Understanding the

Impact Investor

Marketplace

1. What’s taken place so far?

2. What’s attracted those investors?

3. What’s been a challenge in building the market?

4. The future - how do we grow this market?

Overview

The impact investing landscape in Australia

The SEDIF FUNDs 1

The Goodstart syndicate

Purchase 678 child care centres from ABC

Learning

3

Social impact bonds

• Bonds to reduce out-of-home-care:

• UnitingCare Burnside - Newpin (SVA)

• The Benevolent Society

• Bond to address recidivism: Mission Australia

(SVA)

2

Other initiatives

Western Australia

• WA Government have commenced a $10m

capacity building grant program for social

enterprises.

4

The social

finance

landscape

Private

investors

Commonwealth

grant

Fund managers

Invested

in social

enterprise

Goodstart Capital Structure

• 44 HNWs and family trusts

• Debt obligation - 12% p.a. yield

• Significant business with proven government cashflows

• Deleveraged capital structure

• Strong governance (Board, CEO etc)

• Australia’s largest early learning provider

Goodstart - Key Features/Attractions

SVA Social Impact Fund

Social investors and the Commonwealth government have contributed capital to SVA’s

$8.65m Social Impact Fund, which invests in social enterprise in Australia

The Social

Impact Fund

(unit trust)

Social

enterprise

Social

enterprise

Social

enterprise

Social

investors

(unit

holders)

HNW individuals

PAFs

Foundations

DEEWR

grant money

The trustee

Fund

management

agreement

Trust deed

Governed by

trust deed

Fund

agreement

• Requirement for matched funding

• The SVA SIF has 33 investors, a mixture of HNWs and Trusts:

SIF - Investor profile

9

7

6

4

2 2

0

1

2

3

4

5

6

7

8

9

Individual

PAF

Family Trust

Private company

SMSF

Family Foundation

• Min $50,000

• Only open to ‘wholesale investors’ (Net Worth $2.5m and/or

earnings >$250,000)

• Government funds are ‘subordinated’ to investor monies

• Expected returns potentially in excess of 9% p.a.

• Supporting social enterprise

SIF - Key Features/Attractions

10

SIF - Investments allocated $1.6m (19%)

11 jobs

Council approved, GPs

hired

37 jobs to date

Social Impact Bonds

A social impact bond is a contract where the public sector agrees to pay a

private service provider for delivering improved social outcomes that result in

government savings

Generic structure of a social impact bond

Government Service

provider

Private

investor

Beneficiary of

service

Cost savings to

government

Government pays

investors when desired

outcomes are met

Summary

• Private funds used to fund preventative

programs

• If the program meets agreed targets, the

Government saves money and in

recognition of cost savings repays investors

principal and interest.

• If targets are not met, investors may not

receive any compensation

History

• The first (GBP 5m) was arranged by Social

Finance UK to reduce recidivism rates at

Peterborough prison

• A number of new SIB programs are

underway in NYC and Boston

Bonds in

Australia

Three pilot impacts bonds are in progress in

NSW

• Two Bonds to reduce out-of-home-care:

• UnitingCare Burnside (SVA)

• The Benevolent Society

• Bond to address recidivism: Mission

Australia (SVA)

Private

investors fund

a social

program Direct and

indirect cost

savings accrue

to government

Summary

Text slide may show a series of bullets

Sample of 24 pt text bullet

• Single spacing with 0 pt before line and 0.3 after line

• Text box size is 12.4 cm Height and 21.6 cm Width

• Text box position is 3 cm Horizontal and 3.4 cm

Vertical from top left corner

Newpin Social Benefit Bond

13

Newpin SBB - Structure

Newpin SBB

Trust SVA

UC NSW.ACT NSW

Govt

1. $7m funds raised

2. $7m on-lent to UnitingCare

$50k p.a.

3. ~$50m over 7 years

4. Interest p.a. + Principal upon maturity

5. Coupon p.a. + Principal upon maturity

SBB Investors

Newpin SBB - Breakdown of investors

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

HNW -Trust

HNW -Super

HNW -Individual

Institutional Trust Foundation

15

Newpin SBB - Investor features

Key Protections

Interest Rate Min 5% p.a. during first 3 years

Principal Downside – First 4 years No greater than 25%

Years 5 – maturity No greater than 50%

Early Termination at < 45% Restoration

Rate (from Year 3)

Investors would receive a performance

based payment upon early termination

Full payout upon most Early

Termination Scenarios

Refer IM

• Min $50,000

• Only open to ‘wholesale investors’ (Net Worth $2.5m and/or

earnings >$250,000)

• Attracted two institutional investors (Christian Super & NGS)

• Expected returns potentially in excess of 10% p.a.

• Engaged with the underlying program

Newpin SBB - Key Features/Attractions

1. Scale, particularly for institutional investors

2. Lack of liquidity

3. Understanding social outcomes as a risk/return

feature

4. Track record

5. Open up to retail – associated AFSL issues

Challenges in building the market

How do we grow?

Issue How to address

• Scale Housing, Aged Care, Health,

Education

• Lack of liquidity Build a secondary market

• Understanding social

outcomes

Build evidence base/measurement

• Track record Establish a history, expand offerings

• Retail market Confidence

Investor Market place

Questions?