3. 1. What’s taken place so far?
2. What’s attracted those investors?
3. What’s been a challenge in building the market?
4. The future - how do we grow this market?
Overview
4. The impact investing landscape in Australia
The SEDIF FUNDs1
The Goodstart syndicate
Purchase 678 child care centres from ABC
Learning
3
Social impact bonds
• Bonds to reduce out-of-home-care:
• UnitingCare Burnside - Newpin (SVA)
• The Benevolent Society
• Bond to address recidivism: Mission Australia
(SVA)
2
Other initiatives
Western Australia
• WA Government have commenced a $10m
capacity building grant program for social
enterprises.
4
The social
finance
landscape
Private
investors
Commonwealth
grant
Fund managers
Invested
in social
enterprise
6. • 44 HNWs and family trusts
• Debt obligation - 12% p.a. yield
• Significant business with proven government cashflows
• Deleveraged capital structure
• Strong governance (Board, CEO etc)
• Australia’s largest early learning provider
Goodstart - Key Features/Attractions
7. SVA Social Impact Fund
Social investors and the Commonwealth government have contributed capital to SVA’s
$8.65m Social Impact Fund, which invests in social enterprise in Australia
The Social
Impact Fund
(unit trust)
Social
enterprise
Social
enterprise
Social
enterprise
Social
investors
(unit
holders)
HNW individuals
PAFs
Foundations
DEEWR
grant money
The trustee
Fund
management
agreement
Trust deed
Governed by
trust deed
Fund
agreement
8. • Requirement for matched funding
• The SVA SIF has 33 investors, a mixture of HNWs and Trusts:
SIF - Investor profile
9
7
6
4
2 2
0
1
2
3
4
5
6
7
8
9
Individual
PAF
Family Trust
Private company
SMSF
Family Foundation
9. • Min $50,000
• Only open to ‘wholesale investors’ (Net Worth $2.5m and/or
earnings >$250,000)
• Government funds are ‘subordinated’ to investor monies
• Expected returns potentially in excess of 9% p.a.
• Supporting social enterprise
SIF - Key Features/Attractions
10. 10
SIF - Investments allocated $1.6m (19%)
11 jobs
Council approved, GPs
hired
37 jobs to date
11. Social Impact Bonds
A social impact bond is a contract where the public sector agrees to pay a
private service provider for delivering improved social outcomes that result in
government savings
Generic structure of a social impact bond
Government
Service
provider
Private
investor
Beneficiary of
service
Cost savings to
government
Government pays
investors when desired
outcomes are met
Summary
• Private funds used to fund preventative
programs
• If the program meets agreed targets, the
Government saves money and in
recognition of cost savings repays investors
principal and interest.
• If targets are not met, investors may not
receive any compensation
History
• The first (GBP 5m) was arranged by Social
Finance UK to reduce recidivism rates at
Peterborough prison
• A number of new SIB programs are
underway in NYC and Boston
Bonds in
Australia
Three pilot impacts bonds are in progress in
NSW
• Two Bonds to reduce out-of-home-care:
• UnitingCare Burnside (SVA)
• The Benevolent Society
• Bond to address recidivism: Mission
Australia (SVA)
Private
investors fund
a social
programDirect and
indirect cost
savings accrue
to government
Summary
12. Text slide may show a series of bullets
Sample of 24 pt text bullet
• Single spacing with 0 pt before line and 0.3 after line
• Text box size is 12.4 cm Height and 21.6 cm Width
• Text box position is 3 cm Horizontal and 3.4 cm
Vertical from top left corner
Newpin Social Benefit Bond
13. 13
Newpin SBB - Structure
Newpin SBB
Trust
SVA
UC NSW.ACT
NSW
Govt
1. $7m funds raised
2. $7m on-lent to
UnitingCare
$50k p.a.
3. ~$50m
over 7
years
4. Interest p.a. +
Principal
upon maturity
5. Coupon p.a. +
Principal upon
maturity
SBB Investors
14. Newpin SBB - Breakdown of investors
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
HNW -
Trust
HNW -
Super
HNW -
Individual
Institutional Trust Foundation
15. 15
Newpin SBB - Investor features
Key Protections
Interest Rate Min 5% p.a. during first 3 years
Principal Downside – First 4 years No greater than 25%
Years 5 – maturity No greater than 50%
Early Termination at < 45% Restoration
Rate (from Year 3)
Investors would receive a performance
based payment upon early termination
Full payout upon most Early
Termination Scenarios
Refer IM
16. • Min $50,000
• Only open to ‘wholesale investors’ (Net Worth $2.5m and/or
earnings >$250,000)
• Attracted two institutional investors (Christian Super & NGS)
• Expected returns potentially in excess of 10% p.a.
• Engaged with the underlying program
Newpin SBB - Key Features/Attractions
17. 1. Scale, particularly for institutional investors
2. Lack of liquidity
3. Understanding social outcomes as a risk/return
feature
4. Track record
5. Open up to retail – associated AFSL issues
Challenges in building the market
18. How do we grow?
Issue How to address
• Scale Housing, Aged Care, Health,
Education
• Lack of liquidity Build a secondary market
• Understanding social
outcomes
Build evidence base/measurement
• Track record Establish a history, expand offerings
• Retail market Confidence
