Our very own Michael Traill sat down with Alberto Lidji for a discussion on social investing in Australia, as part of the Do One Better Podcast.
The episode explores a range of topics including:
(1) An overview of philanthropy in Australia today.
(2) Going beyond grant-making and ensuring endowments are invested for impact.
(3) Do investment professionals genuinely value impact investing?
(4) How does a non-profit, impact investment manager actually work?
(5) How do you go about deal flow origination, and what does a deal look like?
(6) How do you go to market with an impact investment proposition?
(7) How will the impact investing market evolve in the coming years?
(8) Do most impact investment opportunities arise from private equity houses, philanthropic foundations, high net worth individuals, or elsewhere?
Former National Australia Bank boss Andrew Thorburn has re-emerged, joining a new originator and investor in deals to manage human services.
The new group, For Purpose Investment Partners, will seek to bring superannuation funding and corporate management skills into the aged care, mental health, disability, social housing and education sectors..
In this episode of The Carnegie Project, Mark Carnegie puts capitalism under the microscope looking at where it came from, when it worked, how it worked and when it hasn't. He then turns his head to the future of capitalism through the lens of impact investing; looking at what contemporary society is attempting to do to bring it back on track after a period where it ran out of control.
Environmental, Social and Governance (ESG) considerations are increasingly important to be able to identify companies that are well prepared for the future. This is largely because companies that recognise the importance of adapting to changing socio-economic and environmental conditions are better able to identify strategic opportunities and meet competitive challenges.
M. H. Carnegie & Co. is proud to be the Co-Founder of For Purpose Investment Partners (FPIP), which is addressing a significant opportunity to respond to social infrastructure investment needs in partnership with the superannuation and social sectors. FPIP will originate, fund and facilitate large scale investment opportunities in Australia that provide compelling risk adjusted economic returns and meaningful social returns. This is CAPITALISM 2.0.
Join the conversation alongside Mark Carnegie, Andrew Thorburn and Michael Traill in part two of the podcast - the future of capitalism. Together they explore a pivot to thoughtful capitalism, how a profit motive and a purpose motive can go hand in hand; giving your investors a good return and society a good outcome.
The Ramsay Foundation and Melbourne-based Conscious Investment Management have teamed up to invest $48 million into disability accommodation, a specialist housing sector which is gaining scale through the increasing attention from institutional players and family offices.
Playing a key role in bringing the deal together is social impact investment house For Purpose Investment Partners, co-founded by prominent venture capitalist Mark Carnegie and Michael Traill. Former National Australia Bank boss Andrew Thorburn joined the outfit earlier this year as well.
On the receiving end is Summer Housing, an early mover in the emerging sector, which will direct the funds into 60 specialist disability units.
"By investing in disability housing alongside Summer Housing, we can significantly improve our residents’ quality of lives," said Conscious Investment's Matthew Tominc.
"We hope to grow this partnership to continue to help address the acute accommodation under-supply for people living with disability."
The commitments from Ramsay and CIM's Impact Fund – former Swisse boss Radek Sali is one of several family office investors backing the fund – will help fund the creation of purpose-built apartments across a number of developments under way in Melbourne Adelaide and Brisbane.
Already Summer Housing has raised more than $300 million from a variety of sources, with 370 dwellings financed. Institutional investors are moving into the sector: Macquarie is among the early birds along with boutique investment house Lighthouse Infrastructure.The housing is specially developed for people living with a disability, with rental streams backed by the National Disability Insurance Scheme. Industry forecasts are expecting the creation of a $5 billion asset class.
There is a large unmet demand. Some 28,000 people – around 6 per cent of those who fall under the NDIS – will require the specialist housing. Taking into account existing facilities, it is estimated new dwellings will be required to accommodate 12,300 participants in the scheme.
So far some 980 new or refurbished SDA dwellings have been created, with a little more than 4000 dwellings enrolled in the scheme. When fully exercised, the housing scheme payments are expected to total $750 million annually, with just 20 per cent of that being paid out so far.
Summer Housing chief executive chief Dan McLennan pointed out the particularly grim situation for more than 5000 people, all under the age of 65, who are forced to live in nursing homes because there are no other appropriate housing options.
The freshly minted agreement with the impact investment consortium would give at least some of those people "the choice to live on their own, or with someone of their choosing, with independence and with the ability to fully participate in the community", Mr Mclennan said.
While Summer Housing's effort has so far been focused within existing larger apartment projects in capital cities, it is keen to extend that.
"How can we come up with scalable solutions that enable institutional capital to be applied toward creating housing not just in capital cities but throughout the whole of Australia. It is a problem that isn’t confined to our cities," Mr McLennan told The Australian Financial Review.
"We’ve got a long way to go in terms of existing pipeline and the market itself still has a lot of scope for growth. I think every institutional investor we’ve engaged with has appetite for significant scale in the market. They are keen for the production of opportunities to finance."
Article via The Australian Financial Review: https://www.afr.com/property/residential/powerbrokers-make-impact-in-disability-accommodation-20200817-p55miz
We are pleased to have partnered with Summer Housing as part of a consortium of impact investors that have injected $48m into 60 specialist disability accommodation (SDA) apartments.
Summer Housing has an innovative approach, acquiring 10 apartments within high amenity, larger, and well-located apartment developments and modifying these to enable a high level of accessibility to tenants. An eleventh apartment is acquired and used as a hub to provide 24/7 concierge support to residents. The model supports people with very high support needs to successfully live independently as part of the community with access to education and employment opportunities and most importantly, an ordinary life.
For Purpose Investment Partners Executive Director, Chris Yoo said: "Summer Housing is a uniquely placed provider in a high growth sector, with a strong and scalable model. We believe we have found a partner in Summer Housing that aligns with our culture and values, and we are excited about the opportunity to team up with The Paul Ramsay Foundation and Conscious Investment Management to provide the required capital to catalyse growth in this space."
Download a copy of the Summer Housing - August 2020 Press Release: Download
For Purpose Investment Partners Executive Director, Michael Traill sat down with John Treadgold on the Good Future podcast, chatting all things sustainable business, the new economy and how your spending and investing decisions can have an impact.
Michael Traill is one of the founding-heroes of impact investing in Australia. He led a pioneering finance deal in 2009 which bought out the assets of the struggling child-care company ABC Learning. He revived the business as Goodstart Early learning, which remains Australia’s biggest child-care centre group. And a foundational story of impact investing in Australia.
Since then the sector has grown, and last year the Federal government setup a taskforce to make recommendations about what they can do to help nurture impact investing and in their wisdom, they made Michael the chair.
The taskforce published an interim report at the end of 2019 and final recommendations were due to be released in the middle 0f 2020. But covid-19 put a spanner in the works, and the report’s been delayed.
Interested to understand what Capitalism 2.0 looks like? Tune in via:
Today we are remembering Labor Senator Susan Ryan AO as a trailblazing feminist.
For Purpose Investment Partners Board Member Wendy McCarthy AO sat down with former Governor-General of Australia Dame Quentin Bryce AD, CVO and Geraldine Doogue AO on ABC Radio to discuss the profound impact that their lifelong friend, feminist hero and gender equality advocate Susan Ryan had on Australian society.
Listen to the full interview via: https://www.abc.net.au/radionational/programs/breakfast/ryan-bryce-mccarthy/12709466
Australia is ready for a more sophisticated market in impact investing according to Michael Traill, who has spent almost two decades encouraging Australians to invest for profit — and good.
As the chair of the federal government’s task force on social impact investing — investment measured by both financial returns and success in a social objective — Traill argues the nation needs to scale up for a potential $60bn market by setting up a “wholesaler” to bring deals to potential investors.
The task force has just presented its final report to the government and while its recommendations are still under wraps, Traill tells The Deal the group has identified the need to develop the “architecture” of the market to offer more products to investors such as superannuation funds, foundations, philanthropists and those prepared to accept a “below conventional risk return”.
“I think there is an appetite for larger scale impact investing,” he says. “There’s been an evolution and a set of developments over the last decade that would suggest that this market is ready for that but it would need some encouragement and stimulation for that to happen.” Till now most investments of this sort in Australia are about $50,000 to $10m but Traill sees potential for a spread of investments with up to $50m at the top end.
He says some industry superannuation funds, such as HESTA, have been proactive, showing financial returns consistent with the “sole purpose test” which directs funds to invest only for the retirement benefit of members.
The task force, set up in the 2019 federal budget to investigate the role the commonwealth should play in developing investment to “provide solutions to address entrenched disadvantage and some of society’s most intractable social problems” released an interim report last December. It identified three existing segments — social impact bonds which provide start-up funds for potential future return; the approximately 20,000 social enterprises of small to medium size with less than $10m turnover; and large scale enterprises of which only about six have an annual turnover of more than $50m. The interim report flagged the need for an early stage foundation; a body to promote more “outcome-based” funding opportunities; and a wholesale fund similar to Big Society Capital in Britain. The latter, it said, was “critical” for growing the sector.
Big Society Capital, was set up in 2012 as a £400m ($727m) fund to support and co-invest with fund managers to invest in social enterprises. It has since signed £540m of investment and attracted more than £1.2bn of coinvestments.
In an interview with The Deal, Traill emphasises that if the market is to scale up, Australia will need impact investment “wholesalers” to operate as intermediaries in the same way as fund managers operate in investment generally. Such a body would also attract people who could “talk a tripartite language” of business, social performance and community, and government. “A lot of the impacting investing space — think social housing, think aged care, early learning, NDIS — has an element of understanding of government policy funding and engagement,” Traill says.
“It becomes a virtuous circle. If you can set up funds that have $40m to $50m in them rather than $5m to $10m, by definition it is easier to hire (top talent).”
The task force found that high net worth funders, foundations and super funds which are already investing in social projects are often hungry for more products. They were saying “we would like to do more, we’ve been quite happy with the financial returns, the visibility of social impact, but we’d like to actually do three to five times the amount of what we are doing”.
“The question is then, how you develop more products?” Traill says. “We think that the answer is to set up the kind of partnerships that support the sustained development of intermediaries ethical fund managers who can originate these opportunities and transactions.” But he says the fragmented market will need support across all three segments from the earliest stage seed funding to mid-sized social enterprises to larger scale projects. This is needed in order to build skills for the bigger projects.
Traill left investment bank Macquarie 20 years ago to become founding chief executive of Social Ventures Australia. Back then the focus was on “venture philanthropy” and the use of performance metrics to bring venture capital disciplines to philanthropy without demanding a return on investment. “What has happened over the 20 years since is a much more sophisticated understanding that there will be opportunities to mobilise even bigger chunks of capital where you can combine reasonable financial returns and social purpose,” says Traill.
At present impact investing totals about $1bn in Australia but Traill suggests it could grow to 2 per cent of the overall local investment market of about $3 trillion. “I don’t think that’s a naive or aspirational target... 2 per cent is still mobilising massive pools of money. It could be a $60bn market. But to get to that point you would want it to be recognised as a mainstream asset class in the same way as private equity or infrastructure or direct property.”
Traill says super funds are interested in investments of $20m to $50m and above. That means they need projects of between $50m to $100m and above. “That is actually a big chunk of the market when you think about aged care, you think about TAFE and further education, early learning childcare, social and affordable housing,” he says. “The NDIS housing (for example) has been effective in encouraging funding into that market. These are clearly multibillion-dollar chunks of the economy.
“Wind the clock forward five or 10 years and I think there will be a very broad church of impact investors. The super funds have to provide reasonable long-dated financial returns and I think there is a transaction opportunity there that will appeal to them. “I think that will be a big market and then you’ll have a spectrum of impact investment that draws on the original pool of foundations, philanthropists and investors who want to generate a return but may be prepared to accept a ‘below conventional risk return’. And that’s already happening.”
The British system was boosted by using “unclaimed monies” and Sir Ronald Cohen, the force behind its establishment, has suggested Australia make similar use of so-called passive funds. But Traill says there are legislative and technical problems in “liberating” these funds in Australia, and the task force has not recommended that idea. Nor is it pushing legislative change to help Australia scale up the sector.
“We think it is much more about government encouragement and enabling,” says Traill. He says the final report addresses two other issues that have held back development of the sector — the need for capacity building for early stage social entrepreneurs who need resources; and “a very specific gap which we came to know as the valley of debt funding”. This refers to the problems faced by a social enterprise which is up and running but is too small to access the next tranche of capital — often between $25,000 to $150,000 — to allow it to grow to the next level.
Full article via The Australian
HELEN TRINCA, THE DEAL EDITOR AND ASSOCIATE EDITOR Helen Trinca is a highly experienced reporter, commentator and editor with a special interest in workplace and broad cultural issues.
For Purpose Investment Partners (“For Purpose”) has announced the acquisition of Catalyst Education and its subsidiaries (registered training organisations Selmar Institute of Education, Practical Outcomes and Royal College of Healthcare) from Anacacia Capital, the founders and current and former staff.
Catalyst Education is a leading private provider of vocational education and training (“VET”) with a focus on key social sector skills including early childhood education and care, aged care and disability care, and although predominantly Victorian-based, also has a growing presence in New South Wales and Queensland.
For Purpose has acquired Catalyst Education to drive further growth of the business, with the goal to become a nationwide market-leading provider of social sector skills training. This is For Purpose’s first acquisition in the Skills Education sector, with the sector being one of its five core areas of focus alongside Aged Care, Disability, Social & Affordable Housing and Mental Health. As a social impact investment firm, For Purpose considers the social impact delivered by its investments equally as important as the financial returns that the investment delivers.
For Purpose Director, Andrew Thorburn said “We are delighted to be investing in Catalyst Education. We think it’s a great business. It really helps people, it has a great reputation and is performing well. We look forward to working with Jo and her team on delivering quality training so that they can continue to have an impact in the community”.
Catalyst Education CEO, Jo Asquith commented “the most exciting thing for us is the alignment of values. What For Purpose are doing and the sectors that it is operating in, what we’re doing and how we’re trying to make an impact in the communities that we deliver our programs in is really well aligned, so I can see an incredibly bright future”.
Anacacia Capital Managing Director Jeremy Samuel added “It’s been great for the Anacacia team to work with Catalyst Education over the past few years helping them to expand and assist so many clients improve their skills. Congratulations to Jo and the Catalyst Education management and we wish them and Andrew and the For Purpose team all the very best for the future”.
For Purpose were advised by Gilbert + Tobin and PwC, while Anacacia were advised by Hamilton Locke and HLB.
Executive Director Andrew Thorburn spoke to John Treadgold at On Impact about our hope to accelerate the social impact investing market in Australia.
Of the opportunity, Andrew said “We feel there’s no dedicated social impact fund or business like ours that exists, certainly not one that’s driving for such scale, where we can really bring private capital to bear to make a real difference to these material issues. And, aiming to make decent returns along the way, there’s no trade-off."
Full article via On Impact
For Purpose Investment Partners and Catalyst Education have partnered with Generation Australia to accelerate employment outcomes in the aged-care sector, providing a unique opportunity for deep social impact.
Generation is a global non-profit that transforms education to employment systems to prepare, place, and support people into life-changing careers that would otherwise be inaccessible, and was designed to complement traditional approaches to employment training.
The partnership will see the launch of an education-to-employment program run by Catalyst in consultation with Generation Australia.
Full article via Hospital and Helathcare: https://www.hospitalhealth.com.au/content/aged-allied-health/news/partnership-launches-program-to-accelerate-aged-care-employment-outcomes-127867902
Aged Care News spoke to For Purpose Investment Partners Executive Director Andrew Thorburn, Catalyst Education CEO Jo Asquith and Generation Australia CEO Malcolm Kinns about our new partnership which will see the launch of an education-to-employment program for Aged Care.
See what they had to say in this article via Aged Care News: https://agedcarenews.com.au/2021/07/07/new-powerhouse-partnership-to-accelerate-skills-development-in-aged-care-sector/
Two of our Executive Directors, Michael Traill and Andrew Thorburn, caught up with The Weekly Source's Saturday editor Lauren Broomham to chat about Capitalism 2.0.
“We call it Capitalism 2.0, which is being more explicit around both the financial and social purpose disciplines. You can apply the logic and thinking, and if you can access the talent at board and management level, you can do that in other areas.”
They also touched on the aspirations for our first fund to invest in solutions to help tackle some of the key social issues faced by Australians subject to exclusion and disadvantage. The fund is targeting a $80 to $100 million first close and a second close mid-2022.
“We think between 40 and 60% will be real, property-backed assets, and the other 40
to 60%, depending on which way you look at it, will perhaps be more operating type businesses,” said Andrew.
See the full article attached or visit the Saturday website: https://www.theweeklysource.com.au/saturday/the-source-saturday/
We are very pleased to announce the successful completion of a first close of For Purpose Investment Partners’ Social Impact Fund I (“SIF I” or “the Fund”), with $67m committed. The Fund will target social impact investments generating appropriate risk-weighted returns, and a roughly even mix between real asset-backed investments and investments in operating companies. The blended return target for the Fund is 9-10% post fees.
The first close was supported by over 100 investors and we are delighted that the Fund has a level of commitments that will enable us to take advantage of the healthy pipeline of investment opportunities we have. It is particularly gratifying for us to welcome funders to SIF I who have been investors from the early days of the impact investing journey. There is significant continuity from a range of investors who committed to the purchase of ABC Childcare Centres in June, 2010, resulting in the landmark acquisition by Goodstart Early Learning. Many of these investors also committed to Catalyst Education which For Purpose Investment Partners acquired early this year. We are also delighted to welcome nearly 80 new investors to the For Purpose family. We look forward to establishing the long-term trusted investment partner relationships with all these investors that will be key to achieving our goal of building a large-scale social impact investing market in Australia.
By funds committed, approximately 70% of investment has come from individuals and families, with the remaining 30% from institutions, predominantly charitable foundations. 30% of funds came from clients of advisors, with whom we had not had previous contact, with the remainder from existing investors and other contacts as well as 6% from the For Purpose team.
FPIP co-founder and Executive Director Michael Traill said; “It is critical for our goal of growing the large-scale Australian impact investing market to establish a fund and to have the funding access to move from a ‘deal by deal’ capital sourcing basis. We are delighted that we have attracted a range of new investors to the pioneering investment opportunity of SIF I which offers a portfolio of social impact investments in our target sectors, in a unique social purpose entity with a not-for-profit investment manager. There is a real sense that for many clients the initial investment commitment is a ‘toe in the water’, and this gives us great confidence in the capacity to build on the foundations of the first close and in line with meeting our first close target, to achieve a second close target that builds a fund size of around $150m.”
During the course of the first close investor presentations, we reinforced the evidence of the growing understanding of mainstream institutional funds of larger scale impact investing opportunities. We continue to be confident that the pioneering support of SIF I founding investors will create the proof point transactions that will attract institutional investment particularly from profit for member superannuation funds in the next iteration of this market.
We would finally like to thank our advisory partners Gilbert + Tobin and PwC, who worked on the documentation and structuring of the Fund.
For Purpose Executive Directors Andrew Thorburn and Michael Traill sat down with James Eyres from the AFR to talk about the first close of our new Social Impact Fund I.See the full article on the Australian Financial Review's website: https://www.afr.com/companies/financial-services/andrew-thorburn-says-impact-fund-s-67m-raising-is-just-the-start-20220111-p59nfi
Investment Manager Harry Breidahl comes from a conventional career in investment banking and private equity for the resource sector so it was quite a pivot to move into impact investing.
In this profile for OnImpact Media, Harry explains how a mine site visit in the Democratic Republic of Congo sparked him to question what career would enable him to connect his work with what he cared about. It was there he discovered Sir Ronald Cohen's "On Impact" and here at For Purpose, we are so glad he did.
See the full profile here: https://onimpact.com.au/impact-profile-harry-breidahl/
Executive Director Andrew Thorburn sat down with Mergermarket to chat about the recent first close of our Social Impact Fund I and continued focus on deploying capital into key social sectors to achieve good financial returns alongside meaningful social outcomes. “You can invest in a good business and have good social impact,” he said.
To read the full article visit https://www.mergermarket.com/intelligence/view/intelcms-dpqrd4 or read here:
We partnered with Summer Housing on behalf of capital partner the Paul Ramsay Foundation and alongside The Impact Fund (“TIF”) managed by Conscious Investment Management (“CIM) to purchase 82 specialist disability accommodation (“SDA”) apartments in 8 properties. Since July 2020, our capital partner has committed $19m (of total $54m) in capital.
Supply of new housing to meet demand for disability accommodation continues to grow since the creation of SDA and its associated contracted payments under the NDIS in 2016. However, despite these incentives, the residual SDA supply shortfall at ~12,000 places remains significant.
Some operators entering the market are focused on maximising profit by meeting bare minimum standards to receive the SDA income stream. As a mission-driven not-for-profit, Summer’s developments are of the highest quality which we believe will drive ongoing strong demand and lower than industry average vacancy rates. We believe that this focus on quality will enhance, not detract from financial returns as a result.
Catalyst Education is a leading private provider of vocational education and training (“VET”) with a focus on key social sector skills including early childhood education and care, aged care and disability care, and although predominantly Victorian-based, has a growing presence in New South Wales.
We invested in Catalyst Education with a view to building a transformative leader in VET with a focus on key social sectors. With its impressive reputation, strong values-aligned management team and market-leading position in Victorian early childhood training, we saw Catalyst Education as the perfect entry point to build from. It was core to our belief that structuring Catalyst Education as a not-for-profit would provide us with opportunities to create deep mutually beneficial partnerships with values-aligned not-for-profit care providers. Our discussions with these providers as part of our diligence gave us high conviction that the significant current and future workforce needs presented a large opportunity in training. Regulatory changes are an ever-present risk in VET, however the outlook is positive and Catalyst Education is well placed with a demonstrated track record of quality.
Our Social Impact Fund I will open to new investors shortly, following a successful first close of $67m in December 2021.
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