Beyond the Margin: Redirecting Asia’s Capitalism
35th ADFIAP Annual Meeting, 25th April 2012
Yvonne Li, Avantage Ventures
yli@avantageventures.com
Avantage Ventures
Supports key development sectors in Asia Pacific which address the most
pressing challenges and opportunities of our times.
long term investments of
USD2 to 5 million
committed to
addressing social
& environmental
challenges
Early exposure to investments
in socio-economic solutions
underpinning Asia’s
development
Asia
based
To create a sustainable future for everyone in Asia
3
Regional Trends in Asia
Key Trends & Rationale
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Limited
Resources
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Climate
Change
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Ageing
Population
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Social
Marginalization
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Sectors of Impacts
Consumption demand of 4.2bn Asians
Emerging middle-class driven consumptions
Persistent industrialisation and urbanisation
Concerns with food and water security
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Environmental challenges in water, air and
ecological conditions
Global imperative to cut greenhouse gas emission
Governments adopt low carbon growth strategy
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Longer lifespan
Falling fertility rates in China
Policy-driven demographic changes (e.g. single
child policy in China)
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Income inequality leading to worsening wealth gap
Large communities are economically left behind
Under-provision of public services for groups at the
margin
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Sustainable agribusinesses
Recycling facilities
Waste management
Affordable clean energy
Energy efficiency
Water management
Elderly homes and
residential care services
Training geriatric care
workers
Special needs education and
vocational training
Affordable housing
Employment designed for
disenfranchised communities
Beijing LangLang School
Sector:
Special Education
Country:
Throughout China
Investment Type:
Growth Equity and
Working Capital
Expected Impact
• Educate and empower dyslexic children as well as their families
Description
• LangLang is a tutorial service for children with dyslexia. This
enterprise aims for a moderate expansion in China by setting up their
own headquarters, branches and centres in key Chinese cities. The
founder has developed her own materials that cater to the Chinese
market. LangLang has been interviewed by many Chinese media, such
CRI Online and Global Times, and is recognised by the British Council
China as a leading social entreprise.
Qingdao Yanguang Elderly Home
Sector:
Elderly Care
Country:
Throughout China
Investment Type:
Growth Equity and
Working Capital
Expected Impact
• Provides institutional and in-home elderly care services to the middleclass elderly who are currently ignored as foreign investors are focused
on the high-end market and the public sector is occupied with the
needs of the poor.
Description
• Founded in 2001, now running 7 elderly homes in Qingdao with 930
beds with 265 staff to provide specialized, semi and fully dependent
care. Yangguang has achieved healthy financial performance through
its efficient management and cost-effective operations, now looks to
provide 5000 new beds and expand to other provinces of China over
the next 5 to 10 years.
Big Tree Farm
Sector:
Sustainable
Agriculture, Farmers
Supply Chain
Country:
Indonesia
Investment Type:
Growth Equity and
Working Capital
Expected Impact
• Empowers local farmers and communities to access to critical supply
chain support and technical assistance
Description
• A vertically integrated food company, working with 13,000 sustainable
farmer partners and millions of customers worldwide. Strength lies in
its supply chain cooperation between individuals, farmers and
community groups.
• Products including coconut palm sugar, chocolate, honey, sea salt, etc,
are mainly sold to US and EU.
Spectrum of Social & Financial Objectives
 ESG (environmental, social and governance) is a generic term used in capital markets and used by investors to evaluate corporate behavior
and to determine the future financial performance of companies. They are a subset of non financial performance indicators that includes
sustainable, ethical and corporate governance issues such as managing the company’s carbon footprint and ensuring there are systems in
place to ensure accountability.
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DFIs and Impact Investing
Traditional DFI Investments
Impact Investing
Profit Maximisation
Profit and social impact maximisation
in social enterprises
Invests in theme based funds such as
SMEs, clean technology, infrastructure
Overlay with ESG principles
Invests in social enterprises - SMEs
with positive externalities and with an
explicit social mission through
innovative business models
Track financial performance as key
indicator
Track social and environmental
performance on top of financial
performance
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Development Finance Institutions
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Uniquely placed to spur private sector dollars to
finance:
•Global public goods – climate change remedies/micro
energy efficient solutions
•Narrowing income divide in frontier countries
•Strengthening financially successful social enterprises
•Building healthcare and education infrastructure and
networks
DFIs can achieve this by:
• Changing the risk perception of social enterprises in Asia Pacific by providing
“stamp of approval”
• Knowledge sharing through linkage programmes
• Integrating social enterprises into global supply chains
• Leveraging field experience and knowledge of intermediaries to further
investment and outreaching to social enterprises who offer sustainable and
innovative solutions to social and environmental issues
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Market Size and Opportunity
 JPMorgan November 2010 report classifies impact
investing as an emerging asset class globally. Their
report looks at impact investing opportunities at BOP
and estimates a potential market of $400 billion to $1
trillion.
 Avantage Ventures September
2011 report estimates an
investment opportunity of
between $52 billion and $158
billion within Asia-Pacific’ Refer to
‘Beyond the Margin: Redirecting Asia’s
Capitalism’.
12
Market Size of Impact Investing in Asia
Source: Avantage Ventures Analysis 2011
Triple Bottom Line
Social /Environmental
Impact
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Enhance local
communities’
livelihoods
Community
empowerment
Promote sustainable
agricultural practices
Preserve scarce
natural resources
Use clean energy and
reduce harmful
greenhouse gases
Financial Impact
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Balance financial
returns with social and
environmental ones
Grow sustainably
Generate profits to
scale impact
Create disposable
incomes thereby
stimulating vibrant
local economies
“If social enterprises are nurtured and their activities and
investments allowed to grow both in scope and reach,
societies are likely to change their views about how
business and investment can be best used for the
betterment of the entire population. In this way, investors
can directly shape the course of progress in the AsiaPacific region.”
Yvonne Li