Investment trust’s £119m listing to bring ‘impact investing’ to mass market

West Africa

An investment trust that will invest in improving the lives of those in poorer communities in emerging markets will launch on the London Stock Exchange in July opening up impact investing to more investors.

The Impact Investment Trust aims to raise up to $150m (£118.9m).

It will also become the second investment trust to list on the Social Stock Exchange alongside Ben Goldsmith’s Menhaden Capital.

Trust co-founder Thomas Venon hopes it opens up impact investing, which aims to deliver positive social and environmental outcomes alongside financial returns, to retail investors.

Currently impact investing is focussed on private equity and private debt meaning it is only available to the wealthiest of private investors, such as family offices. This is despite demand for socially responsible investment products from the upcoming generation of investors.

The impact investing market is estimated to be upwards of $114bn, according to the Global Impact Investing Network (GIIN).

According to this week’s filing with the London Stock Exchange, the Impact Investment Trust aims to deliver “measurable development impact” by providing SMEs across developing economies with the growth capital to create a “positive impact on the lives of the world’s poorer populations”.

The multi-manager fund, to be launched by Eighteen East Capital, will invest in private equity and impact funds, using Obviam as investment adviser, and aims to deliver 8 per cent annually over the long term.

Venon names Ugandan business APDL as the type of underlying company Obviam has previously invested in. It produces generic pharmaceuticals as a cheaper alternative to imported pharmaceuticals that make up the bulk of the market.

Growth capital for the company facilitated its expansion into Tanzania and Kenya, boosted production capacity and created 500 jobs.

Approximately 40 per cent of the investment trust will be invested in Africa, 40 per cent in Asia and the remaining 20 per cent in Latin America.

Venon argues that while impact investing is a relatively new term Western governments have been practicing it for the last several decades through development finance institutions (DFIs), albeit with returns reinvested back into projects.

Obviam already advises on the Swiss DFI – the Swiss Investment Fund for Emerging Markets.

The investment trust will be focussed on all areas of ESG, not just social impact, with environmental and governance aspects also important.

As part of its inclusion on the Social Stock Exchange, the trust will also have to release an annual impact report detailing the positive impacts achieved through its investments.

The investment trust’s offer for subscription, intermediaries offer and placing are due to close on 5 July with admission expected on 10 July.