This article was published in the Guardian Newspaper on June 26, 2014
Asia's social stock exchange poised to list first Retail Impact Bond
The time is ripe to launch a retail impact bond in Asia, says former Wall Street investment banker Durreen Shahnaz
• Social Stock Exchange – the rise of international competitors
• What a social stock exchange could do for social business
• Social Stock Exchange – the rise of international competitors
• What a social stock exchange could do for social business
Former Wall Street investment banker Durreen Shahnaz. Photograph: Impact Investment Exchange Asia
In my first TED talk Defiant Optimism for Development,
I had four minutes to convince the world about the benefits of a social
stock exchange. Four minutes and four years later, I have created an
exchange in Asia which will host a revolutionary financial product to
change lives.
In its report Impact Investing: An emerging Asset Class, Global Research, 2010, JP Morgan estimated that the impact investment market has the potential to absorb between $400bn and $1trn by 2020. This is a large number to achieve and it would require participation from all investors – especially retail investors.
I am now creating what I believe is the first Retail Impact Bond (RIB) to tap into this new investment base.
The bond, which we aim to launch in the next year, will be between $5m-$10m and will float on the Impact Exchange, which I created last July. It will focus on key areas such as clean energy access, sustainable food sources, urban planning, healthcare and education.
Why did I choose Asia? With approximately 700 million people in Asia and the Pacific living on less than $1 a day, social enterprises are uniquely positioned to bring about equitable growth in the region.
The RIB creates a liquid market for public investments that generate social and environmental value. It's a bit like large scale "crowdfunding" as an investment and not a donation and can catalyse the democratisation of social capital markets, shifting its impact from niche to mass.
While Asia remains the birthplace of several large, now sustainable NGOs such as Grameen Bank – where I previously worked – and BRAC, these entities are the exception rather than the norm and receive much government and donor support.
But days of unlimited philanthropy and donor funding are going. The social enterprises emerging in Asia are not in the same position as the first generation of NGOs were in most of the Asian countries. Most of these social ventures are mid-sized with limited access to grant or investable capital. However, they are positioned to take advantage of unique opportunities for growth and support.
The rise of wealth in Asia, for one, means there is a growing appetite and awareness for impact investing. NGOs are preparing to graduate from donor dependency by changing their legal status and becoming for-profit social enterprises.
We believe this is the only full-scale social stock exchange with an ability to issue and trade shares and bonds of social enterprises from across the globe. It enables trading in securities (including shares and bonds) issued by social enterprises and funds that invest in them. Each entity intending to list will be required to appoint an Authorised Impact Representative (AIR) – an accredited social adviser – who will provide support through the listing process and ensure that the issuer complies with impact requirements.
In my recent TED talk I spoke about combining the best of philanthropy and capital markets to create "social capital markets" that work for all. Issuing an RIB on the Impact Exchange is the best demonstration of this – a much-needed task for creating sources of equitable growth in the world.
Durreen Shahnaz is founder and chair of Impact Exchange and parent company the Investment Exchange Asia (IIX).
In its report Impact Investing: An emerging Asset Class, Global Research, 2010, JP Morgan estimated that the impact investment market has the potential to absorb between $400bn and $1trn by 2020. This is a large number to achieve and it would require participation from all investors – especially retail investors.
I am now creating what I believe is the first Retail Impact Bond (RIB) to tap into this new investment base.
The bond, which we aim to launch in the next year, will be between $5m-$10m and will float on the Impact Exchange, which I created last July. It will focus on key areas such as clean energy access, sustainable food sources, urban planning, healthcare and education.
Why did I choose Asia? With approximately 700 million people in Asia and the Pacific living on less than $1 a day, social enterprises are uniquely positioned to bring about equitable growth in the region.
The RIB creates a liquid market for public investments that generate social and environmental value. It's a bit like large scale "crowdfunding" as an investment and not a donation and can catalyse the democratisation of social capital markets, shifting its impact from niche to mass.
While Asia remains the birthplace of several large, now sustainable NGOs such as Grameen Bank – where I previously worked – and BRAC, these entities are the exception rather than the norm and receive much government and donor support.
But days of unlimited philanthropy and donor funding are going. The social enterprises emerging in Asia are not in the same position as the first generation of NGOs were in most of the Asian countries. Most of these social ventures are mid-sized with limited access to grant or investable capital. However, they are positioned to take advantage of unique opportunities for growth and support.
The rise of wealth in Asia, for one, means there is a growing appetite and awareness for impact investing. NGOs are preparing to graduate from donor dependency by changing their legal status and becoming for-profit social enterprises.
We believe this is the only full-scale social stock exchange with an ability to issue and trade shares and bonds of social enterprises from across the globe. It enables trading in securities (including shares and bonds) issued by social enterprises and funds that invest in them. Each entity intending to list will be required to appoint an Authorised Impact Representative (AIR) – an accredited social adviser – who will provide support through the listing process and ensure that the issuer complies with impact requirements.
In my recent TED talk I spoke about combining the best of philanthropy and capital markets to create "social capital markets" that work for all. Issuing an RIB on the Impact Exchange is the best demonstration of this – a much-needed task for creating sources of equitable growth in the world.
Durreen Shahnaz is founder and chair of Impact Exchange and parent company the Investment Exchange Asia (IIX).
No comments:
Post a Comment