Aimee B. Davis Law P.C.

Checking In on the Status of Impact Investing

{3:15 minutes to read}

It’s been over three years since I learned and wrote about, Impact Investing.

What is Impact Investing?

Emerging in 2007, impact investments are made into companies, quasi-governmental organizations, and funds, with the intention of generating a measurable, beneficial social or environmental impact along with a financial return to the investor. 

When I first learned this term, I was skeptical about whether the milestones established by issuers in this space could accurately measure investor’s goals and stated objectives. I wondered how the corporate attorneys working behind the scenes were drafting meaningful benchmarks that didn’t set their clients up for failure. I wanted to better understand how the lack of a traditional exit-strategy (which is characteristic of these investments) relates to the milestones established for exiting. I likened these investments to short-term, potentially interest-free loans or donation-based, philanthropic gifting.

 

Since then, I’ve learned that impact investments continue to flourish not only in the United States, but around the world.

 

In the fall of 2018 while on a British Airways flight, I was intrigued by the cover story in Spear’s Magazine, entitled “The New Capitalism, How Wealth is Changing the Way the World Goes Round.” The article was written by Jim O’Neill, who spent 20+ years of his career at Goldman Sachs, a front runner in impact investments. While focused on the rise of “profit with purpose,” it didn’t provide much insight into my drafting and other concerns.

 

Shortly after that, I was delighted to attend a NYC Bar presentation called “Perspectives on Impact Investments in Latin America.” At last, I would learn more about how these investments actually work. I had the opportunity to ask the panelists, who either work at, or represent, funds and other entities in the Latin American market, pointed questions.

 

One striking fact I learned is that these investments do yield interest, but investors agree to ratchet down the rates because they seek to establish long-term relationships in the region. I learned of 2 recent exits from impact investments in Latin America, with an IRR of 22% and 26%, respectively. Another interesting fact about Latin America is that issuers making capital investments in the region are required by law to provide some kind of “give back” to the local community, such as building a school.

 

Impact investing seems ripe for Latin America. On the other hand, developing world markets are leery of investing in politically volatile countries such as Venezuela and Argentina.

 

Nevertheless, the Latin American market is experiencing an uptick in local firms and family offices deploying this capital directly. Although the interest rates payable are considered “second level,” these investors are hitting the ground running because of the perceived “dual return” or “double bottom line,” whereby the inclusion of social covenants (i.e. milestones) allow issuers to show they are fulfilling the mission.

 

Notwithstanding my desire for impact investing to actually cure social ills, these investments are a definite step in the right direction!

Aimee B. Davis Law P.C. is committed to advising its clients and resolving issues relating to the legal and business matters that are important to them. If you have any questions, please feel free to contact us at (917) 617-2243 or email aimee@aimeebdavis.com.

Aimee B. Davis

Aimee B. Davis Law P.C.

917-617-2243
122 Ashland Place
Brooklyn, NY 11201

139 comments

  1. Write more, thats all I have to say. Literally, it seems as though you
    relied on the video to make your point. You definitely know
    what youre talking about, why waste your intelligence on just posting videos to
    your weblog when you could be giving us something informative to read?

    Also visit my web-site: candida diet

  2. What i don’t understood is if truth be told how
    you are not actually a lot more well-preferred than you may be right
    now. You’re very intelligent. You realize thus considerably on the
    subject of this topic, produced me for my part believe
    it from so many various angles. Its like women and men are not fascinated except it is one
    thing to accomplish with Woman gaga! Your own stuffs great.
    All the time take care of it up!

    my homepage effectively increase testosterone

  3. Greetings! I know this is kind of off topic but I was wondering which blog platform are you using for this site?
    I’m getting fed up of WordPress because I’ve had issues with hackers and I’m looking
    at alternatives for another platform. I would be awesome if you
    could point me in the direction of a good platform.

    my web-site – five diets

  4. Hi, constantly i used to check website posts here in the early hours in the daylight, for the reason that i love to learn more and more.

  5. I want to get across my affection for your generosity supporting women who should have assistance with this important niche.
    Your personal commitment to passing the
    solution all around had been amazingly good balanced diet and have truly empowered
    people just like me to achieve their goals. Your new insightful report
    entails a whole lot a person like me and substantially more to my colleagues.
    Regards; from all of us.

  6. An outstanding share! I’ve just forwarded this onto a co-worker who was doing a little homework on this.
    And he in fact ordered me breakfast due to the fact that I discovered it for him…
    lol. So let me reword this…. Thank YOU for the meal!!
    But yeah, thanks for spending the time to discuss this matter here on your website.

    Feel free to visit my page; aniene.net

  7. It’s perfect time to make some plans for
    the future and it’s time to be happy. I’ve read this post and if I
    could I desire to suggest you some interesting things or advice.

    Perhaps you can write next articles referring to this article.
    I want to read more things about it!

    Visit my site :: eating diet plan

  8. It’s remarkable to pay a quick visit this web site and reading the
    views of all colleagues on the topic of this article,
    while I am also keen of getting experience.

    my page – Carmella

  9. Hi there are using WordPress for your blog platform? I’m new to the blog world but I’m trying to get
    started and set up my own. Do you require any html coding knowledge to make your own blog?
    Any help would be greatly appreciated!

    Here is my blog: gain muscle

  10. Wonderful goods from you, man. I’ve understand your stuff previous to and
    you are just too fantastic. I actually like what you’ve acquired here, certainly like what you are saying and the way in which you say
    it. You make it enjoyable and you still care for to keep it wise.
    I can not wait to read much more from you. This is really a
    terrific website.

    my web-site: indoor growing

  11. When someone writes an post he/she maintains the image of a user in his/her mind
    that how a user can be aware of it. So that’s why this paragraph is amazing.
    Thanks!

  12. Hello There. I discovered your blog using msn. This
    is a really neatly written article. I will be sure to bookmark it and come back
    to learn extra of your useful info. Thanks for the post. I will certainly comeback.

    my web site – cannabis vodka

  13. Hi there just wanted to give you a quick
    heads up. The words in your content seem to be running off the screen in Safari.
    I’m not sure if this is a formatting issue or something to do with internet browser compatibility but I thought I’d
    post to let you know. The style and design look great though!
    Hope you get the issue resolved soon. Thanks

    My web page … oil pulling teeth whitening

  14. Hey I know this is off topic but I was wondering if you knew of any widgets I could add to my blog that automatically tweet my newest
    twitter updates. I’ve been looking for a plug-in like this for quite
    some time and was hoping maybe you would have some experience with something like this.
    Please let me know if you run into anything.
    I truly enjoy reading your blog and I look forward
    to your new updates.

    Here is my website … Rodger

  15. Undeniably believe that which you said. Your favourite justification appeared
    to be on the net the simplest factor to keep in mind of.

    I say to you, I definitely get irked at the same time as other people think
    about worries that they plainly don’t recognize about. You controlled to hit the nail upon the top
    and defined out the entire thing with no need side effect , other people could take a signal.

    Will probably be again to get more. Thanks

    my website – http://benjamindinh.fr

Leave a comment

Your email address will not be published.