December 17, 2019

By Lynda Kiernan

The largest impact fund in New Zealand, the Purpose Capital Impact Fund (PCIF), announced it has had an initial close on $20 million and is preparing to begin making investments nationwide. Some key investors include K1W1, the Tindall Foundation, WEL Energy Trust, BayTrust, among other family trusts and private individuals.

Although PCIF is actively beginning to commit capital, the fund will remain open to investors, and is targeting a funding goal of $30 million. 

This represents the first time that high net-worth individuals, family offices, and corporate backers have joined forces with community trusts and philanthropists on such a scale to make capital investments that will have a positive impact on the country’s social and environmental issues.

“K1W1 has always been about making a difference in New Zealand,” said Robbie Tindall, K1W1. “Investing through Purpose Capital Impact Fund is another way for us to broaden and deepen our impact throughout the country.”

Founded in March 2019 by Bill Murphy, the founder of Enterprise Angels, PCIF intends to seek out investment opportunities in regenerative agriculture on dairy farms, horticultural projects in partnerships with rural Iwi, green housing, social housing, and urban transportation – primarily in the central North Island area.

After seeing the positive results that impact investing has had in other markets, Murphy expressed anticipation of what can be achieved in New Zealand.

“I felt very excited and somewhat intimidated by the opportunity to be part of getting it going in New Zealand,” he said. “It’s been a great challenge but the commercial sector are very open to the idea of impact investing. They firmly believe that taking commercial business and investment disciplines and applying those to social and environmental change will yield results.”

Impact in New Zealand

The gaps present in the impact investment space in New Zealand indicate significant opportunity. The first broad study conducted on the country’s impact investment market by the Responsible Investment Association of Australasia and the University of Auckland last year found that only 1 percent of the country’s private AUM, or NZ$889 million, is dedicated to impact investments. 

However, out of the investors surveyed that were not already active in impact investing, 78 percent responded that they were aware of the field, with the majority being interested in becoming active impact investors, and nearly a third (28 percent) were actively seeking out impact investment options. 

Of those New Zealand investors that were already active impact investors, 23 percent allocated capital in alignment with their mission; 20 percent allocated capital in order to meet commitments to responsible investment practices; and 12 percent responded that their investments were to contribute to building the impact investment market. 

These experienced impact investors widely report high expectations for returns, with 74 percent saying they expect to realize competitive or above market rates of return, while 58 percent of non-active impact investors in the country have the same expectations from such investments.

New Zealand’s NZ$42 billion Superfund has allocated 7 percent, or NZ$3 billion, of its AUM to sustainable and impact investments across private equity, private debt, and infrastructure, and the country’s Maori investors are expected to invest as much as NZ$2 billion per year in impact scheme for the next 10 years.

Challenge Accepted

A key challenge that’s been cited however, is a lack of evident impact investment options that can provide quantifiable social or environmental effects. It is this challenge that Murphy and his team are set to face.

“Given the immaturity of the eco-system for impact investing in New Zealand, we are having to go look for opportunities and help shape those for investment,” said Murphy. “We can’t simply sit back and wait for things to come to us. We have to be aware of aspirational social and environmental changes out there and engage with them.”

Murphy noted that the team will rely on its philanthropic partners to foster the right connections.

“They’re also a key partner as additional resources will be required to take that proactive approach to engagement with really great environmental and social change projects to help bring those to life and make those investable.”

– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.