Social Impact Investing

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Venture Capital Bridges Ventures CDV Funds financial First Investor Investor Multiple Investors Equity Impact Investment Fund Bridges Ventures CDV Funds Deal Simply Switch Area of Impact Sustainability & Regeneration Geography United Kingdom 15% projected IRR + 165% IRR “Bridges Ventures believes that market forces and entrepreneurship can be harnessed to create social and environmental benefits. We aim to continuously innovate to find new ways of delivering our investors with this combination.” Michele Giddens Executive Director Bridges Ventures Multiple Investors •• Bridges Ventures’ investors range from institutions such as banks (HSBC, Cooperative Financial Services, Lloyds TSB, Barclays and Citigroup) and pension funds (such as Universities Superannuation Scheme and West Midlands Local Authority Pension Fund) through to wealthy individuals, families, trusts and endowments Bridges Ventures CDV Funds (http://www.bridgesventures.com) •• Bridges Ventures is a private sector, mission-driven investment company that specialises in funds that can deliver financial returns and make a positive social or environmental impact •• Bridges Ventures has launched two venture funds that invest in ambitious entrepreneurial businesses that have at least one of the following two characteristics: -- Regeneration–businesses located in the most deprived 25% of the UK -- Sustainable Business–businesses whose social/environmental impact is intrinsic to what they do •• The first £40MM venture fund was raised in 2002. Based on the track record of that fund, Bridges Ventures raised a second fund of £75MM in 2007, which beat its original target of £50MM and was over-subscribed •• The venture funds invest in early stage, later stage and property-backed businesses •• Bridges Ventures utilises a three-stage process to target, maximise and report upon social and environmental impact -- Social Screen–Setting clear social impact of location or sector, then use strictly commercial criteria to select amongst those companies that pass the social screen; looking for winners commercially that do good -- Engagement–Working with the portfolio companies using Bridges Social IMPACT Scorecard to find ways to improve their community and environmental impact while increasing the value of the business -- Reporting–Reporting back to investors on the social and environmental impact of the companies as well as financial and commercial performance Simply Switch (http://www.simplyswitch.com) •• In late 2002, Bridges Ventures invested £125K of early-stage capital in Simply Switch, an online and telephone based provider of comparative information for utilities suppliers. Follow-on investments resulted in a total commitment of £345K •• Simply Switch was sold to The Daily Mail and General Trust for £22MM in 2006, returning £7.5MM to Bridges Ventures and resulting in a money multiplier of 22x and an IRR of 165% to investors •• Simply Switch located itself in a Bridges Ventures target area, creating 80 new jobs in the local economy •• Simply Switch helped raise £500K for charities where it had established an affinity relationship •• By being the first provider to offer its service both online and over the telephone, Simply Switch made it easier for those without resources to go online to save money on their bills Impact social/environmental impact •• 1,300 jobs created or sustained; 500 in target areas and 163 taken out of unemployment •• Almost all investments in the most deprived 25%; 58% in the most deprived 10% of the UK •• Multiplier effect of £3 of additional spending in deprived areas for each £1 invested by Bridges Ventures and £2.13 of Gross Value Added financial impact •• Bridges Ventures has invested over £51MM in 37 companies •• Follow-on investments have been made in over 70% of the portfolio •• Exit returns to date range from 29-165% IRR and from 2x to 22x money multiples 21
Private Equity ProCredit Holding financial First Investor Investor Multiple Investors Profile: TIAA-CREF Private Equity Impact Investment Vehicle ProCredit Holding Area of Impact Microfinance Geography Developing Countries 15% ROE Expected Multiple Investors •• ProCredit’s investor group is a varied group including financial institutions such as IFC and foundations like the Doen Foundation TIAA-CREF •• TIAA-CREF (Teachers Insurance and Annuity Association - College Retirement Equities Fund) is one of the largest financial services companies in the United States, with ~$400B in assets under management Global Microfinance Investment Program (http://www.tiaa-cref.org) •• TIAA-CREF manages the largest, comprehensively screened social investment vehicle for individuals in the US with ~$9.6B of assets under management (2007), representing ~2.4% of total assets under management •• The ProCredit investment is part of the firm’s Global Microfinance Investment Program ($100MM) under TIAA- CREF’s Socially Responsible Investing initiative -- The ProCredit investment has been larger than TIAA-CREF’s typical SRI initiatives -- Whilst this is a direct investment, most other investments will be fund investments ProCredit Holding AG (http://www.procredit-holding.com) •• ProCredit is a majority shareholder in 22 fast-growing banks in transition economies/developing countries •• Provides credit and other banking services to very small and medium-sized enterprises and lower and middle income savers: more than 93.5% of ProCredit’s outstanding loans were for amounts of less than $12,700 •• TIAA-CREF made a growth investment into ProCredit to help advance economic development through the provision of transparent, stable banking services and financial awareness in developing countries •• TIAA-CREF’s initial investment into ProCredit was $34M •• Sample investment: Congo -- Underdeveloped banking sector with 11 banks in total for Congo, which is the size of Western Europe -- Most banking services focus on wealthy individuals, international corporations and the public sector, leaving the poor underserved -- ProCredit launched in 2005 to serve the many small and very small enterprises and now has 3 branches in Kinshasa and holds 45% of all customer deposits in Congo Impact social/environmental impact •• Social returns are not explicitly measured, however: -- As of June 30, 2008, more than 1 million loans with a combined volume of $4B were outstanding -- Since the group’s formation in 1998, the institution has grown rapidly, and it now operates through 704 branches with over 19,350 employees globally financial impact •• The investment horizon is ~8 years •• Financial returns are measured by book value growth and potential multiple expansion at sale •• The investment is targeting 15% return on equity 22 Investing for Impact: Case Studies Across Asset Classes
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Fund Azzad Ethical Mid Cap Fund Bri
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development in the US, or are made
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concern, and submitting and voting
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sustain land trusts, to a meeting o
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that are often excluded from market
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Some organisations that have used S
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it helps identify the critical sour
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and shareholder trust through posit
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Approaches Some commentators have i
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Wieland and Handfield (2013) sugges
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EthicalQuote (CEQ) tracks reputatio
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Displaying commitment to CSR is one
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Brand Differentiation CSR can help
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takes health and safety, diversity
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advance with the practice of CSR wh
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Stakeholder Influence One motivatio
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Regulation Fifteen European Union c
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jurisdictions. E.g., some jurisdict
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"Impact investments can be made in
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venture capital community. Investor
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countries via local intermediaries.
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determining views of affected commu
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Another measure of economic impact
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The Board for the CCEG was to inclu
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17 Love Relationship Online dating
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Social Value Act 2012 legislation.
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Development released a report outli
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Benefits and Costs of Social Impact
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UK On 18 March 2010, Secretary of S
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Page 112 and 113: Notes _____________________________
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Page 116 and 117: Investing for Impact Case Studies A
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Page 154 and 155: Appendix Methodology The Investing
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Page 164 and 165: SOCIAL IMPACT INVESTMENT: BUILDING
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SOCIAL IMPACT INVESTMENT: BUILDING
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Global Research 29 November 2010 Im
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Impact Investments: An emerging ass
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Advocacy Foundation Publishers The
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XVI for Drug-Free Communities Landm
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Vol. VIII 2022 ComeUnity ReEngineer
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Vol. XV 2029 Inner-Cities Revitaliz
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The e-Advocate Journal of Theologic
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Issue Title Quarterly Vol. I 2015 I
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The e-Advocate Juvenile Justice Rep
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2018 - The Theological Law Firm Aca
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About The Author John C (Jack) John
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Social Impact Investing

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