Australia’s Impact Investment Market Development Enters New Era

Australia’s growing impact investment market is moving into the next wave of development.

The Australian Advisory Board on Impact Investing, which represents the country on the international impact investment stage, has declared the first stage of market development complete.

Having delivered on key priorities to “catalyse the market” – the Impact Investment Ready Growth Grant, the first Impact Investor Survey, the first dataset capturing the performance of Australian impact investment products, and a blueprint for a flagship financial institution, Impact Capital Australia – the advisory board will now move onto a new set of strategies.

Australian Advisory Board chair Rosemary Addis told Pro Bono News the key achievements of the first development phase included “contributing to the momentum and activity in the market [and] Australia really confirming its leadership role globally in developing impact investment”.

“Since we launched [our] strategy to catalyse impact investing in and from Australia in 2014, the market has made significant leaps in increased awareness, interest and activity.” Addis said.

The new development phase will have a deeper focus on delivering the flagship market-building initiatives that were introduced in the first stage.

“For us, seeing Impact Capital Australia is a lynchpin because it has the potential to really be a gamechanger,” Addis said.  

“[And] seeing the Impact Investment Ready Grants grow so that they can reach more organisations.”

Once set up, Impact Capital Australia will serve as an impact investment wholesaler, distributing funds to intermediaries who will then invest directly in social enterprises and not-for-profit organisations.

On Tuesday the Ready Grants was relaunched as the Impact Investment Ready initiative, with a new program added on specifically to help not-for-profit organisations explore the “huge potential” of impact investment and attract investors.

Addis said stakeholders would also be consulted to prioritise new initiatives.

“There’s still work to do to develop the market. There are now a broader range of participants and a number of them have fantastic ideas for things for the next stage,” she said.

“For the second wave of strategy we’ll go back to the market and review with stakeholders what they think would make the biggest difference in terms of moving the market.

“There are a number of ideas for initiatives such as a clearinghouse or further work on data.”

Timed with the beginning of the second strategy stage, the sector’s key body Impact Investing Australia, which drives the implementation of the advisory board’s strategy, faces a leadership changeover.

CEO Daniel Madhavan will step down from his role to explore new opportunities in the impact sector.

He has led the organisation since October 2014 and will continue to remain involved in a voluntary capacity.

“We’ve been very lucky to have Dan for the last two-and-a-half years, and it was always anticipated that he would take on this role to see through that first wave of market building… and then consider what was next for him,” Addis, who is also chair of Impact Investing Australia, said.

“And so having done a fantastic job of shepherding those things through, he’s now moving to the next opportunity in the impact market as planned.”

Madhavan said: “It has been an enormous pleasure to lead Impact Investing Australia over the past three years.

“We’ve been able to play a significant role in market development and realising greater opportunities for private capital to deliver social and environmental impact.”

Fund manager Sally McCutchan will take over as executive director from 1 April.

“I’m excited about the work that lies ahead,” McCutchan said.

“We see enormous potential for the establishment of the flagship initiative Impact Capital Australia to champion impact investing market development and to change the way we address social issues in Australia. My focus will be on driving this and other key initiatives forward.”

Addis will continue to chair the Australian Advisory Board, with Louise Sylvan and Richard Brandweiner taking up positions as vice chairs.

Addis said the second phase of market development had “a lot of potential” for growth.

“Those who are active in the market would like to be doing more… provided they can be given the right kinds of opportunities to invest in,” she said.

“The projections that were done by JBWere back in 2012 were that we could expect to see the Australian market reach $32 billion within a decade.

“And the investor survey last year confirmed that there’s a baseline of somewhere around $18 billion in willing capital, provided that we can continue to develop the market to present the right opportunities to investors.”