Transform Global - A model for a private world bank


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Transform Global (TG), previously Transform Capital Management, is a model for a private world bank, also known as a global impact investment bank, investing into funds which have a social, environmental and financial return. TG aims to address critical market failures caused by our current financial system, while tackling the environmental and social symptoms that are a by-product of the system.

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Transform Global - A model for a private world bank

  1. 1. TRANSFORM GLOBAL A vision for a Private World Bank also referred to as a Global Impact Investment Bank different by design, to make a difference
  2. 2. TRANSFORM GLOBAL Positive Innovation in Finance for a Better World A model designed to catalyse a £1 trillion market in Active Impact Investment, to help the planet and improve lives - the world over Executive and Investment Summary. The business model is simple. Create a Private World Bank, supported by sponsorship from select categories of global corporation. Use core revenues and sponsor support, to raise innovative funds, blended from aligned investors - and deploy them all around the world. Ensure the Global or Local Impact Investment Funds, are structured to directly or indirectly address key funding gaps, which by addressing and funding at scale, is good for society, sponsors and all other stakeholders. Go further. By globally publicising the importance of funding solutions for the real economy, and social / environmental challenges, help sponsors drive returns. Publicise their involvement, give them access to a pipeline of innovation, help them address key risk and resilience threats - and give them a platform to differentiate against their less sustainable competitors. The opportunity is to invest in one or all of the staged investment rounds, to partially or fully capitalise this detailed vision for a Private World Bank. Transform Global is raising £36.5m in stages of £1.5m, £5m then £30m in equity. Healthy returns are offered through this innovative model which is designed to do both good, and do well.
  3. 3. TRANSFORM GLOBAL Index 1 First - a little context 2 Grand challenges - need urgent solutions 3 Transform Global - where it fits 4 A Private World Bank - with aligned corporate support 5 Democratising finance - to fuel the ‘real intelligent economy’ 6 There is a better way - to structure, raise and deploy funds 7 Progressive business structure - focus and model 8 Profit with purpose - just the right balance 9 G/LIPS - The Global and Local Impact, Pilot and Seed Fund 10 - 11 The GIIF - Global Impact Investment Fund 12 - 13 The LIIFs - Local Impact Investment Funds 14 - 15 Innovations at the heart of the Transform Global model 16 Hope - engagement - equity - and investment examples 17 Background - management - and how it will attract talent? 18 ‘Scale Up Speed Up’ - the marketing roadshow 19 The development plan - co-global headquarters 20 The investment opportunity - risks - returns - and governance A sustainable proof of concept - and a platform to build from Funding the financial innovators - indirect investing Funding important but ignored enterprise - direct investing
  4. 4. TRANSFORM GLOBAL First - a little context “70% of all power required by 2030, still needs to be built” “an additional 1 Billion people over the next 20 years will be urbanised” “the equivalent of 1 new city the size of London, is being currently created every 6 weeks” “more buildings will be built in the next 40 years, than were built in the last 10,000” “many of the utilities that currently provide our energy, will not exist tomorrow” “80% of global fish stocks are classed as having being fully or over exploited” “unless we change, 70% of the planet will suffer water insecurity by 2030” “trust in governments, corporations and banks is at an all time low” yet - despite these critical risks and opportunities, where is the urgency, innovation, and collaboration, and how can we remove key investment bottlenecks? 1
  5. 5. TRANSFORM GLOBAL Grand challenges - need urgent solutions Locally, regionally and globally, there are some really big risk and resilience threats that require urgent attention. Tackling them requires nothing short of Transformation. The world is facing an unprecedented crisis in sustainability, with wide ranging economic, social and environmental ramifications. Global population is predicted to rise by over 2 Billion souls over the next 30 years. This puts more strain on already stressed water, food and natural resource systems. Despite people rising out of poverty in parts of the world, gaps between the have’s and have not’s have never been greater, and are fast widening. All this creates multiple linked conditions for serious instability. To live within the natural limits of the planet, whilst raising living standards, and addressing the serious risk and resilience threats detailed - we need to Transform; • our energy systems; • the way we protect and value biodiversity and ecosystem services; The most important Transformation, • how we live and feed a growing population; as a catalyst for everything else, is • how we define and create wealth; to Transform how capital is raised, • our economies, to create sustainable new jobs and prosperity for all; deployed and managed. • and to do it all - the way we manage natural, human and financial resources. While the scale of the challenges is truly staggering, all this can be done, and fits together as part of a coherent sustainability agenda. In short - less capital needs to flow to things that are destructive on a social and environmental level, and a great deal more needs to flow to the kinds of projects, businesses and innovations which are constructive. The good news is people the world over are fabulously creative. When the incentives are right and capital is made available along with just the right help and support, and of course sensible governance - incredible things can happen. Key to it all is finding ways to intelligently fill many nonsensical funding gaps so entrepreneurship and innovation can be unleashed on an unprecedented scale. While we need solutions and innovations on every level and in every corner of society, existing finance and governance systems have so far failed to deliver. Transform Global is about using the power of incentivised collaboration and ‘system innovation’ in finance to finally reverse this trend. * *another way to describe ‘system innovation’ is the ‘practice of joined up thinking’, or looking at things from an ‘holistic’ or ‘whole systems’ perspective, and changing or utilising numerous pieces of a system - to alter entrenched practice or challenge the status quo. 2
  6. 6. TRANSFORM GLOBAL Transform Global - where it fits While some investment banks have worked hard to use finance to address social and environmental challenges, even for those with the greatest motivation, there have been some significant blind spots. Most however have been locked into business models that are hard to change, or into competitive landscapes from which it is hard to escape. They have ignored or struggled with the kind of financial innovation that is urgently required and most socially useful. National, regional and multilateral financial institutions often have sensible agendas, and just like commercial investment banks, they play an important role. However at the scale or with the flexibility required, they also struggle to meaningfully address the aforementioned challenges. All too often, bureaucracy or entrenched interests block rather than open up access to capital. Actors in philanthropy, aid and charity all make important contributions too. However, there is just not enough donor capital to go around, and donated money is not always the best solution to address what economists call ‘market failures’. Financial innovations are emerging. Crowd funding, peer to peer lending, payment and transaction solutions, and many flavours of impact investment to name a few. However - while important, much of this financial innovation is struggling to get to scale, or is not suited to address some of the bigger challenges - infrastructure for example. For structural or capacity reasons, many of these innovations are still highly unattractive to mainstream financial markets - and this has to change. To scale up and speed up the provision of intelligent finance to address the most pressing and important of needs, ‘fit for purpose’ financial institutions are required, so that all manner of financial and non financial innovation can be catalysed. Transform Global aims to be just such an institution. The focus is on delivering financial innovations which can be adapted and deployed globally. Finance suited to the modern, complex and interrelated world. Where links between public, private and philanthropic are frequently blurred. And doing all this with the combined strength, aligned interests and responsible governance required to democratise capital at scale. Transform Global is model which collaboratively and efficiently can work with all forms of capital, institutions and funds, with 100% focus on filling the funding gaps that need addressing but which others are unable to do on their own. And - it’s designed with some important innovations that position it to succeed. 3 Filling critical funding gaps, that can unlock the level and type of commercial activity to thoroughly address global challenges, requires funds and financial instruments which are better designed, structured and deployed.
  7. 7. TRANSFORM GLOBAL A Private World Bank - with aligned corporate support By pulling together a powerful group of motivated commercial sponsors, not only can this Private World Bank secure core funding so it is of sufficient size to be fit for purpose, but it can also garner value added help and support, creating the ideal conditions where positive innovation in finance, and therefore in innovation itself - can thrive. To innovate with finance and meaningfully impact the issues described, it’s critical to operate at scale and for the business model to incorporate scalable design. To be ‘fit for purpose’ requires focus and plenty of motivated personnel in a number of connected and complex areas. To structure and raise new funds for example, and to replicate them around the world - there needs to be a focussed and large scale sales and marketing effort - all with specialist skills and support. It’s clear that to stand the best chance of success, it would help to have some deep pocketed, complementary and motivated partners. Those who can benefit in many ways from their involvement, and who in return are able to provide revenues and support in areas to which they are best suited. In other words, sponsoring operations so the important innovations that require much funding and take time, have the ideal conditions to become financially viable and fully sustainable. The Transform Global model incorporates ways to recruit motivated aligned sponsorship from global, regional and local corporations. It is designed to deliver compelling benefits in return - helping sponsors stay relevant and truly innovative. Transform Global will allow sponsors to properly demonstrate Energy FMCG Automotive Mining A snapshot of key categories of sponsorship for organisations which are; leadership and capability on a global level, to a degree that moves Media Telecoms Water Management Power Generation the needle of both perception and reality, generating tangible and defensible returns as a result. • globally diverse; • sector exclusive; • motivated and; Finance Food & Beverage Consulting Technology • best of breed Commercial and non commercial benefits of collaborative sponsorship. Transform Global and the funds it will then raise and deploy, collectively are positioned to give sponsors a funding network of substance, providing multiple and exciting benefits in return for their support and engagement. • working with a group of noncompetitive organisations to unlock capital, in order to address risk and resilience threats - and business viability - globally. • leveraging sponsorship to capital unlocked, by at least a 1 : 100 ratio. • collaborative intelligence and competitive differentiation. • adding value in areas of core competence, with the knowledge others are contributing in a similar fashion. • access to the deal flow pipeline for further investment and scale opportunities, and capability to place ‘non core’ projects and offshoots into the funding and open innovation machine, to unlock hidden value. • access to sustainability technologies, businesses and expertise to further drive sustainability focussed returns. • ability to train, educate and inspire employees, with an active secondee program with recruitment and retention benefits of global proportions. • positive publicity on a global and coordinated scale, with the ability to leverage impacts and brand loyalty - while focussing on the day job. • commercial returns that can completely recover the cost of sponsorship, via modest but linked fund investments. 4
  8. 8. TRANSFORM GLOBAL Democratising finance - to fuel the ‘real intelligent economy’ It is estimated that these SME’s are responsible for over 50% of new job creation, and between 40% and 60% of all innovation. Yet in an emerged economy such as the UK, they are also thought to receive much less than 0.5% of all institutional investment. This inverse relationship between job creation, innovation and capital invested is a global phenomenon and it’s one with serious consequences for us all. The big question is how many more jobs would be created, and solutions generated for important social and environmental issues, if bottlenecks could be removed to unlock capital and support in the ‘Valley of Death’, and do so at adequate scale? For many reasons, financial investment chases liquid markets, large deals and mature opportunities. However, a big part of why more capital does not flow more effectively to where it is needed for healthy economies - is due to how funds are structured and raised. This leads to challenges in how these funds are invested. Generally, funds for investing in areas which are viewed as risky, or into entities which are small and require aggregation, where more work is required for success, are 100% equity - or risk money. Often this capital comes from investors who seek to maximise financial return, and funds are mostly structured to last 10 years. For many reasons, these funds are incredibly inefficient, but remarkably this basic fund structure (the 2 : 20 - 10 year model) has seen little innovation in 40 years. The world over, governments and others do work to stimulate economies, often in strategically important areas such as energy, the environment or health. Yet when such impact investors (those with a social / environmental purpose) do invest - they often do so in disconnected ways. Would it not be better if they could all collaborate with great scale and joined up thinking? It’s our belief that this is the only way to get capital flowing - which is why incentivised collaboration is at the heart of the Transform model. In this out of date structure, with typically one class of investor (such as pension funds), returns sought to compensate for the real or perceived additional risk, actually prevent the funds investing into the type of enterprise that most require capital (ironically these are where decent aggregate returns could be found if a little more thought was given to the structure and system of investing). To de-risk as a result, funds are often small and narrowly focussed - but this is a damaging false economy. High return expectations, means decent help and support alongside investment is just not possible, and funds rarely posses critical mass which in turn would enable better systems and efficient investment portfolios. While the ‘Valley of Death’ is a commonly recognised problem in technology, there are similar funding gaps, challenges and bottlenecks in other sectors and types of business such as project finance, non tech investing, infrastructure etc. 5 HIGH Capital Intensity LOW water infrastructure t in Sa fo hat ves mp t r l de sus are me e a ve ta cr nt rea i b Many talk about the importance of investment flowing to the ‘real economy’ where the heartland of ’SME’s’ (small and medium enterprise) can be found. Those companies and entrepreneurs who despite being starved of capital, are historically proven to create more jobs and deliver more innovation than their larger counterparts. We call it ‘the real intelligent economy’. property retrofits Intellect LOW capital flows to high IP, businesses, but is thin on
  9. 9. TRANSFORM GLOBAL There is a better way - to structure, raise and deploy funds. A key challenge Transform Global neatly tackles, is that innovation which comes from outside existing systems (which is where real innovation normally occurs), is fiercely resisted by those who profit most from the old system. Providing both capital and strong support enables innovators to jump over resistance barriers in a way that is fair and objective. Blended, evergreen and value adding broader portfolio funds can help capital to flow naturally. Allowing aligned stakeholders to access more of what they seek for energy storage By governments, supranationals or groups of impact investors, investing (or using guarantees) alongside pension funds - then larger funds can be raised at a lower cost, and over a longer timeframe, including evergreen. This structure enables strategic and impact investors to get measurable social and environmental benefits in return for slightly lower financial return expectations (plus or minus market returns, rather than 100% financial loss such as philanthropy). As a result, institutional investors such as pension funds, are then able to invest into a major part of the fund. They gain access to lower risks, steady returns and a patient investment horizon, and help meeting longer term obligations as a result. Crucially, the lower average cost of capital, and patient time frame that blended evergreen funds can provide, pays for what’s really needed and most often ignored. Early stage business of all types need technical help and support alongside any investment. By incentivising those providing it, and helping entrepreneurs focus on core activities, any investment is able to go much further. All this combines to ensure overall success with impacts enhanced in the process. At Transform we also believe a better and more holistic way of building a portfolio of investments - is to do so through stages. Investing from the earliest pre revenue stages, all the way to maturity - and either to dividend creation or appropriate exit. This system, in a carefully and dynamically structured portfolio, means a broader selection of businesses and projects can receive investment, and they can receive it from earlier stages. It thus opens up investment bottlenecks, and in turn provides access to many previously unreachable investment opportunities. Additional data that can be gathered as a natural part of the process, and also knowledge that can be captured and disseminated (important for scaling or aggregating business in critical areas, such as energy, agriculture and water) creates a feedback loop to further drive scale, success and impacts. The direct investing focus therefore, is to create the structures which are able to raise and deploy funds that are blended and value adding, and therefor better suited to filling important funding gaps to unleash the real intelligent economy. el a op ina itic bot as w m bi al tle it en lit to n h t a y in ad eck nd no dr s ro va ess ll tio ou n t less risk - and with more diversity. On the fund raising and structuring side, where possible and appropriate, as can be seen below - the focus will be on blending funds from aligned investors. digital only tual Property HIGH , low capital intensity n the ground elsewhere the focus is on moving from disconnected investment like this Government Investment Corporate Investment to larger blended aligned impact funds like this to enable strong portfolios that make staged investments and provide practical added value help and support like this Institutional Investment Impact Investment Blended Evergreen 6
  10. 10. TRANSFORM GLOBAL Progressive business structure - focus and model Transform Global Trust (TGT) Has ownership stake to embed long term vision provide governance, and deliver NFP objectives financial government corporate impact With sponsor revenue and support, the GIIB has the strength and focus to raise and scale new important funds and financial innovations G/LIPS Fund (Global & Local Impact Pilot & Seed) G/LIPS will deliver a comprehensive proof of concept for Transform Global, manage risk, and provide a strong launch platform Global Impact Investment Fund (GIIF) The £500m GIIF will invest into a TGT - Local Local Impact Investment Fund (LIIF) e.g. UK Impact Investment Fund small basket important asset managers, platforms and financial initiatives with maximum impact and scale potential Assess, Incubate, Develop, Accelerate (AIDA) providing incentivised help and support (to be replicated around the world) The £2billion LIIF will invest into ignored early stage businesses and projects in planet positive themes and sub themes (£100k - £40m) TGT Trustees Global Impact Investment Bank (GIIB) TGT Local Trustees Company Investors Business Structure Advisory Research Technology Fund raising Communications Network Leadership - Support Functions - R&D Fund Investors Transform Global Ltd Risk Management & Impact Measurement Sponsors Assess, Incubate, Develop, Accelerate (AIDA) providing incentivised help and support Middle East & North Africa Impact Fund Japan Impact Fund (etc.) Through incentivised collaboration and scalable design, the Transform Global model has the potential to directly unlock £150b over 12 - 15 years. Indirectly it has the potential to catalyse much more. All to address some of the toughest but most important issues in the world Transform Global is specifically structured to: The business model. • raise equity investment, and commercial sponsorship, in order to fund and support a powerful but will governed umbrella organisation which can then; 1. sponsorship • raise and blend capital from financial, social, and commercial investors; • 3. share of fund management fees create or find funds, funding vehicles and platforms through which said capital can best be deployed; • find, evaluate, invest in, incubate and accelerate sustainable ventures - with a system packed full of innovations, that can help do this at significant scale while better managing risk and generating blended returns; • • generate healthy financial returns, with patient capital characteristics; • 7 combine advantages of a commercial approach with a sustainability agenda all supported by strong impact measurement capability; create an efficient template which can be replicated, franchise style, country by country, with local management and the benefits of network intelligence. 2. fund marketing (distribution) fees 4. share of carried return Key areas to be addressed. 1. Sustainability (energy, agriculture water, clean technology etc.) 2. Intelligent economic recovery 3. Education 4. Health
  11. 11. TRANSFORM GLOBAL ‘Profit With Purpose’ - just the right balance Neither ‘profit maximising’, or ‘not for profit’ capital structures alone are suitable to fill the gaps to address some of the most Not only do funds need to be blended. We believe Transform Global itself is best suited to a being a social / commercial hybrid - to deliver ‘profit with purpose’. Delivering on these ambitions requires capital. A business model with growth characteristics of highly valued organisations will enable investors in Transform Global to make compelling returns - fuelling scalability and maximum impact. important issues of modern times. Though stock and other performance incentives, personnel will have not just an ownership mentality - but an ownership stake. For the talent to make money, investors have to make money. And for both groups to make money, there has to be measurable social and environmental impacts. The ‘For Profit With Purpose’ This structure, ownership mentality and business disciplines that come from having investors, alongside well designed and progressive governance, is all about ensuring accountability and efficiency. The goal is to signal that is not only possible, but that doing well and doing good with maximum impact, can be a proven reality. structure ensures flexibility and operational strength, whilst also providing well governed and analytical ways of measuring results and impacts. The 5 : 10 : 20 + model Why is this structure really important? Creating working markets for distributed renewable energy for example, building up knowledge industries, sustainable agriculture, and tackling what is known as the ‘valley of death’ in early stage investment (a challenge also known as ‘access to finance’), will require more capital than is available in ‘social only’ finance such as aid, charity, philanthropy or government funding. As a core part of the ‘Sustainable Charter’ Transform Global will have a 5 : 10 : 20 + relationship with the Transform Global Trust. It will most likely also take longer, thus delivering lower returns than most profit maximising funds and structures typically tolerate in the short term. Over time however, these businesses, in sectors of the future, will collectively have a strong chance of delivering significant profitability, and therefore value and returns. 5 - is the number of shares (5 Million, or 5% of equity when Transform Global is fully funded & diluted) to be held by the TGT foundation. At a time where more and more executives, entrepreneurs, and young people who are exiting education want to work on things they deem important - this structure also gives the ideal platform to recruit and motivate talent at scale. 10 - is the number of days per year, that all employees can spend working on Impact projects of their choice. 20 - Is the target percentage of post hurdle rate returns for any fund raised or managed by Transform, which will be used to fund TGT aims which include max impact not for profit areas of: Sustainability; Health; Education; and Investment Reform + - is everything else that Transform Global can do to support the Trust, including funding any direct governance associated costs, and working on any separate fund-raising or relevant promotion activity. The Transform Global Trust - and the Sustainable Charter Transform Global has a progressive ownership structure, with the goal of working to embed the principles set out at its founding - and using its living endowment for maximum impact - in areas of sustainability, health, education and financial reform. The Transform Global Trust (TGT) is being set up to be a transparent independent body, with strong management and a respected mix of trustees to include public servants, and leaders from the NGO, academic, think tank and policy communities. TGT will have a small ownership stake in Transform Global, with a weighted share of the vote and associated governance role. TGT will have responsibility to ensure the ‘Sustainability Charter’ which sets out what the business can and cannot do, and how it will operate - is adhered to. In addition, TGT will be responsible for delivering on the objectives which have purely social goals, and as the panel to the left shows, it should have the means to address areas that are truly important with maximum and well funded impact. 8
  12. 12. TRANSFORM GLOBAL G/LIPS - The Global and Local Impact, Pilot and Seed Fund Though Transform Global has significant ambition, steps to deliver the full vision with international roll out - are inherently practical. The first of these steps will be the innovative £20m G/LIPS fund - which manages risk for initial equity investors, whilst also delivering a compelling proof of concept for the innovations that are included in the wider business model. The objective is to do something that on a small scale, delivers a highly compelling proposition to investors and investee companies alike. By providing seed (and incubation), and lead (with corporate finance co-investment fund-raising), the model can be both attractive to investee companies, and healthy for investors. Importantly, G/LIPS creates a strong launch platform, delivering investment case studies, helping secure cornerstone investors, and starting the sponsor recruitment program. In turn it positions for Global and Local Impact Investment Fund launches. G/LIPS will invest in circa 24 staged investments over two - three years, with similar process to the full Transform model. Of course a fund this size can’t do exactly what the larger Global or Local funds would do, but its design will give effective indicators for processes and innovations to be used on a larger level. These include: objective stages; speed of execution; collaborative network; portfolio design; added value provision; fair and transparent terms; method of driving and harnessing returns; and the ability to measure and reinforce impacts. G/LIPS will also use a cut down version of the portfolio and deal management technology to be utilised in the Global and Local Impact Investment Funds. Showcasing typical Local Impact Investment Fund investments, 20 seed deals of £200k will be made over the first 2-3 years. Here, investee companies will receive £150k of cash and £50k of direct incubation services. This builds the relationship, adds value with meaningful help and support, all helping feed into the decision process on who should progress to the next stage. From there approximately 50%, or 10 investments will receive follow on funding, where Transform provides a lead round averaging £800k. The corporate finance team will raise match funding from other strategic or value adding investors. G/LIPS fund stages and structure Pilot Investments for Local Impact Investment Fund deals Pilot Investments for Local Impact Investment Fund deals £150k seed £800k lead £400k seed The process is similar for deals which showcase the Global Impact £2M lead Investment Fund - though more concentrated. 4 companies will receive £500k (£100k of incubation services and £400k of investment). exits exits For 3 qualifying investments, G/LIPS will then invest £2m with £2m - £4m of co-investment raised by the corporate finance team. £50k £1.2m- £4.2m Cash investment 9 £100k Incubation support £2m - £4.2m Follow on fund-raise
  13. 13. TRANSFORM GLOBAL A sustainable proof of concept - and a platform to build from • G/LIPS will be a £20m fund to make seed and lead investments into theme relevant businesses, and to pilot process, technology, portfolio construction methods, and sector focus for the Global and Local Impact Investment Funds. • The structure is an investment breakthrough as no management fees will be charged to fund investors. • All incentives will be performance based. The cost of raising the fund, and providing initial and ongoing management, will be covered by equity investors or from other strategic partner organisations. • G/LIPS fund, de-risks the investment for initial equity investors, through providing carry rights on the portfolio (if the full Transform Global business model was not possible for whatever reason, the management share of returns (carry) on the diverse portfolio, would go to initial Transform equity investors). • G/LIPS is designed to fully invest within 24 - 30 months. • The objective is to enable exits via ‘passing through’ exit management to more financially driven follow on mainstream investors - but with governance and structure to ensure exits are responsible. • Investors receive 100% of returns up to 6%, and 64% of anything over 6%, with 20% going to the Transform Global Trust Foundation, and 16% going to Transform Global and G/LIPS General Partner personnel. • Invested companies will receive intensive incubation alongside a financial investment. This will allow G/LIPS management to decide which deals are appropriate for leading a further funding round. Incubation will be charged to investee companies at 25% of initial investment (20% for larger GIPS deals). • The corporate finance team will raise co-investment (with corporate finance costs being met from a fee charged for additional funds raised). To assist the process and provide further ‘skin in the game’, the G/LIPS fund will lead these investment rounds (providing £800k on average for typical Local Impact investments, and £2m for Global Impact Investments (for definitions, see Global and Local Impact Investment Fund details on the following four pages) • Sponsor support will be secured where possible for incubation space, publicity and additional legal / financial services. The G/LIPS fund will be raised from a mixture of individual investors, institutions, and aligned strategic investors such as the UK government via its business bank. Or from the EU where suitable business stimulus programs exist. 10
  14. 14. TRANSFORM GLOBAL The GIIF - Global Impact Investment Fund The big idea around the Global Impact Investment Fund, is to find the most innovative and game changing financial ideas and businesses in new market creation and Impact Investment. To fully and progressively invest in the management or operating companies, and with our Global Impact Investment Bank, support their further fund-raising and help them scale at optimum speed. As it is currently practiced, much financial innovation of the type society so desperately needs, happens from a position of weakness. It’s frequently under capitalised or funded with impatient or inadequate structures. As a result it’s in a class all of its own when it comes to levels of difficulty and chances of success. Disruptive innovation rarely comes from existing market players as we have said previously. Yet - the resistance new players in finance meet, particularly those with blended purpose, no matter how sensible or important, is massive. If success is to be measured as meaningfully impacting important challenges, and creating healthy working markets, and over time creating profitable financial businesses to fund and sustain them - nothing less than scale will suffice. We have to find new ways of ensuring more of the positive financial innovation can occur, less fails for the wrong reasons, and more can get beyond market resistance, achieve scale - and meaningful success. The Global Impact Investment Fund, with Transform Global and the sponsors behind it, is designed to progressively and collectively get around these problems, creating a position of strength for a basket of game changers in finance. It is more efficient to fund a complementary basket of financial innovations, so more have a better chance in succeeding to address truly important financial challenges. Sponsors will be invited to invest into the Global Impact Investment Fund, where a modest investment, delivering a target return - could enable them to wipe out their entire cost of sponsorship - further motivating their help and support. Qualifying GIIF Investments will have: • Transformational system innovation potential in the sourcing and deployment of funds, or high impact market enabling capability. Fund management fees are supplemented by TG and sponsors to provide fund-raising support and technical assistance £5m x 15 £75m £10m x 10 £15m x 5 £25m x 2 £10 Billion combined annual market size within 5 - 10 years £2 Billion Stages £100m (£175m) £75m (£250m) £50m (£300m) Totals £5 Billion Climate and ecosystem service bond exchange £500 Million Peer to peer / crowd funding platforms Investment size and number Staged equity investments into management companies of new or proven platforms, fund managers, asset managers or initiatives with scale and maximum impact potential 11 Sustainable aggriculture aggregation fund • £1bn + of annual investment potential within 5 years of launch, or less for those with high enabling potential. • The ability to address critical areas of market failure in either or both, the developed / developing worlds, emerged / emerging markets. £2 Billion • For addressed market failure to be eradicated, over time, restoring governed, balanced & working markets. £500 Million • Commercial return potential, operating with market mechanisms and designed to provide financial returns to investors, around important social or environmental purpose, with strong governance. Sanitation/ water management financing facility Impact bond management and exchange Size of annual markets, or capital deployed by funds, platforms or initiatives as a result (within 5 yrs) • Wide impact focus on: Sustainability (Climate; CleanTech; Agri; Energy) Health, Education, Social Enterprise and solutions based commerce.
  15. 15. TRANSFORM GLOBAL Funding the financial innovators - indirect investing • The Global Impact Investment Fund (GIIF) will have a £500m target size, with initial deals carried out through a modest pilot fund (G/LIPS). The GIIF will start (first close) at £50m and is targeted to be in place 6 - 9 months after launch. • The GIIF will be raised by the Transform Global distribution (fund-raising) team and managed by the stand alone GIIF General Partner unit inside the HQ. • Non core functions may be outsourced to a co-manager to provide corporate finance, regulatory and back office support. looking for maximum impact. • The goal is for the GIIF to be ‘evergreen’, meaning on exits, it will return capital and an ongoing yield to investors - recycling a percentage of the surplus to continue investing - therefore continuing to deliver social and financial returns. Investors for GIIF will include • For those who wish, liquidity and fund exit will be provided via a secondary market offering - or other suitable means. • 10 - 15 transformational fund management, market-enabling or investment initiatives are targeted in the first 5-6 years. • Investments will receive average initial equity of £5m. As can be seen by the graphic on the facing page, the most promising are then targeted to receive follow on investment into the company and, if appropriate, co-investment into the subsidiary funds themselves (up to a total of £55m max per deal).Total of up to £300m of equity (60% of GIIF) into management companies, and £200m (40% of GIIF) into fund investments. • The full 2% management fees will only go to support personnel costs for running the fund - thus giving a much stronger GP (General Partner) function than would be available through typical fund management structures. • Transform Global will use sponsorship and partner revenue to pay for the GIIF fund raise, supportive technology, incubation, collaboration, global promotion, governance, supportive economic and technical research and related services. Transform Global will also do follow on fund-raising for investee organisations. • Risk is mitigated via the concentrated incubation capability, complementary nature of investments, and support from a network of sponsors and partners. • The GIIF targets an Internal Rate of Return of 12% - 18% + leveraged impacts. The GIIF is designed to give game changing financial innovations a fighting chance of succeeding and getting to scale. And to provide a leveraged impact solution to all investors impact investors, foundations, ultra high net worth individuals, governments, sponsors and socially responsible Investment (SRI) focussed institutions. The entire fund-raising budget for the GIIF will be covered by equity investment and sponsor revenues. Within 3 years, this structure is projected to fund a team of 40 full time fund-raising professionals, fund-raising for the GIIF itself, and for all initiatives, platforms, funds or asset managers the GIIF invests into. 12
  16. 16. TRANSFORM GLOBAL The LIIFs - Local Impact Investment Funds The core idea behind the Local Impact Investment Funds, is on a local, regional or country level, to invest for equity into broad and deep, early to late stage portfolios of theme focussed businesses which address social or environmental challenges. Some which will be highly innovative and high growth, and some - highly normal. The exact ‘blend‘ of capital and terms will vary according to strategic objectives of government or relevant underwriter of debt, level of development or economic profile of a region, competitive landscape, investor objectives and priorities, and maturity of the Transform Global and LIIF business models themselves. At the core of the LIIF structure, is a system and process which can more effectively find, filter, fund and properly accelerate investment opportunities - in a way that is good for all stakeholders. Investing in a way that is better for the entrepreneurs and management teams, better for investors, and better for other stakeholders too. To the left of the diagram below, the system starts with an introducer network and outreach program to deliver deal flow. Using a staged process, potential investments are then filtered fairly and objectively, with investment in the due diligence and assessment process to ensure it is thorough and that great people, ideas and ventures do not fall through the gaps. From there as can be seen, a volume of seed investments can be made. Due to the added value help and support provided via the AIDA system, these seed deals can then progress through stages, as far as they need, to full funding, maturity and exit. This structure, with a method of capturing data and using advanced analytics for decision support - means the focus can be taken off the individual idea or business, and switched to looking at the overall portfolio returns and impacts. Early Middle (yellow) capital allocation per stage as a proportion of annual investments deal-flow pipeline for a country such as the UK, the LIIF would be investing at £200m per annum at target size Deal size and number Risk is managed and fund level returns generated here Innovation and roll out potential proven and nutured S S Incubation 13 E S HR, recruitment, talent management and training Marketing, sales, web design, build and presentation Legal, financial, patents, contracts, commercial Facilities, supply chain IT infrastructure, telecoms Market research, policy, environment, science Technical, engineering, logistics, manufacturing For a £2 Billion fund (ideal for a country the size of the UK), there would be 180 AIDA personnel (full time & contracted) and 60 investment managers - giving a 3 : 1 ratio £10m - £30m Co-investment with value adding parties raised at each stage A (Assessment, Incubation, Development & Acceleration) The AIDA team can be paid due to the blended capital structure with lower capital costs. Late £2.5m - £10m £100k - £2.5m AIDA Leverage S M Development E N T Acceleration REMEMBER Transform Global with it’s corporate sponsor support, will be doing the structuring and fund raise. The LIIF investment management teams are then free and focussed on sourcing and making the investments, using a much more patient and fairer system to generate timely and appropriate exits. The AIDA teams, who are fully incentivised on success, provide added value help and support to investee companies.
  17. 17. TRANSFORM GLOBAL Funding ignored but important enterprise - direct investing LIIFs will be structured to look at the bigger picture of fund performance • With the LIIF structure, we aim to set new standards in Venture Investment. • LIIFs will be raised by the Transform Global distribution team, but structured and managed by independent management where they are based, locally or regionally. Because they will be raised by, but operated at distance to Transform Global, a network of LIIFs can be scaled globally. • A typical fund would be of £1.5Bn – £2.5Bn raised from a blend of motivated and patient capital providers (social, financial, philanthropic and strategic). Using structured financial techniques to blend capital from aligned groups means LIIFs have the strongest chance of being of adequate scale, and delivering financial and Impact returns with lower individual investor risk. using a more objective and much fairer system of working out who to invest in, and with wider investment criteria than most in venture capital. Projections indicate that just one Local Impact Investment Fund could create 100,000 – 150,000 jobs within a 10 year period for a country the size of the UK. Typical early stage fund 10 year equity Example LIIF Structure Strategically underwritten debt Institutional evergreen equity Impact evergreen equity • The Local Impact Investment Funds will be evergreen, designed to first pay back the principle to investors, then provide steady, ongoing returns through capital recycling. Unlike typical venture investing, the focus is on generating desired returns and impacts in the most sustainable manner. • Investment decisions are made on a local level by management who are carefully selected and trained in the Transform and LIIF process, and who are supported by Transform systems, technology and the wisdom of groups decision framework. They are also able to plug into the network intelligence at a head office level, or from counterpart funds around the world. • Governance is critical and the Transform pre and-post deal management software enables head office to monitor investment activity and step in to provide re-mediation support, should it be required. • The value proposition incorporates speed, scale, long-term perspective and the ability to satisfy varying needs and appetites towards risk. It does so with the potential for much larger capital flows and far greater combined impact. Impacts everyone can benefit from. • To maintain adherence to the vision of tackling the ‘valley of death’ issue, between 20% and 30% of average annualised investment from the LIIFs will be reserved for first stage deals of up to £500k (or equivalent). 25% – 30% will be reserved for second stage deals of up to £5m, and up to 50% of the fund will be reserved for deals of £5m and above. To allow for additional flexibility, up to 20% of funds under management may be invested in companies requiring £5m and above that have not already received at least two rounds of investment from the first or second stage allocation. The Local Impact Investment Funds (LIIFs) will operate in single markets, such as the UK, France, Spain or Texas, or regions such as the GCC, Scandinavia or Benelux countries. Management believe they are also the most suitable structure for operating in tough or emerging markets, including sub Saharan Africa, India and China. By making staged investments, and providing incentivised support to investee companies (through our AIDA system), the LIIFs can support evolution including from concept to commercial success. 14
  18. 18. TRANSFORM GLOBAL Innovations at the heart of the Transform Global model There is no doubt Transform Global is ambitious. The challenges the world faces, require nothing less. Yet that ambition also has to be practical, achievable, flexible and for maximum impact - self reinforcing. While Transform universally excites, when some first take a look, they find the same scale that excites, also a little daunting. The way the model is designed to progress from stage to stage however, and key features, drivers and innovations at its core all support practical delivery. The business model is designed carefully with characteristics shown in the innovation wheel below, and is glued together by the Transform Global brand. The sections around the outside of the wheel represent key departments that enable everything to happen, all of sufficient scale so Transform can achieve it’s potential. The innovation wheel, which can be viewed in full on the website, shows how at the heart of the model, there are a number of linked innovations which are able to work in harmony, and strengthen each other. We have given summaries of just a few of the core innovations below. Technology and decision framework. Semi automated data gathering ,assessment, and performance monitoring systems of 30 of the world’s leading corporations, selected by business enable superior investment selection, even at very sector, geographic location and attitude. Given the r es ea rch early stages, especially important for tackling Transform mission and likely public profile, the valley of death and access to capital this gives an unmatched opportunity for sponsor leadership problems. Many opportunities can sponsors to garner CSR, marketing, support and timing be reviewed and assessed in and other benefits. These include talent scale and greater depth by a larger team, aligning themselves with the magnet scalability resulting in more objective public mood and being seen assessment. Data gathering as a force for good. They values blended and monitoring continue as are also able to use and culture capital the investees progress. the LIIF technologies Above all, intelligent data and systems to drive systems give the ability their own innovation fund incentivised to harness the wisdom process. Sponsors will structures cornerstone collaboration structural of intelligent groups to collectively provide features assess opportunities £150m per year drivers (£5m each) of core knowledge funding, plus other underpinning TRANSFORM Scale & scalability. management assistance, and in so theory To tackle global GLOBAL doing, they are able to the brand challenges, we need better manage their activity on an extreme own risk and resliance advocacy local level. How we progressive threats, and create a partners facilitate that, and structure operational pipeline of risk adjusted create meaningful innovations sustainability returns. scale, however will be decision portfolio on a macro level. The framework design Transform Global system Fund structures. Where design, is all about carving possible, funds will be dynamic AIDA out the space, and creating evergreen and recycle capital, allocation leverage a model that has strength and with surplus returns paid to terms and deal-flow capacity to work at optimum scale, investors. After the pilot fund, the conditions pipeline where benefits of scale are high, and first fund will be a £500m Global where fund structures can be replicated Impact Investment Fund. This will invest in tech nology globally at optimum speed. platforms that help favourably alter the global conditions for investing in sustainability, including: new asset managers, new market creation, and platforms that Fund-raising. There are real benefits if fund-raising expertise facilitate further investment. We call this leveraged triple bottom line. and relationships can be harnessed, honed and expanded with There will also be multiple Local Impact Investment Funds, locally or military like precision, focus and scale. Separating fund raise from regionally based. The standard investment fund, structure and format deployment, and doing so with sponsor support gives the strength can be replicated locally at low cost across the world. and capacity to raise new innovative funds, and replicate them. ra or nd ng ad isi vis fu y Sponsor support. Transform Global will be sponsored by a network com tw at io ne nic ork mu ns 15
  19. 19. TRANSFORM GLOBAL Hope - engagement - equity - and investment examples Sustainability Intelligent Financial leading to understanding economic non financial and focus growth innovation = Hope Aligned investment flowing to the real Engagement Intelligent Economy + Employment + Treasury revenue = Equity The words above capture the essence of what Transform Global is all about. Those that are most important, are shown in yellow. Hope, equity and engagement are words of today. The world can only be a better place if our existing financial systems add more value than they take. The opposite is a world where people are disengaged, people lack hope, where the environment is damaged beyond repair, and where the extremes of inequities only increase. A world where terrorism and terrible things are ever more prevalent. To change things for the better - to Transform - we have to fund the things that have been much ignored. The examples below are the types of business that can make the world a little or a lot better, but they are also the types of businesses that have typically fallen through existing funding gaps. It is time to change things - and the Transform model can kick start that much needed change - and do so in a way thats much better for all aligned stakeholders in the process. Deal Example 1. Deal Example 2. Deal Example 3. An early stage business, formed by a small group of entrepreneurs, has linked a breakthrough in materials science, with a better process of retrofitting properties to create a way of reducing energy utilisation by 20-30% for domestic or commercial properties. The business has licensed the technology, and requires capital to build out the company and processes, and local funding for installers, to enable distribution and scale. £2m equity sought for top company, with £200k - £500k required for every installer. Both forms of finance are required for success and maximum impact. Team from a sponsoring or similar corporation, have prototyped an engine technology, where significant material and energy savings are possible, but where the corporate will not allocate development capital due to non core nature, misunderstood market potential, or internal capital competition. Business case is viable, and corporate are happy to spin off, retain equity and co invest. Estimated £10m required to get into production, £50m for commercialisation. Disruptive potential. Cut back case - £500m£1b value in 5-10 years. Entrepreneur and advisors with team lined up, and with an exciting financial innovation. Well formulated, detailed business plan. £1.5m of seed capital required to establish viability of business case, market and tech potential and for team to become operational. Business straddles all target areas of importance and incorporates financial technology, financial services, and marketing. Further £5m required to reach base viability and £30m for full roll out. High market enabling, impact and return potential, with a commercial model that is innovative & exciting. 16
  20. 20. TRANSFORM GLOBAL Background - management - and how it will attract talent? Transform Global is the culmination of seven years of focussed research, development and action by a single social entrepreneur - Steve Podmore. Transform Global has a number of With a history in business education and training, marketing, talent management and consulting - after years working to raise capital for entrepreneurial ventures Steve realised that if the world was to progress, system innovation in finance was badly needed. With an intense interest in economics, sustainability and the psychology of individual and organisational behaviour, in late 2006 Steve embarked on what was to become an all consuming journey. The desire was to get to the heart of the linked system challenges, and to do something about them. The core idea has gone through a number of iterations, and the result is the mature, developed and stress tested model that is Transform Global. have provided seed investment It has been said, that the only way to understand and address a serious challenge, is to live it - and to know it inside out. To look at it from angles others have not seen, to listen to - but not be swayed by feedback, to iterate, and not to give up. One of the biggest discoveries of this journey, where the key challenge that Transform seeks to address - has been lived, experienced and observed continually - relates to how the recruitment and investment process for important ideas and businesses, works - or more accurately - doesn’t work. As investment is typically today (without Transform - or outside of California), most potential funders, particularly for things that are capital intensive, want someone else to have invested first. They look for risk to be removed (which is not efficient on a deal by deal basis), and for A class management to be fully engaged. Often investors seek ‘the name’ as a way to get comfortable - but this shortcut often backfires. Breakthrough innovation comes from outsiders, and rarely are these innovators taken seriously. Rather than nurtured and supported to raise capital and recruit a sound team from a position of strength - founders are ignored. This makes no sense, and is at the heart of the problem. The trouble, especially for big ideas or businesses, is without at least the first meaningful stage of capital, it is very hard to recruit a strong and sufficiently diverse team, and get them fully embedded. Not everyone is wealthy and able to work without pay. Yet trying to recruit from a position of weakness, and expecting people to work for the months that they need to sufficiently understand a technology or business and their role in it - is beyond hard. It often delivers the type of team that not only fails to impress - as could be predicted, it fails to deliver. Transform cleverly addresses these issues - and ironically having lived through them - this positions Transform itself, and entities funded as a result - for success. Transform Global - Org Chart seasoned advisors, some of whom over the years - with strong capability in finance, technology, marketing and in the broad tent of sustainability. They include: • The former head of government relations for one of the largest energy companies in the world. • European Chairman and Vice Chairman of Ogilvy and Mather, the worlds largest marketing and communications agency. • The co-founder of a leading environmental investment bank. • Head of European sustainable banking for a US investment bank. • Head of treasury and operations for a top UK retail bank. • A number of business, technical and engineering focussed executives. • Scientific, public policy and social enterprise / finance experts. Despite the challenges described, Transform now has a very strong network, including those who are lined up as stage 1 management, or as important members of the ongoing team thereafter. The founder and core team, which includes experienced corporate finance, investment management and operational executives, will raise the first stages of funding, and with the assistance of advisors above, in stages 1 - 4 (pg 19/20), will then recruit from a position of strength - those shown in the org chart to the left. The compensation plan is staged, and offers equity and performance options to all. 17
  21. 21. TRANSFORM GLOBAL Scale Up Speed Up - the marketing roadshow In this dynamic three day event to be organised by Transform Global, or in the many feeder roadshow events, interested stakeholders Scale Up Speed Up (SUSU), is a comprehensive event format to help stakeholders fully answer the important questions below. It will also help them understand the solutions, including how Transform Global would work in practice, what different stakeholders can get, and how they can engage. Questions include: • Despite the urgency to de-carbonise, and in the absence of binding agreements from international governments - what we are missing which could speed up sustainable economic and environmental recovery. • How ‘fit for purpose’ financial innovations, can be better identified, proven, scaled and scaled at optimum speed. • What financial innovations are currently in the pipeline to better plug critical local and global funding gaps. • How it is possible to integrate adaptation and mitigation to climate change, with development and intelligent economic recovery. • How we can build delivery capacity for the Green Climate Fund and also for international funds that can deliver maximum impact with innovation and jobs alongside attractive financial, social and environmental returns. • Which public policy measures, public private partnerships, and civil society initiatives can help address these global risks and opportunities. • How we can learn from past developments of new asset classes or markets, such as hedge funds, carbon markets, micro finance and exchange platforms. will get to discuss answers to the truly important questions shown. Crucially, rather than just another talking shop, scratching the surface but achieving little else, participants will be able to dig into the detail of a practical and tangible catalysing solution to the issues they care most about. And, they get to do so with sufficient exposure to best understand how they can engage and contribute to its success. SUSU doubles as a marketing roadshow for Transform Global. It is designed to attract the ideal profile of attendees due to the event format, profile of keynote speakers, intense interest in the subject, and Once Transform has secured the £1.5m in seed funding, core team are on board and embedded, and presentation materials are ready, SUSU will be actively marketed by a highly experienced team. Scale Up Speed Up will be free to attend, and strictly by invitation or by application. The event format is innovative, collaborative and compelling, and will be marketed via an extensive PR and communications campaign, with smaller feeder events, email, and direct contact to targetted attendees selected from the extensive Transform network and related stakeholder groups. the marketing method to current and potential stakeholders. Scale Up Speed Up A 3 day event to bring together over 300 global investors and leaders to explore ways to accelerate results, innovation, sustainability and equity in finance to best address the biggest risk and resilience threats - and unlock the largest opportunities of modern times. Qatar Q1 2014 Exploring how Transform Global can expand the provision of Active Impact Investment into Sustainability - Health - Education - Energy 18
  22. 22. TRANSFORM GLOBAL The development plan - co-global headquarters target London co-global headquaters ? ? ? ? ? possible locations for the co-global headquarters ? ? ? ? ? ? ? example of global head office design Transform Global is a big vision - and therefore it requires visionary backers and supporters also. Management believe the best way to launch, is to co-locate the headquarters between London and a suitable country where the regional benefits Transform can deliver are significant, and where the platform of a second HQ enables scalability and market access. Being a global financial centre and the home city, Transform aims to ensure London is at the heart of responsible financial innovation, with many aligned host country benefits. The co-global HQ will most likely be in a key centre in an emerging market. In partnership with the host country government, Transform Global will seek to build an iconic ‘Global’ head office as a financial innovation hub and prestigious showcase of advanced sustainable building, technology and enterprise. Transform at its heart is a sustainability focused job creation machine - offering many benefits for countries and regions where it might have a presence. Ultimately, the goal is to cover the map with appropriate Local Impact Investment Funds, managed by Transform Global, or by local and regional partners. The system design, practical steps, and scale and support the sponsors bring, will enable Transform to set new standards of how important funding gaps are addressed around the world. STEP 1. STEP 3. STEP 4. Transform is raising a £1.5m equity round (possibly split into two stages of £250k and £1.25m. The closing goal of this fund-raising, is Q1 2014 ready for a Q2 2014 start. Management have decided to proceed down the crowd funding route should no suitable strategic investor be found prior to the target start date, and are currently preparing documentation and doing pre marketing, with the goal of going live on Crowdcube in Jan 2014. This funding round will enable the core team of 15 persons to be on board, for all communications to be simplified, regulatory approval progressed, and marketing for stage 2 completed via the Scale Up Speed Up event roadshow. 19 STEP 2. Step 2 involves the securing of the £20m G/LIPS fund and a further £5m of equity (A Round second close), after which investment activity will commence. The equity will enable the technology platform (pre and post deal management, and crowd sourced deal and decision support) to be built, and for it to be tested in the live G/LIPS investment environment. Excluding separate teams who will complete Incubation and Corporate Finance work for the G/LIPS fund, the core Transform team will rise to circa 25 persons. Additionally, the full model will be ratified, with a fund raise and outreach program to secure sponsors and investors for step 3. Step 3 is a combined step, where any of the three pieces could happen in any order, or most likely all at once. To fully role out the model, there is a £30m equity raise (First Round) to capitalise the business (which includes £10m of investments - to be made into profitable entities, giving advisory, network and technology platforms - for marketing access, talent and technical capability). At the same time, the sponsor recruitment process (begun at step 1) aims to deliver cornerstone Global Sponsor agreements. In parallel the first £50m for the GIIF is targeted to close, with sponsor and GIIF investments growing thereafter. When step 3 is in place, roll out proper starts. The first Local Impact Investment Fund will be raised when step 3 is fully in place, with the first LIIF predicted to take up to 18 months. This allows technical preparation, fund-raising, and for investment activity to begin. Each LIIF is predicted to take up to 4 years to be investing at the annual target capacity. When the first LIIF is in place, Transform Global will work to close the second, third and forth LIIFs and so on. Step 4 is where the sponsor recruitment is also extended locally into categories that are beneficial and complementary to Global Sponsors.
  23. 23. TRANSFORM GLOBAL The investment opportunity - risks - returns - and governance Fund-raising Strategy. Transform Global, as a compelling alternative model for a Global Impact Investment Bank, requires necessary complexity to be cleverly distilled. The focus of the fund raise, is showcasing that the core idea is strong, that delivery has been thought about and planned in great detail. That the model is flexible, can work, can attract talent and that management, including those the model can attract, are (or can be) credible and capable. And - to communicate all this in common language for all, and in sufficient detail for those who need more. Transform Global is preparing for a fund raise to fully capitalise the business with £36.5m. As can be seen below, this may be done in three or four practical steps. The first £1.5m - is an opportunity for strategic investors, impact investors, or via a crowd funding platform - for individuals to back this model for a Private World Bank. The follow on £5m (expected to take between 6 and 9 months to raise), will enable strategic financial or corporate investors who are seeking deal flow pipelines and related open innovation capability, to participate in this innovative financial model. £5m equity will be raised alongside the £20m G/LIPS fund. Finally, to fully capitalise - £30m in equity will be raised, via sponsors, impact investors, or as strategic investment from the host country for the co-global HQ. Though the full business model does not require it, and full capitalisation enables profitability to be reached in year 3, Transform reserves the right to raise additional equity in a pre IPO or IPO fund-raising. Management plan to offer a full or partial exit to investors within 3 - 4 years of launch through such means - whilst also strengthening the balance sheet to prepare for and fund global scalability. Fully capitalised with £36.5m £6.5m Equity £30m (+) Equity £250k £1.25m S/EIS EIS X 15 £5m X 25 £20m G/LIPS Fund The first £6.5m of equity is risk managed by the £20m G/LIPS fund. Including £10m to make strategic (and hedging) investments in: Network 20p 10-30 x 25p 8-24 x STEP 1. 50p 4-12 x STEP 2. Advisory Technology The full business plan, shows up to 100 persons by the end of year 1, and 300 by the end of year 3. All personnel can qualify for performance based options, which also are built into the plan, and contribute to return expectations shown below. (GIIF, LIIF and AIDA personnel - are in addition to the above) First £50m of GIIF (Global Impact Investment Fund) Target GIIF size = £500m First LIIF (Local Impact Investment Fund) Target LIIF size = £500 - £2.5b In the event the Global and Local Impact Investment Funds, sponsorship and further equity cannot be raised, returns for the management of the G/LIPS fund, with strength in diversity, would revert to initial equity investors, thus limiting downside risk. Upside projections for full roll out are shown below. Maximum Impact and Governance. 2nd LIIF 3rd LIIF etc. Global sponsor recruitment 100p (share purchase price) 2-6 x (base case - to target - return projections - in 4 - 7 years) STEP 3. STEP 4. Though details on this page highlight the financing strategy and return projections, it is important to reiterate the blended purpose of Transform Global, and the focus on using its hybrid social / commercial model to deliver maximum impact on critical issues such as climate change, sustainable development, job creation for intelligent economies, and the linked issues of health, education and affordable clean energy for all. This blended purpose and impact focus will be made possible by the sustainable charter and governance structure, and embedded and reinforced via the Transform Global Trust and its independent trustees. This innovative structure, means while Transform Global is designed to make and sustain healthy returns for all stakeholders, ‘financial only investors’ are still welcome, but with the explicit understanding and agreement to these positive impact terms. Safe Harbour Statement. This document is not a formal investment memorandum and contains no offer to sell securities. It is a marketing document for the Transform Global concept - to be used in preliminary discussions and marketing to potential investors, management and for strategic partner recruitment. It lays out the business model, sponsor recruitment strategy, and intended structure of funds it will raise and manage directly or indirectly. Also included are details on the equity fund raise for Transform Global itself. Return projections shown, detail base case values for full roll out - based on the business plan and assumptions contained therein. The cut down version of which, and the investment term sheet will be made available to accredited investors and partners by request, and will be made available on the Crowdcube platform when the crowd funding campaign goes live early in 2014. Projections can go up and down, and investors should seek professional advice prior to making any commitment. Though management believe the business model is realistic and can scale once Step 1 funding is secured - Transform Global carries risks. These include fund-raising steps or sponsor recruitment, which may fail fully or partially. Also, the business projects zero revenues until step 2, with the full business plan commencing at step 3. 20
  24. 24. TRANSFORM GLOBAL Transform Global 20 Little Britain London EC1A 7DH Tel +44 203 478 1136