In a collaborative move to strengthen and standardize the impact investing sector, Nexii and Impact Investment Exchange Asia (IIX) are pleased to announce the transfer of Nexii’s role in Impact Exchange to IIX.  With effect as from May 6 2013, IIX has taken over the cooperative management of Impact Exchange with the Stock Exchange of Mauritius (SEM).  Impact Exchange aims at being a social stock exchange with significant global reach, from Africa to Asia, two regions in the most need of capital assistance for sustainable development.

Tamzin Ractliffe, founder of Nexii, said, “We are delighted at this integration, will continue to work with the SEM and IIX to ensure a smooth handover and transition, and are enthusiastic to watch Impact Exchange’s ascension to importance within the financial services industry over the next decade.”

Professor Durreen Shahnaz, Founder and Chairwoman of IIX, commented, “This partnership with the SEM to develop Impact Exchange is an important step in consolidating the interest from impact investors globally to two regions that have the most potential to impact millions of lives for the better.”

The Evolution of Impact Exchange

In 2006, the SEM successfully launched the Development and Enterprise Market to support medium-sized and growing business in Mauritius. Building upon its experience and recognition by Africa Investor (Ai) as Africa’s most innovative stock exchange in 2011 and 2012, the SEM partnered with Nexii to jointly develop the regulatory framework of Impact Exchange, collaboratively drafting listing rules that would cater towards impact investment opportunities. Impact Exchange aims at becoming a platform for the public to invest in and trade shares of social enterprises while assuring mission alignment to social and/or environmental impact. Impact Exchange is designed to be operated and regulated by the SEM. As Impact Exchange becomes operational, IIX will assume Nexii’s current role to oversee impact reporting requirements.

“Impact Exchange is a pioneering effort in democratizing access to investment information, market infrastructure and capital for both impact investors and social businesses or impact investment funds – a stepping stone towards achieving scale in the impact investment sector”, said the SEM’s CEO, Sunil Benimadhu.

Impact Exchange Moving Forward

IIX will work directly with the SEM to build upon the platform’s potential and work towards its launch in the future. Nexii will continue to support Impact Exchange by accrediting Authorised Impact Representatives through the Impact Trust, a move that will establish an independent qualification for intermediaries, with the intention of servicing social stock exchange initiatives globally.

IIX’s entry into Africa through the Impact Exchange relationship with the SEM is a strategic acquisition.  “We are excited for this expansion of our footprint. IIX is currently raising capital through Impact Partners, its private placement platform impacting lives of thousands across Asia. With Impact Exchange, that impact can be multiplied to millions reaching both Africa and Asia. Impact Exchange will also allow for every citizen in this world to become an impact investor and part of the democratization of capital markets”, Shahnaz said.

“As Impact Exchange is a pioneering effort to use public markets for impact, we are excited to work with IIX given their track record of success connecting Social Enterprises to investment capital. We thank Nexii for their initiative and the passion they have brought to this project”, stated Benimadhu.

Interested Social Enterprises and investors can attend IIX’s annual Impact Forum, held in Singapore June 13-14, 2013 where more details of Impact Exchange’s operations will be unveiled.  Registration and further information on the Forum can be found at www.impactforum.asia.

For further information on how to become an accredited Authorised Impact Representative, visit http://impacttrust.co.za/subscribe/ to sign-up for further information.

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About NEXII:

Nexii’s vision is of an inclusive, sustainable and ethical capital markets system that promotes prosperity for all and pays as much attention to issues of people and the planet as it does to issues of financial profit. Nexii is dedicated to building the impact investment market infrastructure and integrated intermediation services necessary to help businesses operating in sustainable sectors to raise capital and trade financial securities. For more information, please visit www.nexii.com

About IIX:

IIX is revolutionizing the way the world looks at sustainable economic development through the creation of social capital markets. It is operating investment platforms, developing products and ecosystems to connect socially and environmentally mission-driven enterprises with impact investors. IIX currently operates Impact Partners and Impact Incubator, two private placement platforms – the largest in the world in the impact investing space, offering social enterprises based in Asia Pacific a marketplace to raise private capital. IIX platforms have successfully raised pioneering investment capital for many social enterprises across the region. IIX’s sister entity Shujog focuses on doing impact assessments for social enterprises and plays a crucial role in the capital raising process. For more information, please visit www.asiaiix.com , www.impactpartners.asiaiix.com and www.shujog.org

About SEM:

Over the years, SEM has been at the forefront of innovation in the Exchange space in Africa, emerging as a reference Exchange on the African continent.  SEM is today one of the leading frontier Exchanges and a full-fledged member of the World Federation of Exchanges (WFE).SEM is presently actively pursuing its internationalisation strategy, which is aimed at moving up the value-chain of products listed/traded on the SEM platform and setting the stage for the Exchange to gradually emerge as an attractive listing, trading and capital-raising platform offering international and multi-currency products. For more information, please visit www.stockexchangeofmauritius.com

About IMPACT TRUST:

The Impact Trust’s mission is to facilitate access to financial, intellectual and political capital for social and environmental solutions through research, impact finance product design, advocacy and education. It is also responsible for accrediting Authorised Impact Representatives, qualified firms and professionals in impact measurement, evaluation, and due diligence. Its work most recent includes developing a pilot for the first social impact bond in South Africa and research into stimulating SME and social business growth through taxation frameworks and legal structures. For more information, please visit www.impacttrust.co.za

Contact Information: For further comments or details on the story, please contact

Nexii / Impact Trust: Tamzin Ractliffe at tamzin@nexii.com or +27 (0) 21 794 0451

IIX: Lina Tang at ltang@asiaiix.com or +65 6221 7051

SEM: Nishan Aubeeluck at nishan.aubeeluck@sem.intnet.mu or +230 212 9541

Impact Forum is happy to partner with Bloomberg Media in spreading the word of Impact Investing across Asia. Register now to save your seat.

Join us in this monumental event for Impact Investing as we bring the top movers and shakers in the space to partake in discussions on Investing in Inclusion.

In the spirit of Investing in Inclusion, Impact Partners is celebrating Social Enterprises (SEs) that are ready to scale their impact at the Impact Forum SE Showcase.

Get to know these SEs from across the region and the exciting investment opportunities they present in the sectors of energy, education, health, and many more. The Impact Forum SE Showcase will be held on 13-14 June 2013 in Singapore. Purchase your Impact Forum ticket here and indicate your interest to attend the SE Showcase. Impact Partners investors may avail of special rates for purchasing both Forum and gala dinner tickets.

For more information, please send an email to enquiry@asiaiix.com.

For full details of ACSEP’s work, please see http://bschool.nus.edu.sg/acsep

Please download the PDF article to read more. 

Oxfam’s £1 billion loan to Mongolia’s Xac Leasing blurs the line between private equity funds and not-for-profit organisations.

The transaction highlights the growing trend of impact investments, or utilising private equity strategies for investments focused on the greater good. It also signals environmental, social and governance (ESG) issues becoming more important for private equity funds.

However both trends raise questions about the for-profit and non-profit status of companies, and may signal the introduction of new corporate structures.

“Charities are excited about impact investing because regardless of budget, there are still billions of people in poverty and never enough resources,” said Matthew Kasdin, legal advisor for Impact Investment Exchange Asia (IIX), a platform for social enterprises to raise capital. “They see impact investing as a way to scale up their impact.”

Impact investments involve making investments in both for-profit and not-for-profit social enterprises which prioritise their missions over the business side.

But its exact definition is not settled. Some believe that impact investments should earn a pure market rate of return while others believe they should earn a so-called muted return – not as much as in a traditional investment.

“That isn’t necessarily settled in the industry, and I believe it never should be, as it is better to have a big tent servicing all investor appetites,” Kasdin.

New structures

It is essential that companies structure themselves for impact investments, and that investors are made aware of any of the company’s goals that differ from those of traditional corporations.

Social enterprise goals can be built into legal documentation. In a recent deal completed by IIX in the Philippines, the documentation included a investor representation that they recognized they were investing in an impact enterprise, and that management would be making decisions to advance the company’s social mission rather than to solely maximise profits.

“The company’s social mission was built into its articles of association and it was required to report on its social impact,” he said.

Traditional corporate or non-profit structures often do not fit a social enterprise’s needs, and there has been a push to introduce new corporate structures to encourage impact investors.

Kasdin said there has been a movement to form new legal structures and accommodate social enterprises. In the US, these take the form of benefit corporations and low-profit limited liability companies, called L3Cs. In the UK, there is the community interest company, while Korea has a special social enterprise law. The Philippines and other Asia-Pacific jurisdictions are following suit

What it means for private equity

Impact investments have taken off as ESG issues become more important to private equity firms. IFLR recently spoke with Kohlberg Kravis Roberts’ (KKR) director of European corporate affairs and head of sustainability about the firm’s focus on ESG issues.

But as the asset class becomes more prominent, counsel warn about blurring of the line between not-for-profit and for-profit organisations and activities.

A private equity lawyer agreed that ESG issues have come into focus in the last year as more investors require firms to disclose their social and corporate governance policies. These factors have long been a concern for multilateral investors such as the Asia Development Bank and the International Financial Corporation.

However maintaining charitable status in some jurisdictions prohibits firms from participating in any activity for profit. “It’s untested ground for a lot of countries,” the counsel said.

A level playing field for private equity firms and impact investors is also a concern as the investment process is nearly the same for impact and private equity investments. Private equity firms are especially wary of tax breaks charities receive, although they are participating in similar investment activity.

For US charities non-charitable activity such as impact investments will be taxable, though it is still unclear how taxation will work in other jurisdictions.

Some private equity funds are looking into impact investing. India’s Motilal Oswal Private Equity recently established a Rs 250-300 crore fund for investments in social enterprises. As impact investing becomes more popular and private equity further focuses on ESG issues, there may be more competition ahead for investment into well-run companies focused on social issues.

Click here for the pdf version or here for the original article.

Social enterprises play a vital role in addressing social and environmental challenges in developing countries in Asia and the Pacific.

With a significant number of people living in extreme poverty in Asia and the Pacific, social enterprises, i.e., organizations that pursue social goals through commercial strategies, serve as a vital link to narrow the gap in the region’s income disparity.

“Social enterprises harness the power of the market to tackle social and environmental problems in a sustainable, scalable fashion. They may be set up as a nongovernment organization (NGO) or a small business, but they operate like a business rather than a charity while pursuing their socially oriented mission,” said Bart W. Édes, Director of ADB’s Poverty Reduction, Gender and Social Development Division.

“The power of social capital markets lies not only in having great ideas but the ability for the ideas to meet investments.” - Professor Durreen Shahnaz, founder of IIX and Shujog

ADB supports sustainable and scalable models that combine private sector impact with the goals that are traditionally associated more with operational NGOs. These efforts are very much aligned with the United Nations’ celebration of the International Day for the Eradication of Poverty on 17 October 2012, encouraging all to help uplift the situation of poor people around the world.

Impact on Asian poverty

Success stories involving social enterprises abound in Asia and the Pacific. For example, in Cambodia, thanks to Sahakreas Cedac Ltd., five thousand farmer families learned technologies to improve their rice production and build their cooperatives, providing them with links to markets where they can sell their produce. As a result, they are starting to earn higher income and can now afford to send more children to school.

In Indonesia, Kedai Balitaku or Kebal is using “kaki lima”, an Indonesian food cart to provide healthy, affordable, and tasty food like the “Bubur Beras Merah” or red rice porridge to poor children in Jakarta. The enterprise has grown to four cooking centers and 22 food carts to help address malnutrition in the area.

Stories like these were shared in the first annual regional Impact Forum held in Singapore in June 2012. The Impact Investment Exchange Asia (IIX), also a social enterprise, organized the forum, while ADB supported some sessions to highlight outputs of an ongoing study on the creation of a platform to connect social enterprises with impact investors to benefit poor communities.

Ideas meeting investments

“The power of social capital markets lies not only in having great ideas but the ability for the ideas to meet investments. The Impact Forum presents the platform in which innovators can meet with investors who are inspired by the social enterprises’ vision and bring this vision to a larger scale,” said Professor Durreen Shahnaz, founder of IIX and Shujog, a Singapore-based, nonprofit sister organization of IIX that helps social enterprises around Asia to improve their organizational and fiscal accountability and enhance their governance in order to improve their attractiveness to potential investors.

Drawing upon Shujog’s expertise, ADB has prepared reports that offer insight into the role of social enterprise in different sectors and developing countries in Asia.

Harnessing the power of the markets, ADB continues to collaborate with partners to strengthen the promotion of social entrepreneurship and impact investing for the benefit of the region’s poor.

Click here for the pdf version or here to view the original article.

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.