What is Impact Investment?
Impact Investment refers to investments made into companies, organisations and investment funds with the intention of generating a measurable, beneficial social or environmental impact alongside a financial return.
Examples of this asset class include investment into commercial agriculture, social housing, clean technology and microfinance as well investments into outcomes-based public services.
The impact investment sector has more than $75 billion assets under management, with estimates suggesting this could grow exponentially to $2 trillion, or 1% of global invested assets by 2025.
Impact Guernsey brings together leaders from Guernsey’s financial and professional service communities, together with representatives of the island’s government and regulator. The group aims to actively develop impact investment in Guernsey as the sector moves from niche to mainstream.
We are delighted to be developing a platform to promote this emerging asset class and hope to assist the States of Guernsey in formulating its policy in this area. - Justin Sykes, Chairman, Impact Guernsey
As a first step, Impact Guernsey has circulated a survey to measure the levels of activity and interest in impact investment, both on and off-island. Some of the early examples of impact investment in the island include:
Partners Group, a Switzerland-headquartered global private markets investment manager with an office in Guernsey, has been making social investments since 2006 when its employee foundation, PG Impact, was established.
In 2015, the group decided to institutionalise its impact investing practice through the creation of PG Impact Investments, a Guernsey-domiciled closed-ended collective investment scheme. Whilst seeking to distribute risk-adjusted returns to LP investors all profits from the GP are transferred to PG Impact Investments Foundation to support philanthropic activities.
The investment fund invests via both impact fund managers and directly into social enterprises with a strong focus on emerging markets as its goal is to create impact where the need for it is greatest.
Obtala Limited is a Guernsey-domiciled commercial agriculture and forestry company which is listed on AIM and available on the Social Stock Exchange, an impact investment brokering platform.
The company’s mission encompasses both the commercial and social aspects of impact investment:
"To become one of East Africa’s largest sustainable food and timber producers, consistently delivering world-class product to the global marketplace. To deliver material, positive social impact in East Africa through commercial enterprise, helping to alleviate poverty and enriching the lives of future generations.” – Our Mission, Obtala Limited
The company is one example of a firm establishing itself in Guernsey and pursuing a listing on the London Stock Exchange to gain access to the greatest number of investors.
As recently as December 2016, Catalyst Investment Management chose to domicile its latest clean-tech fund in Guernsey.
The closed-ended investment fund targets investments in clean energy in the MENA region. Initially, the fund is investing in Jordan, with the aim of expanding its activities to Tunisia, Morocco and Egypt. The fund attracted substantial investment from European Development Finance Institutions (DFIs) including the European Investment Bank.
"This is a significant new promoter and fund for Guernsey. The investment by these high profile DFIs demonstrates European commitment to the development of clean energy and showcases Guernsey as a jurisdiction suitable for both promoters and investors in this growing sector. We were delighted to be able to help the Catalyst team with their first Guernsey fund." – Kate Ovenden, Partner, Bedell Cristin
Home Loan Guarantee Company (HLGC) was established in 1990 as a not-for-profit company in South Africa to provide financial guarantees to lenders in an effort to encourage them to make home loans to lower-income South Africans at the peak of the country’s social and political unrest.
During the first decade of HLGC’s operations, the company's activities were hampered by its limited capital, which had been gifted by a number of benefactors. To overcome this, the company looked for a solution in the reinsurance market.
In 1999, Home Finance Guarantors Insurance ICC Limited (HFGIL), a wholly-owned subsidiary of HLGC, was incorporated in Guernsey. HFGIL facilitated access to the London reinsurance market which enabled HLGC to successfully grow its business to a point that it now has sufficient funds to carry the risk itself.
Founded in 2015, Innovest Advisory is a boutique consultancy company which links socially minded investors with impact investment opportunities worldwide.
Innovest Advisory’s private clients include family offices, trust companies, private foundations and private banks and on the investee side include social enterprises, grassroots financial institutions and first-time impact investment funds.
As well as investor and investee engagement, Impact Advisory provide reporting services that enable investors to understand the social impact of their investments.