South Africa switching onto investing for impact
New research from the UCT Graduate School of Business shows that more than 50% of the South African investment landscape is aware of the importance of investing not only for financial gain but for positive social impact as well.
The research, published today in the South African Investing for Impact Barometer reveals that 51% of private equity and venture capital investors and 54% of asset managers surveyed reported that they have been investing for social impact. A small subsection of private equity and venture capital investors, 3%, and asset managers, 6%, go further and describe themselves as “impact investors”.
The Barometer, a new annual survey published by the Bertha Centre for Social Innovation and Entrepreneurship at the UCT GSB, aims to provide an annual snapshot of the still nascent investing for impact market in South Africa. This is the first time in Africa that such a publication has been attempted. Dr Stephanie Giamporcaro, the academic brain behind the Barometer, said that by aggregating information on the industry in this way they hope to help academics, researchers, investment professionals, journalists, civil society and policy makers to grasp in a more tangible way what is actually happening in this field.
“In recent years there has been a marked international interest in investments that seek financial returns but that also aspire to proactively achieve a positive impact on society as a whole,” said Giamporcaro. “This is the first time in Africa that information about this growing sector of investment has been collected in one place. We were pleasantly surprised to see that such a large number of firms are aware of this form of investing because to a large extent the investing for impact market in South Africa is nascent and fragmented.”
The Barometer, which will be updated annually, includes detailed data on South African asset managers, which have been identified as implementing investing for impact strategies through specific funds labeled under the SRI umbrella (acronym used to refer to social responsible investment or sustainable and responsible investing). It also explores what is happening in terms of investing for impact strategies among South African private equity and venture capital firms and ventures into the sphere of enterprise incubators, who are taking the first step to boost social innovation. Data was systematically sourced from studies, reports, brochures and websites of professional associations and investment funds.
This first edition of the Barometer reveals that international standards or initiatives such as the Principles for Responsible Investment (PRI) and the Carbon Disclosure Project are known to asset managers involved in the SRI space but much less so for private equity and capital venture firms. To date the PRI has been signed by 75% of the asset managers but by only 15% of the private equity and venture capital firms surveyed. One asset manager and two private equity and venture capital firms in the survey manage impact pioneer funds as rated by the Global Impact Investing Rating System (GIIRS).
The three biggest players among impact investing asset management firms are Future Growth Asset Management, a subsidiary of the Old Mutual Investment Group, Oasis Crescent Management Group, and COMANCO, another subsidiary of the Old Mutual Investment Group. It also shows that there are 61 SRI labeled funds totaling R38.7 billion under management available in South Africa.
Among private equity and venture capital firms investing for impact, Old Mutual Investment Group South Africa, including African Infrastructure Investment Managers, is the biggest investor, followed by Actis and Abraaj Capital. Sourced from the South African Venture Capital and Private Equity Association (SAVCA) Full Members matrix 2012, there are 139 funds totalling to R386 billion under management, which include past, present and future funds.
The organisations surveyed give priority to infrastructure, transport, agriculture, enterprise development and health as the sectors considered for good financial returns and a positive impact on society.
“This data will form the baseline from now on as we continue to track trends in the sector,” says Francois Bonnici, Director of the Bertha Centre for Social Innovation and Entrepreneurship. “As a business school we feel we have a responsibility to gather this kind of information and make it available to the market, to produce an overall perspective of it, and to provide the right tools for making more informed investment decisions,” he says.
The South African Investing for Impact Barometer was born out of a year of planning and research. It will be officially launched at the Africa Impact Investing Conference held at the GSB in partnership with the Rockefeller Foundation, the Tony Elumelu Foundation and the Bertha Centre for Social Innovation and Entrepreneurship this week.
