For impact investors and social enterprises looking for ways to link up, the ultimate dream is to have a stock exchange aimed solely at mission-driven companies.

That’s a difficult feat to pull off, to put it mildly. You need a critical mass of investors and stock-exchange ready companies, not to mention the wherewithal to meet all manner of red tape and regulatory hurdles, as well as establish the technology capable of supporting the venture.

But such an exchange is well underway in Singapore.

It’s the brainchild of Durreen Shahnaz, a former social entrepreneur and banker. About a year ago, she launched Impact Partners, a private marketplace that connects accredited investors with social enterprises making $5 million or less in revenues looking to raise $1 million to $7 million; the median is $2 million.  The venture has raised about $70 million of capital, lists about a dozen companies, and has about 140 investors, with four or five more signing up every week, according to Shahnaz.

Impact Partners, however, was part of a larger plan to form a public stock exchange for social enterprises called Impact Investment Exchange Asia, or IIXA. And  Shahnaz says she plans to launch it officially at a forum to be held June 25 to 26 in Singapore called Igniting Capital Markets for Social Good.  That, in itself, is an ambitious event, with Jonathan  Greenblatt, head of the Obama administration’s Office of Social Innovation, as the key note speaker.

Because Singapore regulators insist that the exchange not be open to retail, it will be for accredited investors only, at least initially. But companies will have to meet social, as well as financial, parameters,  with general listing criteria such as having a social and/or environmental goal as their main focus and regularly publishing assessments of their social impact. Trading will take place online through a partnership with PhillipCapital Group , the largest brokerage firm in Southeast Asia, according to Shahnaz.  As she puts it: “We’re taking their existing platform and white labeling it into our own exchange.”

Still, don’t expect this to be up and running July 1. The launch is more an announcement that the IIX will be open for business soon. For example, there aren’t any companies actually listed yet, although Shahnaz expects some of the investors involved in Impact Partners will migrate to IIX. “This is about opening IIX up to the world,” says Shahnaz.

In the meantime, Impact Partners will continue to provide fuel for IIX. According to Shahnaz, many of the social enterprises that want to participate in the private marketplace need a lot of  help before they’re ready for prime time. Many are firmly founded on admirable ideals, with less grounding in financial rigor. So, there’s a lot of work on financials and business plans.

More important, Shahnaz is developing a pipeline, of sorts. Recently, she teamed up with a former Silicon Valley entrepreneur who, after selling his company, moved to Singapore and is looking to give back. Now, she regularly pitches companies–mostly technology startups with, say, systems for water purification or for providing energy to rural areas that are off the grid– to him to receive seed funding.  Then, once those companies are ready for their next rounds of funding, Shahnaz hopes they can  move to the private marketplace and, after that, perhaps the public stock exchange.

“In the U.S., there’s this whole ecosystem where there’s venture capital funding and a system through which organizations can grow,” she says. “That’s what we’re trying to do here.”

IIX and Impact Partners aren’t the only marketplaces out there aimed at social enterprise. For example, there’s Social Venture Exchange in Ontario, which links accredited investors with companies making $100,00 to $25 million in revenues. Founder Adam Spence hopes to turn that into a public exchange eventually. Similarly, Mission Markets in New York aims to build a hub linking stock exchanges globally. And there’s been an effort underway in London for several years to build a regular, retail social stock exchange.

Still, IIX seems to be the furthest along. And, for Shahnaz, even if there’s still a ways to go in getting the exchange up and running, just making it this far means a lot for the future of impact investing and social enterprise. “It has done a tremendous amount for creating a social capital marketplace,” she says.

A stock exchange solely for social enterprises is in the works in Singapore.

FOUNDER and chairwoman of Impact Investment Exchange Asia (IIX) in Singapore Durreen Shahnaz is seeking to create the Impact Exchange a social enterprise exchange. “By investing through the Impact Exchange, impact investors can significantly lower their market research and due diligence costs, as well as have liquidity in their investments thus allowing for more impact and wealth to be created and brought into the space,” she says.

For many social enterprises, the quest to build capital is a difficult one. The simple fact that they may not be able to generate returns for investors creates a big hurdle for them.

On the other hand, investors that are seeking to make investments that benefit society (impact investments) may not know how to look for the appropriate social enterprises to invest in that are profitable and suit their personal passions. The costs of market research and due diligence is quite high, and there is no liquidity for these impact investments.

Therefore, through the exchange, these issues can be dealt with.

The IIX is a social enterprise with a mission to provide social enterprises in Asia with greater access to capital, enabling them to expand the impact of their activities more rapidly.

Pioneers for what would be Asia’s first social enterprise exchange in a couple of months, Shahnaz and her team at IIX sought to create the exchange to bridge the gap between investors and social enterprises. The Impact Exchange will list social enterprises in the Asia-Pacific region and would expand to other parts of the world.

Tranparency and liquidity

In an email reply to StarBizWeek, Shahnaz says: “The exchange will create transparency and liquidity for impact investments while showcasing the social and environmental listing criteria along with the financial sustainability of the social enterprise.”

“Many impact investors want to make impact investments based not only on the social enterprises’ financial viability, but also on their mission alignment with the investors’ particular passions. Creating a match of an impact investor and social enterprise is thus quite difficult, and effective platforms are imperative to creating this match.”

This is the reason the IIX established Impact Partners, which is Asia’s first private placement platform that has seen investment opportunities of at least S$68mil (RM163mil).

“By creating a public trading platform, Impact Exchange, we are taking the next step in evolving the social capital markets, tremendously helping both social enterprises and impact investors,” she says on the rationale for the exchange.

On the profitability of the exchange, Shahnaz says that although she and her team expect the exchange to be profitable in the near future, the core focus will always be to help social enterprises and impact investors.

The social enterprise scene in Singapore is one that is growing. The industry will only move forward starting with launch of the exchange, and also with the help of Singapore’s social enterprise alliance. A toolkit with useful information for those who are keen to start a social enterprise is available on the website: http://www.sedc-seassociation.sg/. Like Malaysia, there are no legal forms that are specifically available to social enterprises in Singapore.

In 2012, IIX and Shujog encourage you to empower yourself to create change, starting with the strongest weapon in your arsenal: YOU! IIX and Shujog are launching the I-Factor Campaign this January, a movement that asks each person “What is your I-Factor?”.

It starts with a simple online test, helping you understand your strengths when it comes to contributing to social good, and harnessing them towards ACTION and EDUCATION. Once you ascertain your I-Factor, that’s when the real fun begins and we start connecting you with amazing people and ideas that are happening online and in your community.

Everyone has a role to play in the quest to making the world just a little bit better. Take the I-Factor test to find out your strengths in this mission and how they can be empowered for positive global change.

Take the I-Factor test today and start amplifying YOUR individual impact. 2012 is about making the leap. Start here!

IIX and Shujog are hosting our biggest Impact Forum to date on June 25 and 26 in Singapore as a culmination of our pioneering achievements thus far, including the upcoming launch of Impact Exchange – Asia’s first social stock exchange.

Impact Forum is a global conference focusing on examining the latest developments in Impact Investing and Social Enterprise in Asia Pacific. The Forum is bringing together over 500 participants-bankers, lawyers, social entrepreneurs, academics, and high government officials from across the globe. Utilizing IIX and Shujog’s on-the-ground experience and our extensive network of movers and shakers of the Asian Impact Investing and Social Enterprise spaces, the Impact Forum 2012 will provide a unique opportunity to learn, engage, and deepen experiences and relationships in these spaces. Register now!

“Social stock exchanges can make the world a better place, which goes back to what I thought capital markets should be doing all along,’ says Kraybill, managing director of Impact Investment Exchange Asia (IIX).”

Read the full article here and keep an eye out for the print edition due in February.

After opening remarks by David and a compelling introduction by Durreen, Alex and Robert sat down for a lively conversation on the state of impact investing and the evolving approaches that foundations and banks, among others, are taking to this emerging asset class – a topic to which Alex brought a unique perspective based on his current role at UBS and his former role as Chief Financial Officer of the Bill and Melinda Gates Foundation.

Our audience, which included old friends as well as new, was treated to a first person account of the Gates Foundation’s historic decision to begin committing a portion of its endowment to impact investments. Alex also shared insights from some of the impact investments that the foundation undertook under his watch, including a guarantee of a pioneering bond offering by charter school operator Kipp Academy, which helped to catalyze private sector investment into this innovative section of the education market. Alex also shared his motivations for joining UBS and discussed the bank’s decision to devote significant resources to impact investment.

A lively Q&A included discussions of the importance of impact measurement to the development of the impact investment market, how investors think about the cost of capital when making impact investments, and the estimated potential of impact investing assets to grow to $1 trillion in the next 5 years and what it will take to reach this potential.

“A few shops have set out to build [impact investing] infrastructure. In March 2011, Singapore-based Impact Investment Exchange Asia (IIX), run by former Morgan Stanley colleagues Robert Kraybill and Durreen Shahnaz, launched a platform called Impact Partners. For an annual subscription fee, Impact Partners gives investors information about social enterprises throughout the Asia-Pacific region. Chosen for their financial viability and their social or environmental impact, the enterprises featured on the platform focus on everything from microfinance to fair trade to sustainable agriculture.”

Read the full article here.

More information about the Shujog’s research can be found here.

BBC News also covered the event, interviewing Dr. Rodin about how investors “can help meet the world’s needs” and the role IIX can play. More information about the interview can be found here.

Videos of comments by IIX Founder & Chairperson Prof. Durreen Shahnaz and Rockefeller Foundation President Dr. Judith Rodin are available online.

RF_IIX_Durreen from gyneth tan on Vimeo.

RF_IIX_Dr_Rodin from gyneth tan on Vimeo.

The video of the panel discussion will be hosted online soon.  For immediate enquiries, please email gtan@asiaiix.com.