Impact Investing Grows, but There’s Still a Dearth of Deals

Wednesday, May 6, 2015

A new study found that 146 of the world’s largest impact investors manage a big hunk of change: $60 billion. But they also continue to bemoan a lack of high-quality investment opportunities. And finding a way to exit isn’t easy.

The research, conducted by Global Impact Investing Network (GIIN) and J.P. Morgan , surveyed fund managers, foundations and other financial institutions globally to assess the state of impact investing today. In 2014, investors committed $10.6 billion to impact investments, with plans to commit 16% more in 2015. Of the total $60 billion being managed, 35% is proprietary capital and 65% managed on behalf of clients.

Other noteworthy findings:

  • Housing accounts for 27% of assets under management . Other sectors include energy (10%), healthcare (5%) and food and agriculture (5%), among others. Top regions are sub-Saharan Africa, followed by East and Southeast Asia, and Latin America and the Caribbean.
  • Most allocations are in private markets. (No surprise there).
  • Almost all respondents reported social and/or environmental impact outperforming or being in line with expectations.
  • Over the last five years, most private equity exits took place in microfinance and what the study calls “other financial services”, for a combined 26 of 77 exits.
  • Almost all respondents measure the social/environmental performance of their investments.
  • Most agree that, over the past five years, impact measurement practice has improved (77%) and governments are playing a more active role (67%).

So that’s all pretty positive.

There’s also a here we go again quality to some of the findings. Top challenges include a shortage of quality deals and lack of appropriate capital, both serious shortcomings and a refrain we have heard for a while now.

Source: Forbes (link opens in a new window)

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