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Commitments to impact investment set to rise 19% to $12.7bn in 2014 – JP Morgan survey

New report with GIIN scopes out $46bn market

Some $12.7bn (€9.2bn) is expected to be committed to impact investments this year, a 19% rise on 2013’s $10.6bn – according to a new survey by investment bank JP Morgan and the Global Impact Investing Network (GIIN) non-profit industry group.

Impact investments are defined as providing a social and environmental impact alongside a financial return.

Survey respondents – which included institutions such as Christian Super, TIAACREF and Storebrand – anticipated a 31% increase in the number of deals in a market put at $46bn. Seventy percent of this figure is invested in emerging markets and 30% in developed markets; development finance institutions manage 42% of the total assets while fund managers run 34%.

Of the $16bn of assets run by fund managers, pension funds and insurers provide 22%. This is followed by family offices/high net worth individuals (17%) and development finance institutions (16%).

The report found that 91% of investors surveyed reported financial returns “above or in line” with their expectations. For social and/or environmental impact this rose to 99%. The challenge to the market is seen as the shortage of quality deals and lack of appropriate capital.“Overall, we see an increasingly sophisticated global impact investing market, supported by growing investment track records and high-level collaboration among governments and major investment institutions,” said Amit Bouri, Managing Director at the GIIN and co-author of the report. Overall, there were 125 respondents.

The report noted several new entrants to the impact investment space in 2013, including the UK pension fund-backed Investing4Growth initiative as well as separate projects by insurers AXA and Zurich.

Their arrival might “indicate that some of the barriers to entry for investors – such as market awareness, investment opportunities and risk perceptions – have begun to ease”.

Other notable developments were the Global Health Investment Fund I, the SNS FMO SME Finance Fund backed by three Dutch pension funds and the UK Social Bond Fund launched by Threadneedle Investments and Big Issue Invest.

The report added that the respondents to the survey are currently managing 189 impact funds – and raising 91.

The 52-page report, called Spotlight on the Market, was put together by JP Morgan’s Yasemin Saltuk and Ali El Idrissi and GIIN’s Amit Bouri, Abhilash Mudaliar and Hannah Schiff.