A new study released by the Global Impact Invest Network (GIIN) at the opening of its two-day Investor Forum 2016 in Amsterdam this week found that impact investors reported substantial growth over the last three years
Impact Investing Trends: Evidence of a Growing Industry reveals that among a consistent sample of dedicated impact investors, both overall assets under management and capital raised by fund managers increased substantially at a compound annual growth rate of 18 percent between 2013 and 2015. Additionally, up to 95 percent of impact investors surveyed reported financial returns at or exceeding expectations, and 98 percent met or exceeded impact expectations.
Since 2011, the GIIN’s Annual Impact Investor Survey has provided valuable ‘state of the market’ information on the impact investing industry. The report, based on data provided by 62 repeat respondents from across the globe — including Prudential, Habitat for Humanity, JPMorgan Chase & Co. and Deutsche Bank — from the last three surveys, offers the first-ever industry-level trends analysis on industry activity and is thus a significant development in tracking growth over time.
A few key highlights of the survey include:
- Survey respondents demonstrated strong growth, collectively increasing their impact investing assets under management (AUM) from USD 25.4 billion in 2013 to USD 35.5 billion in 2015, a compound annual growth rate of 18 percent.
- The survey showed that respondents have maintained a steady flow of activity, committing a total of USD 7.1 billion to 3,332 deals in 2013, USD 9.2 billion to 3,726 deals in 2014, and USD 9.1 billion to 3,096 deals in 2015.
- The volume of capital raised by fund managers increased at a compounding rate of 18 percent each year, growing from USD 1.7 billion in 2013 to USD 2.3 billion in 2015.
- Financial performance was at or above expectations for 85 percent to 95 percent of respondents each year, impact performance was at or above expectations for 98 percent of respondents.
- Over 60 percent of AUM was in emerging markets and approximately 70 percent of AUM was allocated through private debt and private equity each year.
- The sectors accounting for the highest proportions of AUM were microfinance and other financial services, energy housing and food & agriculture.
- The industry continues to progress across various indicators of market growth, but consistent challenges remain. Respondents reported seeing significant progress in terms of the number of intermediaries with successful track records, levels of government support for the market, and the availability of exit options. Notwithstanding this progress, respondents consistently cited ‘lack of appropriate capital across the risk/return spectrum’ and ‘shortage of high-quality investment opportunities with track record’ as top challenges facing the industry.
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The GINN hopes that insights from the research will further the impact investing industry’s reach and impact, enable data-driven decision-making and improve transparency as the market continues to grow.
“The Impact Investing Trends report provides compelling evidence of a growing impact investing industry,” said Amit Bouri, co-founder and CEO of the GIIN. “The report illustrates that impact investing is a powerful movement driven by investors of all types who are effectively putting their capital towards solutions to issues in areas like conservation, education and affordable housing. The positive trends support that investors are increasingly bullish about the use of capital to address social and environmental challenges, and we are confident that this trend will continue.”