Investing money where it matters
Impact investing is a new and exciting asset class – it goes beyond conventionally responsible and sustainable investments.
By aiming to combine financial returns with measured social impact, impact investing is broadly characterised by four main factors:
- Intent of investors to create positive social and environmental impact
- Expectation of financial return and preservation of investor capital
- A wide range of investor return expectations that reflect different investment risk profiles and investor appetite
- Most importantly, investor commitment to measure and report on positive social and environmental impact
We are capitalising on our expertise in international development to act as an intermediary for impact investment opportunities. We are uniquely placed to help investors and other stakeholders enter this important new market through the following services:
- Identifying and sourcing potential investment ideas
- Building a team focused on impact investing across emerging markets
- Investing discrete amounts of our own capital
- Leveraging existing networks as co-investors in target emerging markets
Development Impact Bonds
Social impact bonds are a contract between private investors and donors or governments whereby investors pay in advance for interventions to reach a shared goal and are remunerated only if the interventions succeed. Returns on the investment are linked to verified progress. To date, social impact bonds have seen tremendous success mobilising private funding for social impact – more than 40 social impact bonds have been deployed – but their success has been limited to developed economies.
In keeping with our vision of the impact economy, Palladium is investing significantly in building the marketplace for development impact bonds, whereby these same financing mechanisms are applied in a development context. Our pipeline of six development impact bonds will create positive impact in India, Nigeria, Ethiopia, Viet Nam, and Papua New Guinea.
The face of international development is changing as private investors and philanthropies join traditional donor models. This intersection of the private and public sectors creates an opportunity to leverage the best both partners have to offer. Development impact bonds answer this call, not only attracting new sources of up-front funding for development programs but also offering new business models that encourage innovation and flexibility for better results. Further, the risk investors assume incentivises the creation of feedback loops and data-collection systems to make programs more responsive to the needs of beneficiaries and more likely to succeed.
Director, Impact Investing