Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 1
Market Based Solutions for Impact InvestingAn EMPEA Professional Development Webcast with Accion, J.P. Morgan, LeapFrog
Investments, Siguler Guff & Company, and TriLinc Global
An EMPEA Professional Development Webcast
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 2
EMPEA Upcoming Events
Save the Dates…
• 19 September 2013: Spotlight on Frontier Markets an EMPEA Professional
Development Webcast with CrossBoundary
• 15 October 2013
• Private Equity in Emerging Markets 2013, co-hosted by EMPEA and Financial
Times (FT) Live
• EMPEA’s Annual Members-Only Reception in London
• 16 October 2013: Private Equity in Africa 2013, co-hosted by EMPEA and This is Africa
magazine
• 17 October 2013: EMPEA Fundraising Masterclass, hosted at EBRD’s Headquarters
with support from Debevoise & Plimpton LLP and MVision Private Equity Advisers
For more information on these events, and other EMPEA programming, please visit
http://www.empea.org/events-education/conferences/
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 3
Today’s Moderator
Moderator: Patricia Dinneen, Managing Director
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 4
Objectives of Webcast
1. Understand what is driving the impact investing thesis
2. Assess current state of the market: clarify myths, hype, key players, size, scope, competitive positioning, exits
3. Demonstrate by example how impact investors are achieving financial returns alongside social and environmental benefits
4. Identify challenges and risks
5. Articulate trends and outlook for impact investing
6. Debate what is necessary to make impact investing more attractive to institutional investors
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 5
What is Impact Investing?
Source: GIIN, J.P. Morgan and the Rockefeller Foundation
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 6
Participants
Amy Bell
Executive Director, Social Finance
Gloria Nelund
Chairman & Chief Executive Officer
Andrew Kuper
Founder and President
Monica Brand
Principal Director, Frontier
Investments Group
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 7
What is Driving the Investment Thesis?
Huge social/environmental issues that are not being fully addressed by the limited resources available through government and philanthropy
Ability to leverage traditional EM PE and the broader financial system to link capital deployment to social and environmental impact, as well as financial returns
Opportunity to serve vast new markets (>2 billion people entering middle class)
Innovation / “disruptive” new business models
Portfolio diversification
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 8
Who is Investing and How Much?
• $8B invested in 2012
Resource Mobilization in 2013
• $9B planned in 2013
• 34% investing in S-S Africa
Source: GIIN, J.P. Morgan and the Rockefeller Foundation
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 9
An Increasingly Global Industry
USA
SINGAPORE
CHINA (HONG KONG)NETHERLANDS
UK
INDIA
BRAZIL SOUTH AFRICA
KENYA
MEXICO
GERMANY
CHILE
Source: Rockefeller Foundation
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 10
Largest EM Impact Investing Funds Raised
Fund Manager Fund Name Fund Type Status Geography SectorsTotal Capital
Raised (US$m)Close Year
Description
Vital Capital Investments
Vital Capital Fund I Growth ClosedSub-Saharan
AfricaMulti-Sector 350 2012
Created to align with principles of impact investing, focused on sectors in the Sub-Saharan
African markets with a primary emphasis in housing, commercial agriculture, health care,
and education.
BlueOrchardBlueOrchard
Private Equity Fund
Microfinance ClosedLatin America,
MENA, Sub-Saharan Africa
Banking & Financial Services
195 2010Seeking to forge long-term partnerships with microfinance organizations across the world
through minority stake investments.
Incofin Investment Management
Rural Impulse Fund II (RIF II)
Microfinance ClosedIndia,
Southeast Asia
Banking & Financial Services
173 2011Microfinance investment fund that targets rural
microfinance institutions providing financial services to the rural poor.
LeapFrog Investments
LeapFrog Financial Inclusion Fund
Growth ClosedAsia, MENA, Sub-Saharan
Africa
Banking & Financial Services
135 2010
Investing in high-growth businesses in Africa and Asia which provide financial tools such as
insurance, savings and pensions to the poor and financially excluded.
Catalyst Microfinance
Investors (CMIMC)
Catalyst Microfinance
Venture Capital
ClosedAsia, Sub-
Saharan Africa
Banking & Financial Services
125 2008
Investing in emerging, high potential microfinance institutions, selected and
managed by a team of microfinance practitioners and corporate finance specialists.
© Emerging Markets Private Equity Association. Data as June 2013.
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 11
Recent Investments by EM PE Impact Investors
Fund ManagerCompany
NameCountry Sector
Investment Type
Investment Amount (US$m)
Date Description
IGNIA PartnersProcesaChiapas
MexicoIndustrials &
ManufacturingVenture Capital
8.2 Jan-13
Focused on nutrition through the production and commercialization of high quality products that benefit all sectors of the population, especially those most vulnerable
by their socio-economic, geographical and cultural conditions.
LeapFrogInvestments
CrystaLife Assurance Plc
NigeriaBanking &
Financial ServicesGrowth 7.5 Jan-13
Insurance company in Nigeria that offers a wide range of financial services, including life insurance, pensions and
retirement planning.
IncofinInvestment
Management
Fusion Microfinance
IndiaBanking &
Financial ServicesGrowth 4.6 Mar-13
Microfinance company operating in the rural areas of North-Central India that aims to provide underprivileged
women with economic opportunities to transform the quality of their lives.
LeapFrogInvestments
Bima GlobalMobile Financial
ServicesGrowth 4.25 Feb-13
One of the largest mobile insurance platforms in the world, bringing affordable insurance to people in emerging
markets via their mobile phones and covering 1.6 million people across Africa and Asia.
Africa Agribusiness Investments
(Agri-Vie)
Vida OilsSouth Africa
Industrials & Manufacturing
Growth 4 Jun-13
Producer of specialist coconut oils and fats for the food, pharmaceuticals, cosmetics and chemical sectors in South Africa through socially, economically, and environmentally
sustainable supply.
Bamboo Finance Bridge PhilippinesBanking &
Financial ServicesGrowth 3 Mar-13
Establishing network of provincial banks in rural Philippines with the aim of creating jobs and opportunity by extending financial services to businesses, farmers and individuals in
areas currently poorly served.
Accion Frontier Investments
TiaxaLatAm +
AsiaTechnology & Data Mining
Equity 3 2012
Game changing balance advance product that scores
prepaid mobile phone users and provides “nano loans”-
real time funding to complete transactions,
© Emerging Markets Private Equity Association. Data as of June 2013.
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 12
Assessing the Current State of the Market
Myths versus reality
Competitive positioning of key players
Size of market, funds, deals
Investment structures
Target sectors and geographies
Exits
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 13
Demonstrate with Examples: Returns and Impact
Sectors: Financial services, healthcare, education, housing, agriculture, water/sanitation, clean energy
Geographies: Africa, Asia, Latin America
Fund Type: Microfinance, Venture, Growth, Bonds, Equity, Hybrids
Value created: financial, social, environmental
Exit strategies
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 14
What is the Industry Potential
Total market opportunity across five sectors:
– Potential profit: $183B-$667B
– Potential investment capital: $400B-$1T
Sector
Potential Invested
Capital Required, USD bn
Potential Profit
Opportunity, USD bn
Housing: Affordable urban housing $214 - $786 $177 - $648
Water: Clean water in rural areas $5.4 - $13 $2.9 - $7
Health: Maternal health $0.4 - $2 $0.1 - $1
Education: Primary education $4.8 - $10 $2.6 - $11
Financial Services: Microfinance $176 Not measured
Potential Profit and Invested Capital in Selected BoP Sectors Over 10
Years
Source: GIIN, J.P. Morgan and the Rockefeller Foundation
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 15
Trends and Outlook
Poor as consumers
Deal flow/entrepreneurs
Innovative business models with scalability
Appropriate investment and legal structures
“Aligned capital” models with government, private sector and philanthropists
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 16
How to Professionalize Impact Investing
Track records
Performance database and benchmarking
Standardized metrics
Enabling ecosystem
Research
Shared best practices
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 17
Question & Answer Session
17
Patricia Dinneen
Managing Director
Amy Bell
Executive Director, Social Finance
Gloria Nelund
Chairman & Chief Executive Officer
Andrew Kuper
Founder and President
Monica Brand
Principal Director, Frontier
Investments Group
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 18
Resources & Additional Information
For additional information on impact investing, please visit http://www.empea.org/resources/third-party-resources/impact-investing-resources/
For follow-up questions on this or other webcasts, please contact Emily Sandhaus at [email protected] or +1.202.333.8171.
For Members-Only Research Requests, please contact [email protected] +1.202.333.8171.
Please also visit www.empea.org for further information.
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 19
Launched in 2008, EMPEA has hosted over 30 webcasts to date drawing more than 4,000 participants from 70 countries and more than 820 unique firms.
• Identifying and Mitigating Risks in Southeast Asian Investments
• Investment Spotlight: Secondaries
• The Appeal of Africa: Maximizing Investment Opportunities While Mitigating Risk
• EMPEA Guidelines: A Legal and Regulatory Framework for Global Private Equity
• Private Equity Fund Structuring, Oversight and Administrative Matters
• LP Outlook for Emerging Markets: Preview of EMPEA’s 2012 LP Survey Results
• Anti-Corruption Policies: What Every EM PE Practitioner Should Know
• Investment Spotlights: Emerging Europe & Mexico
• Changing Landscape of EM PE Fund Formation
• The MENA Region: An Overview and Update
• The Impact of the AIFM Directive on PE and VC in Emerging Markets
• Private Equity in North Africa: What Every LP Must Know
• The Impact of the Dodd-Frank Act on Investment Adviser Regulation in the U.S.
• Private Equity Investing in the Middle East, North Africa and South Asia
• Evolving Key Terms & Conditions in Today’s EM PE
• Managing Environmental and Social Risks and Opportunities
• How Will the ILPA Principles Shape GP-LP Relationships in Emerging Markets?
• Catching the Rising Tide of Chinese RMB Funds
• Strategies to Address and Prevent LP Defaults
• Broken BRICs (a four-part series)
• Role of the Secondaries Industry in Emerging Markets Private Equity
• Corporate Governance in Emerging Markets Private Equity
Webcast Topics have included:
EMPEA Webcast Series
Market Based Solutions for Impact Investing
An EMPEA Professional Development Webcast – 30 July 2013 20
EMPEA Contact Information
For follow-up questions on this or other webcasts, please contact Emily Sandhaus at [email protected] or +1.202.333.8171.
For Members-Only Research Requests, please contact [email protected] or +1.202.333.8171.
Please also visit www.empea.org for further information.