Impact investments assets break half-a-trillion mark – GIIN report

Impact investment asset under management reached $502 billion as at end-December, according to research from the Global Impact Investing Network.

In Sizing the Impact Investing Market, which gathered AUM data on more than 1,300 impact investors globally, GIIN found that over 800 asset managers across private equity, venture capital, fixed income, real assets and public equities accounted for about 50 percent of industry AUM. Development finance institutions made up over a quarter of total AUM.

The report noted that DFIs, the largest investors in the impact investing ecosystem, define their investments in different ways. This means some consider only a small portion of what they do as “impact investing”, believing most of what they do is “development finance”. Others consider everything they do impact investing.

“That’s half a trillion dollars that we know of for sure in impact investing assets,” Sapna Shah, director for strategy at GIIN, told Private Equity International. “It does speak to the opportunity and also the need to increase that figure over time because of the scale of some of the global problems facing us.”

Organisations headquartered in North America made up more than half (58 percent) of impact investors, followed by those in Europe (21 percent), sub-Saharan Africa (6 percent) and Latin America & Caribbean (4 percent). Impact investors in Asia accounted for 7 percent while Oceania and North Africa accounted for less than 4 percent each.

In its 2018 annual survey, investors noted that Asia was the fastest growing region in terms of the highest expected growth in increased allocation for impact investing, she added.

In terms of market size, the median investor AUM is $29 million and the average is $452 million. Analysing direct investments as of end-2018, GIIN found that pension funds and insurance companies were the most active, followed by asset managers and banks/financial institutions, with direct deals totalling 212,765, 113,299 and 50,776, respectively.

Impact funds are targeting about $22 billion this year, up from $18 billion last year, with for-profit managers comprising the majority of those, according to a StepStone presentation given at Invest Europe’s Investors’ Forum in Geneva on Thursday.

“Increasingly we are finding PPMs with ‘sustainable’, ‘responsible’ and ‘impact’ written all over them,” said David Jeffrey, head of StepStone Europe.

In October, Hamilton Lane completed the first sale for its debut impact fund – Hamilton Lane Impact Fund – according to a filing with the US Securities and Exchange Commission. In February last year, KKR registered KKR Global Impact Fund in Luxembourg, according to registry documents. It is unclear how much Hamilton Lane and KKR are targeting for the vehicles.

TPG, whose impact fund founder Bill McGlashan was last month indicted over his alleged participation in a US college entrance exam cheating scheme, is seeking up to $3.5 billion for its second impact investing vehicle TPG Rise Fund II.

GIIN will publish its Core Characteristics of Impact Investing report on Wednesday which provides definitions for impact investing and distinguishes it from other complementary investment approaches.