GIIN in the news Press releases

  • Venture Capitalists Plan to Invest $53 Million in Social Businesses

    via Economic Times of Indiaby Ahona Ghosh

    August 01, 2010

    Summary

    Traditional venture capital firms are increasing their investment into social and environmental businesses in India.

    From Economic Times article:

    In the 20-company portfolio of Nexus Venture East, a $320 million venture capital (VC) fund, three businesses stand out. There's Suminter India Organics, which does contract farming for organic produce; D.light Design, which provides solar lighting solutions; and Sohan Lal Commodity Management, which provides grain warehousing facilities in small towns and villages in 12 states.

    Nexus refers to them as 'impact investments' - businesses where the pursuit of profits is accompanied by the premise of social good.

    In the four years it has been in India, Nexus has invested $10 million in social businesses. However, in the next six months alone, it expects to match that amount. Says Sandeep Singhal, co-founder, Nexus: "Businesses are targeting the bottom of the pyramid because people have a genuine ability to pay. So, we are looking at a few good deals in this space."

    Read original article

  • SKS Microfinance IPO Attracts Strong Demand

    via Wall Street Journalby Satish Sarangarajan, John Satish Kumar

    August 01, 2010

    Summary

    SKS Microfinance, the world's second microfinance institution to have an initial public offering, has attracted both institutional and retail investors.

    From original article:

    SKS Microfinance Ltd.'s $347 million initial public offering of stock was subscribed 13.8 times after drawing strong investor demand, one of the bankers involved in the deal said Monday.

    The IPO, the first in India by a microfinance institution, has attracted significant attention to an area of the economy that is still nascent as an organized sector.

    Order-taking from institutional investors ended Friday, and orders from retail investors ended Monday.

    Read original article

  • Big Brokerages Must Work to Embrace Microfinance

    via Financial Timesby Tom Stabile

    July 31, 2010

    Summary

    This opinion piece, which first appeared in the Financial Times Fund Manager section, identifies an emerging market for financial intermediaries in microfinance, an investment sector that satisfies the demands of investors with social motivations.

    From original article:

    Two trains are chugging through the post-crash marketplace - one full of wealthy US investors willing to put their capital toward a mix of investment return and social good, and the other of developing world entrepreneurs and institutions hungry for modern financial tools.

    But for now, they move along separate tracks with no junction in sight.

    While "impact investing" - the concept of forgoing some percentage points of market return in exchange for a measurable social benefit - is not widespread, US advisers say they see many clients today scouting opportunities beyond simple philanthropy.

    Read original article

  • Rich I.P.O Brings Controversy to SKS Microfinance

    via New York Timesby Stephanie Strom, Vikas Bajaj

    July 28, 2010

    Summary

    The New York Times writes how the impending initial public offering of SKS Microfinance shares has raised a debate about the future of its non-profit partnerships, and the future of the microlender's social components.

    From original article

    The question is whether the social good will be as amply rewarded.

    SKS Microfinance is not the first microlender to go public, and there has long been debate over whether social enterprises should be turned into giant commercial operations. Proponents of commercial microfinancing say the money raised can provide even more loans to the needy than relying only on charitable donations.

    Read original article

  • Microfight

    via The Economist

    July 28, 2010

    Summary

    The Economist examines the potential trade-offs that socially-motivated microfinance institutions must weigh as they consider an initial public offering — and what these trade-offs might mean for impact investors in these institutions.

    From original article:

    The loans that microfinance companies make may be tiny but their ambitions can be vaulting. Take SKS Microfinance. Already India's biggest microlender, with 6.8m clients and 5.8m active borrowers in the year ending on March 31st (see chart), it intends to become the world's largest by 2012, with 15m clients. To fund this growth, it hopes to raise nearly $350m by selling a 21.6% stake in an initial public offering (IPO) which got under way this week.

    According to the Consultative Group to Assist the Poor (CGAP), a think-tank housed at the World Bank, the IPO is only the second by a pure microfinance institution, after the offer by Mexico's Compartamos Bank in 2007. More may follow. CGAP reckons that SKS's move "should set the stage for future IPOs in the sector." The omens are good. On July 27th SKS announced that it had raised $64m from anchor investors, including JPMorgan Chase, Morgan Stanley, and India's ICICI Prudential and Reliance Mutual Fund, at the top end of the expected price range.

    Commercialisation appals some. Muhammad Yunus, the head of Bangladesh's Grameen Bank and the industry's founding figure, has described Vikram Akula, SKS's founder, as a "capable young man [who] took a wrong turn when he decided to use microcredit for making money." But Mr Akula points out that the amount lent by Indian microlenders in 2008 was less than 10% of estimated demand. He reckons that SKS should be doing more microfinance and doing it fast. That means making enough profit to attract capital.

    Read original article

  • With Squeeze on Credit, Microlending Blossoms

    via New York Timesby Kristina Shevory

    July 27, 2010

    Summary

    In the recent recession, microlending organizations which began by serving small businesses in the developing world are starting to lend in the United States.

    From original article:

    Before the economic collapse, microfinance - the granting of very small loans, mostly to poor people - was a concept most closely associated with the developing world. But tight credit and the recession have increased the demand for smaller loans in the United States, giving microlending a higher profile and broadening its appeal. Both Kiva and Grameen Bank, a microfinance group that is based in Bangladesh and was started by Muhammad Yunus, winner of the Nobel Peace Prize for his groundbreaking work in microlending, have widened their lending to Americans.

    Read original article

  • I4c Campaign Invests in Environmental, Social Change

    via Denver Postby Greg Griffin

    July 09, 2010

    Summary

    Impact investing gains visibility at the Lilith Fair, thanks to musician, entrepreneur, and Denver-native Casey Verbeck, whose idea for collaboration is profiled in this article.

    From original article

    Roughly $1 from each [Lilith Fair] ticket sale is invested in three companies and one nonprofit organization chosen by Verbeck and organizers of the female-oriented concert tour. The ventures also are promoting themselves at the concerts. Verbeck would not disclose the size of the investment.

    "The people who are truly tackling today's biggest challenges are doing it through entrepreneurship and collaboration," Verbeck said. "People are realizing they can be philanthropic and profitable."

    Verbeck, who managed the Yonder Mountain String Band until he quit to help raise his children a few years ago, said he is an entrepreneur at heart. He was looking for a way to support young companies with sustainable models or "triple bottom lines" of people, planet and profit.

    A growing field of venture-capital and private-equity firms serves these businesses. Impact investing, as it is called, is similar to socially responsible investing but seeks out companies targeting social and environmental problems rather than screening out those deemed harmful.

    Read original article

  • Wealthy Attracted To Impact Investing

    via Financial Advisor Magazineby Bruce Fraser

    June 05, 2010

    Summary

    From original article:

    "Investors and financial advisors looking for a way to achieve social and environmental impact, as well as financial reward, might want to consider impact investing.

    Around the world, particularly in underdeveloped, poverty-stricken countries from East and West Africa, to Central America, to South Asia, impact investing is attracting wealthy investors. Impact investing attracted attention last year with the launch of the Global Impact Investing Network, or GIIN, based in New York, a collaboration platform and information hub designed to accelerate the development of impact investing in a more efficient, effective manner."

    Read original article

  • With Impact Investing, a Focus on More Than Returns

    via New York Timesby Paul Sullivan

    April 22, 2010

    Summary

    Impact investing is discussed as a growing trend among wealthy individual investors in this New York Times 'Wealth Matters' column.

    From original article

    More often, impact investing is described by what it is not. It does not work in the same way as socially responsible investing, which excludes areas a person does not want to invest in - like tobacco or guns - through a simple screening process. Impact investing focuses more on bringing about change - helping the working poor in India buy a home, for instance.

    While most of the money is going into areas like helping to reduce poverty and improving the climate, it is not philanthropy. Investors expect at least a return of their capital with an adjustment for inflation and, in many cases, a lot more than that.

    In the piece, GIIN Director Camilla Seth offers perspective on why standards like the Impact Reporting and Investment Standards (IRIS) are needed in the impact investing industry:

    One of the main reasons for the slow growth is the lack of basic investing information. The Global Impact Investing Network is trying to remedy this. It has created standards to measure what a recipient says it is doing. "If an investor is trying to create jobs, the question is, 'How do I create more jobs?' " Ms. Seth said. "Everyone was measuring it in a different way. We want a job to be a job to be a job." She said the network had also built a reporting platform to track how investments were accomplishing their goals.

    Read original article

  • Banks Making Big Profits From Tiny Loans

    via New York Timesby Neil Macfarquhar

    April 12, 2010

    Summary

    This front page New York Times article delves into the current conversation within the microfinance sector about the balance between social impact and financial returns.

    From original article

    [Microfinance] has grown so popular that some of its biggest proponents are now wringing their hands over the direction it has taken. Drawn by the prospect of hefty profits from even the smallest of loans, a raft of banks and financial institutions now dominate the field, with some charging interest rates of 100 percent or more.

    "We created microcredit to fight the loan sharks; we didn't create microcredit to encourage new loan sharks," Mr. [Muhammad] Yunus recently said at a gathering of financial officials at the United Nations. "Microcredit should be seen as an opportunity to help people get out of poverty in a business way, but not as an opportunity to make money out of poor people."

    The fracas over preserving the field's saintly aura centers on the question of how much interest and profit is acceptable, and what constitutes exploitation. The noisy interest rate fight has even attracted Congressional scrutiny, with the House Financial Services Committee holding hearings this year focused in part on whether some microcredit institutions are scamming the poor.

    * * *

    Underlying the issue is a fierce debate over whether microloans actually lift people out of poverty, as their promoters so often claim. The recent conclusion of some researchers is that not every poor person is an entrepreneur waiting to be discovered, but that the loans do help cushion some of the worst blows of poverty.

    "The lesson is simply that it didn't save the world," Dean S. Karlan, a professor of economics at Yale University, said about microlending. "It is not the single transformative tool that proponents have been selling it as, but there are positive benefits."

    Read original article

  • Architects of a 'Social Investment Data Engine'

    via Financial Timesby Tom Stabile

    April 11, 2010

    Summary

    Tom Stabile of the Financial Times writes about the Global Impact Investing Network and the emergence of an impact investing industry that supports for-profit investment in funds and businesses that produce social or environmental benefits.

    From original article

    A new group is aiming to revolutionise the standard maths used to select investments for billions of dollars worth of assets by constructing a data engine that contrasts - and quantifies - the tangible social benefits of investing opportunities.

    The common recipe to judge an investment's relative worth often hinges on its performance against benchmarks or peers, but the new system's architects want to inject a measurement of social good into that valuation. The New York-based Global Impact Investing Network and its partners aim to introduce a broadly accepted arbiter to determine, for instance, whether 20 seasonal jobs on a Kenyan coffee farm produce the same social good as 20 full-time positions at a textile factory in Guatemala - and help investors use that information alongside financial returns data.

    The drive to build and pilot a taxonomy, database, portfolio management tool and rating system to standardise comparisons of social benefit started out in the "impact investing" world - a smallish community of organisations trying to bring capital to developing world business enterprises on the front lines of combating poverty and underdevelopment. The sector, which focuses on merging goals of generating both social good and financial returns, now has more than $50 billion (GBP 33 billion, EUR 37 billion) in assets, but an industry estimate sees potential for that volume to grow to $500 billion within the next decade.

    ***

    The target of GIIN's Impact Reporting and Investment Standards initiative are the masses who would be willing to choose investments based on their social benefit if only they had a credible way to measure it, says Sarah Gelfand, director of the IRIS project. The approach differs from better-known environmental-social-governance (ESG) reviews, because those tilt more toward analysing actions to minimise socially negative behaviour and often do not capture comparable, quantifiable data points.

    "The difference here is that we're trying to look at the proactive, mission-driven organisations that maximise positive impact," Ms Gelfand adds. "This absolutely is meant to build a market for the for-profit investing world to participate, and to use standards, auditing practices, and rating agencies that would make [impact investing] more accessible to the broader investment community."

    Read original article

  • The Impact of Green Investing

    via Australian Broadcasting Corperationby Sue Lannin

    March 24, 2010

    Summary

    The Australian Broadcasting Network runs a story about environmentally-focused impact investing opportunities, and the growth of interest in impact investing.

    From original story:

    Concern about the impact of business on the planet has seen impact investing take-off overseas.

    That is when investors put money into funds or projects which solve environmental or social problems as well as generate profit.

    The Global Impact Investing Network is funded by private investors including the Rockefeller Foundation and the Bill and Melinda Gates Foundation.

    It works on improving standards in the impact investing industry.

    Louise O'Halloran, from the Responsible Investment Association, says environmental and socially themed investment funds are attracting high net worth individuals overseas.

    She says the time of the green fund is coming.

    "It's on its way. Very powerful people and very wealthy people want to find these kind of investment solutions where it's not a donation, it's not a conservation grant," she said.

    "What it is, is a vehicle that's been structured so they do get returns."

    Read original article