Robert Kraybill


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Robert Kraybill

  1. 1. Democratizing the Social Capital Markets October 16, 2013 Aldaba Theater, University of the Philippines Quezon City, Philippines
  2. 2. The State of Impact Investing Today
  3. 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 ($bn) Impact Investment Market Size ($bn) 1,200 $1,000 1,000 800 600 $650 $500 400 200 $25 0 Monitor Calvert JPM/Rockefeller Estimated Near-term Potential Source: “From the Margins to the Mainstream.” World Economic Forum. September 2013. Page 3 Today
  4. 4. “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 As quoted in “From the Margins to the Mainstream” by the World Economic Forum, September 2013. Page 4
  5. 5. Source of Funds for Impact Investment Fund Managers, 2012 Source: GIIN, J.P. Morgan. Page 5
  6. 6. Impact Investing Landscape Social Venture Capital Funds DFIs Microfinance Investment Vehicles Foundations Pioneering Institutions Private Loans and Private Equity Investments Family Office / HNWIs Broad Range of Institutions Retail Investors Page 6 Publicly Traded Shares and Bonds Invest through Mutual Funds
  7. 7. 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
  8. 8. Shujog, IIX and the Impact Exchange
  9. 9. IIX and Shujog: Working together to nurture the Social Enterprise and Impact Investing space 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 aims to create better understanding of the Social Enterprise space 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. Page 9
  10. 10. Building Social Capital Markets From seed funding to public listings  SEs Early growth stage Mature Type of Seed capital investment Equity, quasi-equity Shares, bonds, funds Investor Incubator HNWI, Family offices Retail, institutional Capital raise $ $$ $$$$$$ Impact Page 10 Seed-stage 
  11. 11. Impact Exchange: A Partnership between IIX and SEM Stock Exchange of Mauritius Impact Investment Exchange Asia  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 IIX conducts Impact screening and monitoring and will develop the market Liquidity, transparency, efficiency Page 11 SEM operates the Impact Exchange board on its platform under regulation of the Financial Services Commission Mission protection Increased impact 11
  12. 12. 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 earlystage investors …and bringing transparency to the entire process Current investors Mainstream Foundations Family Offices High-Net-Worth Individuals Social Venture Funds Page 12 + Institutions Maximize impact and democratize capital markets
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. Impact Exchange Stakeholders Issuers Information Providers Financial Advisors Page 16 Investors in Private Placements Investors in Public Markets Brokers Social Advisors (AIRs)
  17. 17. Impact Exchange Stakeholders Issuers Investors in Private Placements Benefits • Access to capital Investors in Public • In large amounts Markets cost • At lower • Liquidity • Diversified shareholder base Information Providers • Mission-aligned investors Brokers • Triple bottom-line value capture • Transparency for Impact • Benchmarking Financial Advisors Page 17 Social Advisors (AIRs)
  18. 18. Impact Exchange Stakeholders Benefits • Ease of access Issuers • Single market for SEs Investors in Private Placements Investors in Public Markets • Open to retail investors • Connected through brokers • Liquidity Information Providers • Lower transaction costs Brokers • Transparency • Triple bottom-line returns • Portfolio diversification Financial Advisors Page 18 Social Advisors (AIRs)
  19. 19. Impact Exchange Stakeholders Issuers Investors in Private Placements Benefits • Liquidity for top portfolio Investors in companies Public • SocialMarkets and environmental value capture • Invest with knowledge of increased exit options Information Providers Financial Advisors Page 19 Brokers Social Advisors (AIRs)
  20. 20. Impact Exchange Stakeholders Role • Preparing issuers for listing and financial aspects Issuers • Securing investors • Assist in meeting ongoing listing obligations Information Providers Financial Advisors Page 20 Investors in Private Placements Role • Preparing impact Investors in assessment Public • Preparing issuers for listing Markets on social aspects • Impact verification Brokers Social Advisors (AIRs)
  21. 21. Impact Exchange Stakeholders Issuers Role Investors in Private • Market access for retail and Placements institutional investors • Secondary market trading Investors in Public Markets • Market-making • Research Information Providers Financial Advisors Page 21 Brokers Social Advisors (AIRs)
  22. 22. Impact Exchange Stakeholders Issuers Investors in Private Placements Role • Expansion of social and environmental data Investors in Public • Integrate into current ESG Markets platforms • Highlight performance and impact for investors Information Providers Financial Advisors Page 22 Brokers Social Advisors (AIRs)
  23. 23. 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 • Page 23 Photo credit: National Geographic
  24. 24. Creating social and environmental capital markets Impact Exchange We envision a future in which: ‣ Capital markets will increasingly reflect triplebottom-line value ‣ Enterprises will serve many stakeholders, not only shareholders ‣ In financial markets, one dollar will no longer equal one vote Value Creation Stakeholders Market Participation ‣ Externalities currently borne by the underserved will be priced into corporate decisions Pricing of Externalities ‣ Investors will have access to real-time social and environmental information, not only financial information Market Information Page 24 Photo Sources: The Economist, Thomson Reuters
  25. 25. Thank You Capital Markets for Social Good