Now anyone can make a difference: Impact Investment Trust is set to list on the London Stock Exchange

 
Lucy White
Impact Investment Trust IPO
Impact Investment Trust will invest in education, healthcare, agribusiness, small scale renewable energy, small scale infrastructure and access to finance (Source: Getty)

Impact investing, where investors aim to further social and environmental causes as well as grab a good return, is set to hit the mainstream.

Although the phrase has become more common, with increasing numbers of financial institutions bandying it about in the hope it makes them look grounded and benevolent, impact investing has previously been almost impossible for the normal person.

Read more: Millienials want to invest for good - but what is impact investing?

But a new investment trust, aptly named Impact Investment Trust, is readying for a $150m (£118.85m) listing on the London Stock Exchange on 10 July.

“What we're doing is very simple – we're trying to have a positive effect on the lives of poor populations in developing countries,” said the trust's co-founder Thomas Venon.

“We do that by investing in small and medium-sized enterprises (SMEs) which are great measures of economic growth and job creation.”

Formerly, vehicles offering an impact investment strategy have mainly been private equity and private debt funds – most of which require an eye-watering minimum investment and lock up capital for at least 10 years.

Read more: Gresham House launches a platform for pension funds that want to make an impact

But Venon and his partners Emmett Pearce and Dave Portmann, who met while working for in the City in the early 2000s at ABN Amro and Royal Bank of Scotland (RBS), thought such a worthwhile strategy should be available to the average retail investor.

They began by meeting with the government's Department for International Development, which has a programme specifically designed to help build a market for impact investing.

“If you look at who is active in impact investing right now, on one side you've got the development finance institutions (DFIs), which are largely arms of western governments, and on the other side you've got the ultra high net worth individuals,” said Venon.

So the trio decided to set up an investment trust, which anyone could commit to by buying shares priced at $1 apiece.

Impact Investment Trust will invest in six areas "which people need to lead a life that looks a little bit more like ours", according to Venon.

These include education, healthcare, agribusiness, small scale renewable energy, small scale infrastructure and access to finance.

"If you look at the African continent, you have a growing middle class with a household income of a few hundred dollars. They are extremely aware of the need to educate their children and dedicate part of their revenue to that," said Venon.

"But pretty much across the African continent, governments are failing to deliver even remotely good education. Families have to turn to the private sector. So we're providing that private sector with the capital it needs to grow."

Obviam, the manager of Switzerland's DFI, will act as the independent investment adviser to the fund, which will make commitments to local private equity and debt funds across Asia, Africa and Latin America.

Impact Investment Trust adopted a fund-of-funds model in order to take advantage of investment teams on the ground, who have hands-on experience and expertise, according to Venon.

To ensure complete transparency, Venon and his partners – who have established themselves as Eighteen East Capital – will step back from the trust following the listing into an investor relations role, and "hand over the keys" to an independent board.

The trust is aiming to make an eight per cent return over the long term, and will also list on the Social Stock Exchange.

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