Open up new sources of finance for impact-driven businesses

The Impact Programme will work with partners to develop new models for intermediation between a wider range of investors and enterprises and support the innovation of new structures that facilitate greater capital flows.

Initiatives

Taking impact investment public

Partner: Eighteen East Capital Ltd

The Impact Programme supported Eighteen East Capital to design and test the market appetite for the launch of an Impact Investment Trust on the London Stock Exchange. If successful, this would make impact investing in frontier markets accessible to all categories of investor, including ordinary private individuals, by providing a regulated product offering liquidity and a low minimum investment size. Funds raised would be on-invested in specialist impact funds in Sub-Saharan Africa, South Asia and Latin America. The results from the test marketing for the launch of an Impact Investment Trust on the London Stock Exchange can be read here.

Scope of work

DFID is helping to meet the costs of:

• Selecting an investment advisor
• Defining the investment mandate, impact strategy and impact assessment methodology
• Engaging a broker to support test marketing
• Drafting a simplified prospectus and an investment advisory agreement for test marketing purposes based on a Close-Ended Investment Company (CEIC) model
• Market-testing the proposition with potential investors and their advisors
• Producing a report on the findings of the test marketing exercise, to be made available to the public

Intended impact

The market-testing results have indicated a reasonable chance for a successful launch of an initial public offering (IPO) and Eighteen East Capital has sourced additional funding to complete the structuring of this product. The successful launch of the first vehicle of this type would potentially trigger the launch of competing and complementary vehicles. This would help to develop an impact investing CEIC sector on the LSE and other major stock exchanges, thereby facilitating much larger sums of private capital to invest for impact.