Tue | Oct 16, 2018

Growth & Jobs | Global investment movement to target local businesses

Published:Tuesday | September 25, 2018 | 12:00 AM
From left: Saffrey Brown engages Kelly Silvera, general manager at Toucan Limited, Jermaine Deans, deputy general manager, JN Fund Managers, and Dr Suzanne Shaw, chief executive officer, the Leap Company.
Meeting attendees giving critical feedback.
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The launch of the Leap Impact Investment Fund places Jamaica and the Caribbean squarely at the centre of a new global investment movement, says The Leap Company's chief executive officer and Head of Impact Investment, Dr Suzanne Shaw.

"The fund will invest in companies built on profitable models with the intention of generating measurable social and environmental impact alongside a financial return," Shaw said, noting that. "The requirement for both profitability and sustainability is what differentiates it from other types of investment.

"Impact investment directs money to entrepreneurs who can identify local problems and address those problems through business," Shaw explained. "And as these businesses are based on profitable models, they will be able to deliver sustainable solutions year on year without the need to rely on grants."

Managed by the Leap Company, in partnership with JN Fund Managers, the Leap Impact Investment Fund has a capitalisation target of US$30 million and a minimum gross target return for investors of 13 per cent Shaw told potential investors and social entrepreneurs seeking funding, at a meeting in New Kingston, recently.

"Data show that impact investment funds have a financial performance on par with traditional private equity funds, and, indeed, that smaller impact funds - less than US$100 million - outperform traditional funds," the energy economist told her audience. "The fact that we have a relatively small and targeted fund allows us to be confident about our expected returns."

 

Reduce barriers

 

The Global Impact Investing Network, which seeks to reduce barriers to impact investing, estimates that the value of the impact-investing sector has roughly doubled from $114 billion in assets under management, in mid-2017, to $228 billion, currently.

"More and more investors are turning towards impact investing. The Leap Impact Investment Fund brings this opportunity to Jamaican and the Caribbean," Shaw stated. She explained that the fund would focus on renewable energy and energy efficiency, climate-smart agriculture, circular economy; and sustainable infrastructure.

Jermaine Deans, deputy general manager, JN Fund Managers, told the audience that the partnership his firm formed with the Leap Impact Investment Fund was an opportunity for it to craft innovative financial instruments to provide capital investments for this rapidly growing sector.

"We want to play a role in improving peoples' lives, the country, and the financial environment across the Caribbean," Deans said. "And we will seek to achieve this by easing access to investment for businesses that provide positive social or environmental impact."

A licensed securities dealer and a full-service investment manager, JN Fund Managers Limited will help to develop optimal financial strategies for the companies being funded.

Saffrey Brown, head of innovation at The Leap Company, noted that the level of investment to be provided for the selected entities would range from US$200,000 to US$3 million, depending on the size and stage of the business. The fund will invest in small to medium-sized companies at various stages of their development cycle, from seed to early phase and growth stage.

"Jamaica has existing organisations seeking to address social and environmental challenges, but these have not been overcome," the social enterprise development expert said. "We need to inject a lot more capital into the impact economy to address the concerns."

Brown is also the chief executive officer of A Leap Forward, a non-profit subsidiary of The Leap Company. The subsidiary is an incubator and accelerator for developing businesses to assist them to attain market readiness.

"We are seeking to catalyse the entire impact ecosystem," Brown stated. "Entrepreneurs need to be brought into impact the economy and given support to upscale their businesses."