Intellecap and GIIN’s new report reveals a growing and high-potential impact investing market in Southeast Asia
The Global Impact Investing Network (GIIN), in partnership with Intellecap Advisory Services, has published The Landscape for Impact Investing in Southeast Asia, the first-ever detailed analysis of impact investing activity across Southeast Asia. The report was generously supported by Investing in Women, an initiative of the Australian Government which is partnering with impact investors to grow impact investments in women owned and led SMEs in Southeast Asia. The Landscape for Impact Investing in Southeast Asia provides deep insight into the three most active markets in the region: Indonesia, Vietnam, and the Philippines, and a broader regional overview of the remaining eight countries, namely Brunei, Cambodia, East Timor, Laos, Malaysia, Myanmar, Singapore, and Thailand.
Abhilash Mudaliar, Director of Research at the GIIN, says, “The Asia Pacific region has been the fastest growing impact investing market worldwide over the past five years. This report shows why that’s not surprising. The countries across the region offer dynamic business environments with increasing entrepreneurial and investment activity focused on ensuring inclusive and sustainable economic development.”
The report outlines opportunities and challenges for impact investors and analyzes regulatory and economic factors that inform investment decisions in each country. Overall, the report sheds light on a dynamic and expanding regional impact investing market:
Investment activity in Southeast Asia has increased over time. Since 2007, Private Impact Investors (PIIs) have deployed USD 904 million through 225 direct deals, and Development Finance Institutions (DFIs) have deployed USD 11.3 billion through 289 direct deals. For both sets of investors, investment activity has increased significantly in recent years.
Indonesia, the Philippines, and Vietnam are the three largest markets in the region accounting for over 60% of capital deployed to date. However, each country in the region faces its own set of social and economic challenges, and presents investors with unique opportunities to develop strategies that both generate a financial return and have a positive impact.
The top three impact investment sectors in the region have been financial services, energy, and manufacturing, accounting for over 80% of total capital deployed. As the market expands there is growing interest and activity in sectors such as education, healthcare, and workforce development.
On the findings, Mudaliar notes, “Historically, most capital for impact investing in the region has originated from investors in North America or Western Europe. A particularly promising trend is the growing participation of local investors – led by wealthy families and high net-worth individuals. We expect this trend to expand rapidly across all investor segments in the coming years.”
Vikas Bali, CEO, Intellecap, says “The Southeast Asian region is one of the most vibrant regions both economically and demographically. Due to its sheer diversity, the region offers tremendous potential for social entrepreneurship and impact investing, as is evident from this research. While the focus of investors has remained on promotion of financial inclusion, expansion of access to basic services and creation of livelihoods, there is increasing excitement around sectors such as healthcare, education and sustainable forestry. While social enterprises face challenges such as a lack of sufficient early stage capital and limited incubation support, partnerships are being forged among a variety of ecosystem stakeholders, that hold the promise of addressing these challenges. There is also increasing awareness and investor interest about Gender Lens Investing. Through the Aavishkaar Frontier Fund, the Aavishkaar-Intellecap Group has invested in high impact enterprises and supported their journeys to scale. We remain committed to supporting the region through more insightful and action-oriented research, network-building, and partnering with like-minded institutions to promote the growth of entrepreneurship and livelihood opportunities across the range of impact sectors including financial inclusion, healthcare, WASH and agriculture.”
The report also finds that there is increasing awareness and uptake of gender lens investment (GLI) strategies in the region, which are investments that seek to address gender disparities and/or examine gender dynamics to inform better investment decisions. A growing number of investors have started developing GLI strategies in recent years, with USD 40 million deployed into more than 30 deals in Indonesia, the Philippines, and Vietnam alone.
Dr. Julia Newton-Howes, CEO of Investing in Women, argues, “This important research provides much needed market intelligence for Southeast Asia and reveals the growing appeal of impact investing in the region. Importantly, moving capital with a gender lens can unlock a significant under-served market and additional social impacts. Obviously, investing with a gender lens has a long way to go in the region, particularly with development finance. But we recognize that impact investing will not reach its full potential without incorporating an intentional gender lens and are proud to partner with the GIIN and Intellecap on this publication.”
The Landscape of Impact Investing in Southeast Asia report is based on interviews conducted with over 100 stakeholders, a thorough review of existing research, and aggregate analysis of over 500 impact investing transactions made since 2007.
About the GIIN
The Global Impact Investing Network (GIIN) is a nonprofit organization dedicated to increasing the scale and effectiveness of impact investing around the world. Impact investments are investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets, and target a range of returns from below market to market rate, depending upon the circumstances. The GIIN builds critical infrastructure and supports activities, education, and research that help accelerate the development of a coherent impact investing industry. For more information, please visit www.thegiin.org.
About Intellecap Advisory Services
Intellecap is a pioneer in providing innovative business solutions that help build and scale profitable and sustainable enterprises dedicated to social and environmental change. Intellecap provides a broad range of Consulting, Research and Investment Banking Services, to Multilateral Agencies, Development Finance Institutions, Social Enterprises, Corporations, Investors, Policy Makers and Donors. In 2017, Intellecap won the ‘Impact Market Builder of the Year Award’ from Global Steering Group (GSG) Chicago, a G20 Think tank. Intellecap is a part of the Aavishkaar – Intellecap Group, which collectively manages assets of over USD 650 million and has cumulatively directed over USD 1 billion of capital to entrepreneurs addressing some of the most world’s most challenging problems. For more visit, www.intellecap.com
About Investing in Women
Investing in Women is an Australian Government initiative to catalyse inclusive economic growth and poverty reduction in South East Asia. The program’s goals are to improve women’s participation in the workforce and as business leaders; enhance women’s voice in decision making and leadership; and influence the private and public sectors to recognise and promote the value of gender equality. Investing in Women partners with impact investors to strengthen access to finance for women-owned and led SMEs particularly in Indonesia, the Philippines and Vietnam, and to build a business case for a more inclusive investing environment globally. For more information, please visit www.investinginwomen.asia.
View report here.