Market Based Solutions for Impact Investing€¦ · 29/07/2013 · Market Based Solutions for...

Market Based Solutions for Impact Investing

An EMPEA Professional Development Webcast – 30 July 2013 1

Market Based Solutions for Impact InvestingAn EMPEA Professional Development Webcast with Accion, J.P. Morgan, LeapFrog

Investments, Siguler Guff & Company, and TriLinc Global

An EMPEA Professional Development Webcast



EMPEA Upcoming Events

Save the Dates…

• 19 September 2013: Spotlight on Frontier Markets an EMPEA Professional

Development Webcast with CrossBoundary

• 15 October 2013

• Private Equity in Emerging Markets 2013, co-hosted by EMPEA and Financial

Times (FT) Live

• EMPEA’s Annual Members-Only Reception in London

• 16 October 2013: Private Equity in Africa 2013, co-hosted by EMPEA and This is Africa

magazine

• 17 October 2013: EMPEA Fundraising Masterclass, hosted at EBRD’s Headquarters

with support from Debevoise & Plimpton LLP and MVision Private Equity Advisers

For more information on these events, and other EMPEA programming, please visit

http://www.empea.org/events-education/conferences/

http://www.empea.org/events-education/conferences/



Today’s Moderator

Moderator: Patricia Dinneen, Managing Director



Objectives of Webcast

1. Understand what is driving the impact investing thesis

2. Assess current state of the market: clarify myths, hype, key players, size, scope, competitive positioning, exits

3. Demonstrate by example how impact investors are achieving financial returns alongside social and environmental benefits

4. Identify challenges and risks

5. Articulate trends and outlook for impact investing

6. Debate what is necessary to make impact investing more attractive to institutional investors



What is Impact Investing?

Source: GIIN, J.P. Morgan and the Rockefeller Foundation



Participants

Amy Bell

Executive Director, Social Finance

Gloria Nelund

Chairman & Chief Executive Officer

Andrew Kuper

Founder and President

Monica Brand

Principal Director, Frontier

Investments Group



What is Driving the Investment Thesis?

Huge social/environmental issues that are not being fully addressed by the limited resources available through government and philanthropy

Ability to leverage traditional EM PE and the broader financial system to link capital deployment to social and environmental impact, as well as financial returns

Opportunity to serve vast new markets (>2 billion people entering middle class)

Innovation / “disruptive” new business models

Portfolio diversification



Who is Investing and How Much?

• $8B invested in 2012

Resource Mobilization in 2013

• $9B planned in 2013

• 34% investing in S-S Africa




An Increasingly Global Industry

USA

SINGAPORE

CHINA (HONG KONG)NETHERLANDS

UK

INDIA

BRAZIL SOUTH AFRICA

KENYA

MEXICO

GERMANY

CHILE

Source: Rockefeller Foundation

http://www.lokcapital.com/index.html

http://www.asiaiix.com/



Largest EM Impact Investing Funds Raised

Fund Manager Fund Name Fund Type Status Geography SectorsTotal Capital

Raised (US$m)Close Year

Description

Vital Capital Investments

Vital Capital Fund I Growth ClosedSub-Saharan

AfricaMulti-Sector 350 2012

Created to align with principles of impact investing, focused on sectors in the Sub-Saharan

African markets with a primary emphasis in housing, commercial agriculture, health care,

and education.

BlueOrchardBlueOrchard

Private Equity Fund

Microfinance ClosedLatin America,

MENA, Sub-Saharan Africa

Banking & Financial Services

195 2010Seeking to forge long-term partnerships with microfinance organizations across the world

through minority stake investments.

Incofin Investment Management

Rural Impulse Fund II (RIF II)

Microfinance ClosedIndia,

Southeast Asia


173 2011Microfinance investment fund that targets rural

microfinance institutions providing financial services to the rural poor.

LeapFrog Investments

LeapFrog Financial Inclusion Fund

Growth ClosedAsia, MENA, Sub-Saharan

Africa


135 2010

Investing in high-growth businesses in Africa and Asia which provide financial tools such as

insurance, savings and pensions to the poor and financially excluded.

Catalyst Microfinance

Investors (CMIMC)

Catalyst Microfinance

Venture Capital

ClosedAsia, Sub-

Saharan Africa


125 2008

Investing in emerging, high potential microfinance institutions, selected and

managed by a team of microfinance practitioners and corporate finance specialists.

© Emerging Markets Private Equity Association. Data as June 2013.



Recent Investments by EM PE Impact Investors

Fund ManagerCompany

NameCountry Sector

Investment Type

Investment Amount (US$m)

Date Description

IGNIA PartnersProcesaChiapas

MexicoIndustrials &

ManufacturingVenture Capital

8.2 Jan-13

Focused on nutrition through the production and commercialization of high quality products that benefit all sectors of the population, especially those most vulnerable

by their socio-economic, geographical and cultural conditions.

LeapFrogInvestments

CrystaLife Assurance Plc

NigeriaBanking &

Financial ServicesGrowth 7.5 Jan-13

Insurance company in Nigeria that offers a wide range of financial services, including life insurance, pensions and

retirement planning.

IncofinInvestment

Management

Fusion Microfinance

IndiaBanking &

Financial ServicesGrowth 4.6 Mar-13

Microfinance company operating in the rural areas of North-Central India that aims to provide underprivileged

women with economic opportunities to transform the quality of their lives.

LeapFrogInvestments

Bima GlobalMobile Financial

ServicesGrowth 4.25 Feb-13

One of the largest mobile insurance platforms in the world, bringing affordable insurance to people in emerging

markets via their mobile phones and covering 1.6 million people across Africa and Asia.

Africa Agribusiness Investments

(Agri-Vie)

Vida OilsSouth Africa

Industrials & Manufacturing

Growth 4 Jun-13

Producer of specialist coconut oils and fats for the food, pharmaceuticals, cosmetics and chemical sectors in South Africa through socially, economically, and environmentally

sustainable supply.

Bamboo Finance Bridge PhilippinesBanking &

Financial ServicesGrowth 3 Mar-13

Establishing network of provincial banks in rural Philippines with the aim of creating jobs and opportunity by extending financial services to businesses, farmers and individuals in

areas currently poorly served.

Accion Frontier Investments

TiaxaLatAm +

AsiaTechnology & Data Mining

Equity 3 2012

Game changing balance advance product that scores

prepaid mobile phone users and provides “nano loans”-

real time funding to complete transactions,

© Emerging Markets Private Equity Association. Data as of June 2013.



Assessing the Current State of the Market

Myths versus reality

Competitive positioning of key players

Size of market, funds, deals

Investment structures

Target sectors and geographies

Exits



Demonstrate with Examples: Returns and Impact

Sectors: Financial services, healthcare, education, housing, agriculture, water/sanitation, clean energy

Geographies: Africa, Asia, Latin America

Fund Type: Microfinance, Venture, Growth, Bonds, Equity, Hybrids

Value created: financial, social, environmental

Exit strategies



What is the Industry Potential

Total market opportunity across five sectors:

– Potential profit: $183B-$667B

– Potential investment capital: $400B-$1T

Sector

Potential Invested

Capital Required, USD bn

Potential Profit

Opportunity, USD bn

Housing: Affordable urban housing $214 - $786 $177 - $648

Water: Clean water in rural areas $5.4 - $13 $2.9 - $7

Health: Maternal health $0.4 - $2 $0.1 - $1

Education: Primary education $4.8 - $10 $2.6 - $11

Financial Services: Microfinance $176 Not measured

Potential Profit and Invested Capital in Selected BoP Sectors Over 10

Years




Trends and Outlook

Poor as consumers

Deal flow/entrepreneurs

Innovative business models with scalability

Appropriate investment and legal structures

“Aligned capital” models with government, private sector and philanthropists



How to Professionalize Impact Investing

Track records

Performance database and benchmarking

Standardized metrics

Enabling ecosystem

Research

Shared best practices



Question & Answer Session

17

Patricia Dinneen

Managing Director

Amy Bell

Executive Director, Social Finance

Gloria Nelund

Chairman & Chief Executive Officer

Andrew Kuper

Founder and President

Monica Brand

Principal Director, Frontier

Investments Group



Resources & Additional Information

For additional information on impact investing, please visit http://www.empea.org/resources/third-party-resources/impact-investing-resources/

For follow-up questions on this or other webcasts, please contact Emily Sandhaus at [email protected] or +1.202.333.8171.

For Members-Only Research Requests, please contact [email protected] +1.202.333.8171.

Please also visit www.empea.org for further information.

http://www.empea.org/resources/third-party-resources/impact-investing-resources/

mailto:[email protected]


http://www.empea.org/



Launched in 2008, EMPEA has hosted over 30 webcasts to date drawing more than 4,000 participants from 70 countries and more than 820 unique firms.

• Identifying and Mitigating Risks in Southeast Asian Investments

• Investment Spotlight: Secondaries

• The Appeal of Africa: Maximizing Investment Opportunities While Mitigating Risk

• EMPEA Guidelines: A Legal and Regulatory Framework for Global Private Equity

• Private Equity Fund Structuring, Oversight and Administrative Matters

• LP Outlook for Emerging Markets: Preview of EMPEA’s 2012 LP Survey Results

• Anti-Corruption Policies: What Every EM PE Practitioner Should Know

• Investment Spotlights: Emerging Europe & Mexico

• Changing Landscape of EM PE Fund Formation

• The MENA Region: An Overview and Update

• The Impact of the AIFM Directive on PE and VC in Emerging Markets

• Private Equity in North Africa: What Every LP Must Know

• The Impact of the Dodd-Frank Act on Investment Adviser Regulation in the U.S.

• Private Equity Investing in the Middle East, North Africa and South Asia

• Evolving Key Terms & Conditions in Today’s EM PE

• Managing Environmental and Social Risks and Opportunities

• How Will the ILPA Principles Shape GP-LP Relationships in Emerging Markets?

• Catching the Rising Tide of Chinese RMB Funds

• Strategies to Address and Prevent LP Defaults

• Broken BRICs (a four-part series)

• Role of the Secondaries Industry in Emerging Markets Private Equity

• Corporate Governance in Emerging Markets Private Equity

Webcast Topics have included:

EMPEA Webcast Series



EMPEA Contact Information

For follow-up questions on this or other webcasts, please contact Emily Sandhaus at [email protected] or +1.202.333.8171.

For Members-Only Research Requests, please contact [email protected] or +1.202.333.8171.

Please also visit www.empea.org for further information.



http://www.empea.org/

Market Based Solutions for Impact Investing€¦ · 29/07/2013 · Market Based Solutions for...

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Transcript of Market Based Solutions for Impact Investing€¦ · 29/07/2013 · Market Based Solutions for...