Monday, 10 January 2011 9:34 PM

Forum Highlights Ways to Link Social Enterprises with Impact Investors

DHAKA, BANGLADESH (10 January 2011) - Social enterprises are making an important contribution to inclusive economic growth and in providing opportunities for the poor in the Asia and Pacific region, but they need financing from impact investors to scale up their efforts.

These were the conclusions of the "Impact Forum for Social Change" co-organized today in Dhaka, Bangladesh by the Asian Development Bank (ADB) and Impact Investment Exchange Asia (IIX Asia).

Social enterprises - organizations using business methods to address social or environmental concerns - are tackling problems such as lack of access to basic goods and services in healthcare, education, housing, and micro-financing. However, social enterprises are generally unable to make widespread, systemic, and positive impact because they lack access to growth capital to expand their operations.

Impact investors - investors seeking both financial and social returns - are addressing this need by committing resources to businesses considered socially and environmentally responsible. However, even social enterprises with access to some funding are seeing their capital needs quickly outpace the capacity of investors in the private markets.

There is no platform in the region where socially minded impact investors can direct their capital into reliable and liquid investments. Traditional stock exchanges tend to ignore social enterprises, as their investors' primary focus is on maximizing profits.

"ADB recognizes the powerful role of the private sector in promoting development and addressing poverty in the Asia and Pacific region," said Bart W. Édes, Director of ADB's Poverty, Gender, and Social Development Division. "This forum shows that there are substantial private funds available to invest in social enterprises. To free up more of these funds, however, it will be necessary to identify social enterprises ready to receive capital, agree on a way to measure their performance, and create vehicles through which investments can take place."

According to IIX Asia, a social stock exchange will allow sustainable social enterprises to raise capital through the capital markets. "A regional stock exchange serving social enterprises from Bangladesh and other developing countries would link social enterprises in need of funding with impact investors who understand their business models and value their social mission," said Durreen Shahnaz, founder and Chair of IIX Asia.

Such a specialized exchange would reduce the cost of search for impact investors and increase their confidence in purchasing shares and bonds issued by social enterprises looking to expand their operations, added Ms. Shahnaz.

The one-day forum assembled 60 participants from government, development agencies, social enterprises, and impact investors, as well as experts in capital market development and resource mobilization. It is aimed at providing participants with a deeper understanding of impact investment, impact measurement, and the market readiness of social enterprises in Bangladesh and elsewhere in the Asia and Pacific region.

ADB's support for the forum was provided by the technical assistance project on Developing a Regional Social Investment Exchange Initiative, financed by the Investment Climate Facilitation Fund under the Regional Cooperation and Integration Financing Partnership.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members - 48 from the region.

IIX Asia is a Singapore-based social enterprise with a mission to provide other social enterprises in Asia with greater access to capital, thereby allowing them to more rapidly expand the impact of their activities. IIX Asia seeks to establish the region's first social stock exchange to provide sustainable social enterprises from developing countries with the opportunity to raise capital through the capital markets, based on their social, environmental, and financial results. IIX Asia has received significant financial support from the Rockefeller Foundation.

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