Impact Investing and Conservation Enterprise
•
2 likes•628 views
Francois Bernard, from Conservation Capital takes our members through the ins and outs of impact investment, providing insights on identifying relevant options, and giving us a reality check on the suitability of impact investment for conservation enterprises. He also highlighting how Conservation Capital conceived, developed and managed, alongside their partner NGOs, the first investment funds exclusively focused on conservation enterprise in Africa and in Europe, namely African Wildlife Capital and Rewilding Europe Capital.
Recommended
Recommended
More Related Content
What's hot
What's hot (20)
Similar to Impact Investing and Conservation Enterprise
Similar to Impact Investing and Conservation Enterprise (20)
More from The Long Run
More from The Long Run (9)
Recently uploaded
Recently uploaded (20)
Impact Investing and Conservation Enterprise
- 1. The Long Run Annual Meeting Impact Investing and Conservation Enterprise Francois Barnard f.barnard@conservation-capital.com September 2017
- 2. Conservation Capital A leading specialist practitioner in the field of conservation enterprise and related investment financing. I 2The Long Run – Impact Investing & Conservation Enterprise
- 3. Any commercial activity that can generate economic or social benefits in a way that supports one or more meaningful conservation outcomes. Conservation Enterprise I 3The Long Run – Impact Investing & Conservation Enterprise Tourism Agriculture Livestock Aquaculture Bio-Enterprise Energy
- 4. DRIVERS Conservation enterprise What we do I 4The Long Run – Impact Investing & Conservation Enterprise Conservation landscapes Investment finance
- 5. DRIVERS Conservation enterprise What we do I 5The Long Run – Impact Investing & Conservation Enterprise Conservation landscapes Investment finance RESPONSE Conservation enterprise development Conservation area business planning Investment structuring and management
- 6. • Generating finance • Building incentives • Optimising sustainability • Offsetting encroachment • Stimulating engagement Conservation impacts I 6The Long Run – Impact Investing & Conservation Enterprise
- 7. Strategic benefits • Financial Sustainability • Funding Diversification I 7The Long Run – Impact Investing & Conservation Enterprise • Promoting Sustainable Values • Enhanced Political Relevance
- 8. Conservation Capital • 27 countries • 80 + enterprises • US$ 250m + of total capital investment • US$ 40m + generated in annual revenues • US$ 6m + of annual direct conservation contributions • 9 national park systems • 25 + conservancies • 3,000 direct employees (>80% from local communities) • 125,000 contracted outgrowers • 54 international awards nominations I 8The Long Run – Impact Investing & Conservation Enterprise
- 9. USD 41B USD 40-60B USD 80-100B USD 10B USD 210-290B USD 220-300B Today Gap Need Aid & Charity Investment Conservation finance gap I 9The Long Run – Impact Investing & Conservation Enterprise USD 300-400B USD 250- 350B Funding Gap NEEDCURRENT GAP Sustainable solutions to conservations challenges will require an increase in conservation investment by a multiple of 20-30 times. Conservation Finance—Moving beyond Donor Funding toward an Investor-Driven Approach Credit Suisse, WWF, McKinsey & Company, January 2014 (updated 2016)
- 10. Investing vs granting • Re-orientates funding towards demand lead dynamic • Applies the positive power of risk – both for the financier and investee • Creates leverage and longer term stakeholder relationship for driving optimized commercial and conservation performance • Creates an ability to work with proven existing enterprises as well as greenfield projects • Eliminates market distortions created by ‘free financing’ • Can be recycled into numerous projects thus multiplying impact I 10The Long Run – Impact Investing & Conservation Enterprise
- 11. Conservation impact investing Investments made with the intention of creating a measurable nature conservation benefit alongside a financial return. • A rough estimate has the global conservation impact investment market at about US$ 4 billion annually • An investment type and not an asset class • The type of investors vary widely • Financial returns are generated through various innovative means, including PES schemes, REDD and carbon markets, markets for biodiversity, hydrological services, ecotourism, livestock and agriculture, etc. I 11The Long Run – Impact Investing & Conservation Enterprise
- 12. Finance sources Spectrum of financing sources: 1. Individuals and family offices I 12The Long Run – Impact Investing & Conservation Enterprise 2. Impact investment funds 3. Multilateral development banks
- 13. Financial tools • Debt: Loan • Venture debt: Debt financing to venture-equity backed SMEs • Equity: Ownership • Quasi-equity / royalty: Debt that can appear as equity • Mezzanine: Hybrid of debt and equity financing • Patient capital: Space between venture capital and traditional philanthropy • Venture philanthropy: Supports social ventures with both financial and technical support • Blended finance: Combining concessionary loans or grants, usually provided by the public sector, with private investment • Crowdfunding: Mozart and company I 13The Long Run – Impact Investing & Conservation Enterprise
- 14. • Africa’s first investment vehicle for conservation enterprise; • Focus on tourism, agriculture, and energy in and around the continent’s highest value naturally functioning ecosystems • Backed by African Wildlife Foundation (54 years of experience in supporting conservation in Africa) and managed by CC; • Raised and allocated a US$ 7M pilot round across 9 investments in 5 counties • Evolving to secure additional funding and support scalable models. Investment management I 14The Long Run – Impact Investing & Conservation Enterprise
- 15. Pilot portfolio I 15The Long Run – Impact Investing & Conservation Enterprise Tanzania Namibia Kenya Ethiopia Zambia Tourism Livestock Agriculture
- 16. • Established by Rewilding Europe and CC in 2014 to create and grow nature-based economies in Europe; • €445,000 of loans to 17 enterprises in five different countries (Portugal, Italy, Croatia, Netherlands and Romania); • In 2017, the EIB provided REC with a 6 million euro loan finance contract; • Portfolio focused on nature-based tourism, natural products, natural resource management and promotion of wildlife comeback. Investment management I 16The Long Run – Impact Investing & Conservation Enterprise
- 17. Case study 1: Financial tools • Community conservancy lodge upgrades • US$ 245,000 investment • Terms: 8 yr, scheduled principal repayments, royalty of 1.1% I 17The Long Run – Impact Investing & Conservation Enterprise
- 18. • International luxury travel company • US$ 2m investment • Terms: 10 yr, mechanism to reduce cost of capital with 2% Case study 2: Innovative incentives I 18The Long Run – Impact Investing & Conservation Enterprise
- 19. • Bale Mountains and Simien Mountains National Parks • US$ 2.5m+ investment • 2 Eco-lodges • Community based tourism • Best practice conservation finance • Royalty for ‘conservation school’ Case study 3: New economies I 19The Long Run – Impact Investing & Conservation Enterprise
- 20. • Sabinyo Silverback Lodge (Rwanda) and Clouds (Uganda) • Owned by host local communities • Tendered and contracted private sector operators • Structured US$ 250,000 loan from a private investor. Zero % interest, revenue based royalty. Repaid in 5 yr at IRR of over 20% • US$ 2.5 million to communities Case study 4: Community ownership I 20The Long Run – Impact Investing & Conservation Enterprise
- 21. • CC conceived and REC funded 3 tourism ventures in transactions totalling €100,000 (further €100,000 and 2 enterprises planned) • Clustering and cross marketing of complementary tourism enterprises • NB for smaller enterprises • Land acquisition fund Case study 5: Clustering I 21The Long Run – Impact Investing & Conservation Enterprise
- 22. What we have learned • Conservation investing - a niche area • Structuring – permanent capital vehicles • Limited exit opportunities • Many small deals, but how to scale? • Frontier opportunities – biodiversity offsets • Challenges: – Exit strategy – Pipeline – Right type of capital – Risk profiles – Size of investments – Impact measurement I 22The Long Run – Impact Investing & Conservation Enterprise
- 23. The power of hybrid structures • Investment capital work alongside traditional donor sources • Combination of for-profit and not- for-profit legal entities • New capital unleashed alongside donor funds • Profits are released as dividends to offset overheads and optimise financial efficiency and thereby attractiveness to donor markets I 23The Long Run – Impact Investing & Conservation Enterprise
- 24. Execution fundamentals • Conservation context • Business plan • Operators • Financing • Property rights • Partnership structure • Conservation covenants I 24The Long Run – Impact Investing & Conservation Enterprise
- 25. Conservation covenants • The design and application of conservation covenants are a hallmark of Conservation Capital’s work. • Similar to financial covenants, but focused on optimising conservation impact. “All loans provided by REC will incorporate institutional use of contractual rewilding covenants driven by and focused on management and operational dynamics designed to optimise the ability of the portfolio enterprises to actively support the generation of rewilding outcomes and natural rewilding impacts.” I 25The Long Run – Impact Investing & Conservation Enterprise
- 26. Impact investing and your business What impact investors want: Great businesses, with great impacts and great returns. • Range of emerging funds, most not willing to accept froth returns • Return expectation of 8 – 15% pa • Deals less than $1 million are scarce I 26The Long Run – Impact Investing & Conservation Enterprise
- 27. Impact investing and your business Reality check: • NOT soft and high risk capital (in-between banks and family and friends) • Family offices rely on relationships and deal flow visibility • Emerging trends show shift away from investment in small / individual tourism businesses I 27The Long Run – Impact Investing & Conservation Enterprise
- 28. Trends: I 28The Long Run – Impact Investing & Conservation Enterprise Consolidation Comparable returns Domestic market Impact investing and your business
- 29. Benefits: • Funds emerging (evolution of AWC) • Technical assistance facilities • Softer than traditional forms of capital • Active investors Impact investing and your business I 29The Long Run – Impact Investing & Conservation Enterprise
- 30. Impact investing and your business Is impact investment the right investment for your business? What type of money do you want? What opportunities does it create? I 30The Long Run – Impact Investing & Conservation Enterprise
- 31. How we can help MOU with The Long Run: Consulting services at a special rate Services include: • Business development and diversification; • Identifying new opportunities and sources of finance; • Develop business plans to enable fund raising; • Partnerships and alliances. I 31The Long Run – Impact Investing & Conservation Enterprise
- 32. Thank you I 32 Francois Barnard f.barnard@conservation-capital.com www.conservation-capital.com The Long Run – Impact Investing & Conservation Enterprise