benefits
• Ease of access
• Single market for SEs
• Open to retail investors
• Connected through brokers
• Liquidity
• Lower transaction costs
• Transparency
• Triple bottom-line returns
• Portfolio diversification
Page 18
Impact Exchange Stakeholders
Investors in Public
Markets
Investors in Private
Placements
Brokers
Social Advisors
(AIRs)
Financial Advisors
Information Providers
Issuers
Benefits
• Liquidity for top portfolio companies
• Social and environmental value capture
• Invest with knowledge of increased exit options
Page 19
Impact Exchange Stakeholders
Issuers Investors in
Public Markets
Investors in Private
Placements
Brokers
Social Advisors
(AIRs)
Financial Advisors
Information Providers
Role
• Preparing issuers for listing and financial aspects
• Securing investors
• Assist in meeting ongoing listing obligations
Role
• Preparing impact assessment
• Preparing issuers for listing on social aspects
• Impact verification
Page 20
Impact Exchange Stakeholders
Investors in Public
Markets
Investors in Private
Placements
Brokers
Social Advisors
(AIRs)
Financial Advisors
Information Providers
Issuers
Role
• Market access for retail and institutional investors
• Secondary market trading
• Market-making
• Research
Page 21
Impact Exchange Stakeholders
Investors in Public
Markets
Investors in Private
Placements
Brokers
Social Advisors
(AIRs)
Financial Advisors
Information Providers
Issuers
Role
• Expansion of social and environmental data
• Integrate into current ESG platforms
• Highlight performance and impact for investors
Page 22
How to get involved
• We invite all interested parties—including SEs, impact investors, and prospective partners—to visit our website and learn more
• Register your interest in being part of Impact Exchange
• http://impactexchange.asiaiix.com/
Photo credit: National Geographic Page 23
Creating social and environmental capital markets
We envision a future in which:
‣ Capital markets will increasingly reflect triple-
bottom-line value
‣ Enterprises will serve many stakeholders, not only
shareholders
‣ In financial markets, one dollar will no longer
equal one vote
‣ Externalities currently borne by the underserved
will be priced into corporate decisions
‣ Investors will have access to real-time social and
environmental information, not only financial
information
Photo Sources: The Economist, Thomson Reuters
Value
Creation
Stakeholders
Market
Participation
Market
Information
Pricing of
Externalities
Impact Exchange
Page 24
Thank You impactexchange.asiaiix.com
www.asiaiix.com
Capital Markets for Social Good
