Understanding the Opportunity for Impact Investing in Africa June 5, 2013.
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Transcript of Understanding the Opportunity for Impact Investing in Africa June 5, 2013.
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Understanding the Opportunity for Impact
Investing in Africa
June 5, 2013
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Our Panelists
Niamani MutimaAfrica Grantmakers’
Affinity Group
Daryn DodsonWallace Global Fund
Scott WallaceWallace Global Fund
Cynthia MullerArabella Advisors
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Impact investing uses return-seeking investments to help
accomplish social and environmental goals.
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Industry Timeline
1790
1968
1980-2000
2007
2010+
Franklin establishes
1st fund
PRIs included in Tax Code
Socially Responsible Investing Movement
Global Financial Crisis
Development of market infrastructure
4
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Projected market size of Impact Investing
5
Impact Investing5-10 year projection
~$650 billion
Philanthropy (U.S. only)~$300 billion
Total Investing~$60 trillion
Impact Investing in 2013~$9 billion
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Mapping the Impact Investing Industry
6
USA
CHINA (HONG KONG)NETHERLANDS UK
INDIA
BRAZIL SOUTH AFRICA
KENYA
MEXICO
GERMANY
SINGAPORE
AUSTRALIA
The Sterling Group
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Cynthia Muller
Director, Impact InvestingArabella Advisors
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Impact Investing
Commercial Investors
FoundationsHigh Net
Worth Individuals
Development Institutions &
Banks
Where Does the Capital Come From?
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Source: F.B. Heron Foundation Mission-Related Investing Continuum
Impact Investment Continuum
Below Market-Rate Hybrid Market-Rate
Grant Support Equity Subordinated
LoansSenior Loans Cash Guarantees Cash Fixed
IncomePublic Equity
Private Equity
Higher Risk Lower Risk Lower Risk Higher Risk
Below Market-Rate Investments(Impact First)
Market-Rate Investments(Finance First)
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Mission Related Investments
Investing with social or
environmental screens
Market rate expected return
“Double or Triple Bottom
Line Investing”The 95%
Program Related Investments
IRS Tax Code –can be counted
toward 5% payout
Below Market Returns
Foundation Impact Investing
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Impact Investing in Africa
• Size of African impact investing market between $300-400 million per year
• Sub-Saharan Africa represents a large area of growth with the continent
• Kenya and South Africa represent large areas of interest and growth
• Challenges around transparency and general uncertainty about business and political environment
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SOUTH AFRICA
KENYA
GHANA
Examples of Impact Investing in Practice
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Scott Wallace
Co-chairWallace Global Fund
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Background on Wallace Global Fund and Impact Investing
• WGF progressive family philanthropy • Henry A. Wallace• Programs in environment, democracy, women’s
human rights, media and corporate power • Funds globally and domestically
• Work in Africa• History of supporting women’s human rights in Africa,
reproductive rights and abandonment of FGM/C• Support for civil society in Southern Africa• Example: Zimbabwe Alliance, donor collaborative
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Mission Related Investing
% Return 2012Wallace Global Fund II 11.80%Custom Index (1) 10.58%
(1) Custom Index reflects a blended return composed of various indices: 25% S&P500, 30% BGCI, 15% MSCI EAFE, 8% TBills, 7% R2000, 5% MSCI Emerging and 10% HFRI.
Past performance not indicative of future returns.
• Commitment to breaking down the wall between 95-5%
• 2009-2011 – Process begins to align program and assets
• New investment committee, advisors and managers, with substantial savings in overall management cost to Fund
• 2012 first year of performance – 11.8% beating benchmarks
• Screening goal is 100% positive + negative screens, currently over 90%
• Example of Environment Program alignment – fossil fuels and climate solutions/clean tech
• 99% fossil fuel free• 5% + in clean tech
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Portfolio Screening System
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Impact Investing • 5% of fund minimum for impact investments, will
increase• Early interest: Shared Interest• Board set criteria for impact investment
– Benefit marginalized communities, potential for scale
– Women– Sustainability and climate solutions
• Engaged consultant to research impact opportunities
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Daryn Dodson
ConsultantWallace Global Fund
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Q&A
Niamani MutimaAfrica Grantmakers’
Affinity Group
Daryn DodsonWallace Global Fund
Scott WallaceWallace Global Fund
Cynthia MullerArabella Advisors
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Sampling of AGAG Membership with an Impact Investing
Strategy
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Opportunity for AGAG Funders
• Help to build networks and awareness• Seek opportunities where Grants and or PRIs
can help to reduced transactional risk and costs
• Cultivate strong entrepreneurs• Don’t forget about public policy• Share your results and experiences
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Impact Investing Resources
• The Global Impact Investing Network (The GIIN)
• Mission Investors Exchange• Council on Philanthropy• Publications
– Impact Investing in West Africa (Dalhberg)– Case Study: Mtanga Farms– Special Report: This is Africa
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Stay in Touch
• Web– www.ArabellaAdvisors.com– www.AfricaGrantmakers.org – www.WGF.org
• Twitter– @ArabellaAdvisor & @CynMull – @AGAGAfrica
• Email– [email protected]
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Niamani Mutima
Executive DirectorAfrica Grantmakers’ Affinity Group