Impact Investment Study Highlights Local Case Studies
3 April 2013 at 11:20 am
So far, most of Australia’s impact investment market has been domestically focused, according a new report into the emerging market. The following is an extract from the IMPACT Australia report looking at local case studies.
Local examples of international impact investing interests include Barefoot Power and microfinance fund investments by Christian Super and The Grace Foundation. In addition, Australians are contributing impact loans through crowdfunding microfinance sites, like Good Return.
Beyond these examples, there is other investment activity in Australia that has a long history and has not come under the impact investing definition. There is a range of community enterprise grounded in a long and rich tradition which could now be categorised as impact investing.
This includes cooperatives and mutuals, some of which are large: for example, Co-operative Bulk Handling Group (WA), the Murray Goulburn Co?operative Ltd (Vic), Australian Unity and Dairy Farmers’ Milk Cooperative. Another example of impact investments in local enterprises can be seen in employee ownership arrangements, such as at C-Mac Industries.
There are also community-owned businesses, such as Yackandandah Community Development Corporation (Case 5, Section 2.2) and sustainability projects, such as Hepburn Community Wind (Case 7, Section 2.2). There are a range of Indigenous businesses and enterprises supporting local communities and land and sea management.
Australia has also seen developments in some areas that could now be categorised, in whole or part, as impact investing, ahead of the term gaining currency here.
For example, there are a number of sustainability and environmentally-themed funds within the responsible investment landscape. Housing Associations and, more recently, the incentives provided by the National Rental Affordability Scheme have sparked interest and activity in finance to increase the stock of social and affordable housing.
An Indigenous ‘stock exchange’ initiated a decade ago has been assisting indigenous owned and run businesses to access capital and develop a marketplace for investment.
Many Not for Profit organisations provide support for new enterprise ideas, or use their own capital to finance investment opportunities. They do this within their own organisations or as partners in other vehicles, such as Goodstart Early Learning, the Benevolent Society’s Apartments for Life, STREAT and Chris O’Brien’s Lifehouse (Box 3).
Other such organisations access mainstream finance; and while the source and quantum is unclear, the amount could be material in the context of impact investing.
Examples of impact investment driven from the Not for Profit sector:
Apartments for Life bonds. In 2011, The Benevolent Society proposed a $10 million bond offering to help finance 128 dwellings to house older people in a community setting. The bonds carried a 5% return over eight years. For a range of reasons this bond issue did not proceed. It was an innovative experiment that enlivened the imagination of others and sparked dialogue about the level of financial return required to attract investors and how policy can support capital raising for the community sector.
STREAT equity raising. STREAT is a social enterprise providing homeless youth with a supported pathway into long-term careers in the hospitality industry. In 2012, STREAT financed the purchase of the Social Roasting Company through an equity raising. STREAT aims to double the number of young people it reaches and return at least 7% to investors over the first three years.
Chris O’Brien’s Lifehouse at RPA bonds. Lifehouse created a 'social bond' to partially finance development of a cancer centre in Sydney providing care outside of a hospital setting. The bonds have a term of 6 or 8 years, and the $14 million raised will allow the centre to be completed and available sooner. Returns are targeted at between 5 and 8 % depending on whether investors accept a 6 or 8 year term.
“The stories featured in this report showcase examples in Australia and internationally of people harnessing capital markets to support community prosperity, encourage vibrant culture and contribute new solutions for issues of exclusion and sustainability,” Social Innovation Strategist with DEEWR Rosemary Addis said.