Social Impact Investing

Impact Investments:
An emerging asset class
Global Research
29 November 2010
emerging markets. Additional five- and ten-year VC returns data are shown in Table
28 in Appendix V.
We also note that the average realized returns of the investment management
community almost always lag the expected, forecast or projected returns when the
investment is being made. We have no reason to suppose that the impact investing
community will be any different. Our own anecdotal experience and interviews with
fund of fund and alternative investment managers suggest that VC managers in both
the Developed and Emerging Markets target net returns in the range of 15–20% and
gross returns of 20–25%.
Impact investors’ return expectations show high variance
Figure 9 shows the distribution of return expectations for developed market debt
investments, while Figure 10 shows the same for emerging market debt investments.
Figure 11 and Figure 12 illustrate the expectations for developed market and
emerging market equity investments. We see a much broader distribution of
expectations in equity investments than in debt investments, with some investors
expecting returns of 25% or more.
Figure 9: Expected returns – Developed markets debt investments
Total # of investments = 219; Total size of investments = $524m
Figure 10: Expected returns – Emerging markets debt investments
Total # of investments = 411; Total size of investments = $488m
25% +
20-24.9%
15-19.9%
12-14.9%
8-11.9%
5-7.9%
0-4.9%
Notional, USD mm
Number of deals
- 50 100 150 200 250 300
25% + Notional, USD mm
20-24.9%
Number of deals
15-19.9%
12-14.9%
8-11.9%
5-7.9%
0-4.9%
- 50 100 150 200 250 300 350 400
Source: GIIN, J.P. Morgan. Investments for which no expectation was reported are not included.
Figure 11: Expected returns – Developed markets equity investments
Total # of investments = 91; Total size of investments = $320m
25% +
20-24.9%
15-19.9%
12-14.9%
Source: GIIN, J.P. Morgan. Investments for which no expectation was reported are not included.
Figure 12: Expected returns – Emerging markets equity investments
Total # of investments = 119; Total size of investments = $265m
25% +
20-24.9%
15-19.9%
12-14.9%
8-11.9%
5-7.9%
Notional, USD mm
Number of deals
8-11.9%
5-7.9%
Notional, USD mm
Number of deals
0-4.9%
0-4.9%
- 20 40 60 80 100 120
- 20 40 60 80 100 120
Source: GIIN, J.P. Morgan. Investments for which no expectation was reported are not included.
Source: GIIN, J.P. Morgan. Investments for which no expectation was reported are not included.
This dispersion partly reflects the rapidly evolving motivations of investors engaged
in impact investing. Impact investing historically was largely capitalized by private
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