Social Ventures Australia (SVA) has launched a new Diversified Impact Fund that features a unique 20% downside protection.
The SVA Diversified Impact Fund is seeking to raise $10 to $15 million to fund a diversified portfolio of impact investments. The fund will also provide 20% downside protection funded by philanthropists, including Joseph Skrzynski, Geoff Wilson and their families, and the Bob Bryan Foundation.
“When we get to the end of the fund’s life – which is likely to be in 10 years – we calculate if the investors have received 100 cents in the dollar in capital returns and earnings,” said Alex Oppes, director, impact investing at SVA. “If there’s a shortfall, we’ll call on the downside protection up to 20% in the dollar.”
The fund will seek to invest in between 10 and 15 assets, with investment size ranging from $500,000 to $1.5 million.
“We see a lot of opportunities in the space of social enterprises, really interesting companies and organisations that are seeking growth capital and aren’t able to access that from mainstream sources,” Oppes said. “We think that the port of capital we can do will have the flexibility offer capital to growth stage organisations, and add on SVAs support and network, and we think it’s a proposition that can help underlying orgs to achieve the goals.”
The fund will replace the Social Impact Fund, which is being wound down. The Social Impact Fund was seeded through the Department of Education, Employment and Workplace Relations (DEEWR) AU$20 million Social Enterprise Development and Investment Fund (SEDIF). SEDIF was established to improve social enterprises’ access to finance to help them grow their business and increase the impact of their work in their communities and matches private investment. SVA, Foresters Community Finance and SEFA were selected to manage the money.
“The Social Impact Fund has been in the market for the past five years,” Oppes said. “It has made 10 investments – loans, equity investments and convertible notes. That fund has returned 7% p.a., and the next step for us has been creating a fund that doesn’t rely on government funding, but features some catalytic philanthropy to crowd in other impact investors and make other interesting investments.”
The fund has attracted cornerstone investment from Carol and Alan Schwartz through the Trawalla Foundation. It has been established with $500,000 in seed assets in the form of social impact bonds – SVA has reserved $500,000 of the social impacts bonds they have put into the market in the last year – Newpin Queensland bond, the Resolve Bond and the Aspire bond in South Australia, Oppes said.
“We’ve had verbal commitments from a number of the largest investors in our Social Impact Fund,” he said. “Our target is actually to get investors that invested on the first fund to roll over and perhaps increase their investment in the new fund. We actually have a couple of institutional investors that are looking at the fund, but we do think it will be particularly attractive to trusts and foundations that are interested in aligning their investing with their giving, which is why we’ve gone for a diversified fund.”