Impact Investing Australia gets set for $350m fund

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 (Pictured: Dan Madhavan)

Australia is putting into action the grand plans hatched last year by the G8 countries, led by the UK, to foster impact investing with the recruitment of an experienced financial services executive as the first CEO of Impact Investing Australia. One of the not-for-profit organisation’s early goals is to provide the framework for a $350 million impact investment fund.

Daniel Madhaven, who until recently spent 12 years at JB Were in a range of roles including chief operating officer, said the goals and action points of Impact Investing Australia were clearly set out in the strategy launched in September – ‘Delivering on Impact – with governmental and investment community support.

“We aim to raise a fund, of $350 million over five years,” he said. “It won’t be our role to run it but rather to bring together a group of people to make those decisions. We also want to raise a pool of money, of between $10-20 million, and the resources to assist not-for-profits and social enterprises to position themselves better for funding. And we will also engage in market building, which is to do with the establishment of basic infrastructure, such as the provision of investment surveys and benchmarking, and making available data which investors need for their own decision making.”

Impact Investing Australia was established early this year under Rosemary Addis, the organisation’s chair, to provide leadership in the area and remove barriers to development of the market. With Madhaven on board, Addis will be concentrating on her broader role, including interacting with similar bodies around the world.

Madhaven says he is well aware of the many challenges for impact investing to be addressed, however, there is a clear trend of interest from investors at all levels. For instance, there was a session on impact investing at this year’s AIST-sponsored Australian Superannuation and Investments conference in Alice Springs – addressed by Addis and Richard Brandweiner, the CIO of First State Super and one of the Australian advisory board members – and another session on ‘ethical investing’, which included a lot of discussion about impact investing, at this month’s SuperRatings and Lonsec conference in Sydney.

Madhaven says he is even aware of the various definitional discrepancies used to describe ‘impact investing’, although this seems to be becoming less of an issue, in the same way that ‘ethical’ has morphed into the generally accepted ‘ESG’ principles which are universally adopted by big institutional investors in their processes.

With impact investing, a big issue for super funds is size. Most investments designed to have a socially beneficial outcome while providing a good return to investors are quite small. Christian Super, a $1 billion fund which has been a pioneer in this field, has even found it difficult to get set in all the NSW Government’s social impact bond issues which it would have liked. What chance has the $70 billion AustralianSuper got?

“People are still trying to find out exactly how they can participate,” Madhaven said. “Size is an issue that goes to the heart of the maturity of this sector. Our role is to try to make it happen faster than it would do organically.”

For him, the career shift from JB Were to Impact Investing Australia made a lot of sense, although he admits it would not seem to be a logical move. While he had done a lot of charitable work with disadvantaged youth in his spare time, and worked for the Foundation of Young Australians, he did not have this in mind when he left JB Were.

“After I left, for no reason but to have a change after 12 years there, I did a couple of meetings for financial services jobs, but I found myself asking whether there was something more I could do,” he said. “I came across Rosemary [Addis] and Impact Investing Australia and I thought it was something I would really like to get involved with.”

 

– Greg Bright

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