People are now more discerning when it comes to what companies do outside their businesses. They want to invest in organizations that not only perform well financially but also seek to do good.
Global Impact Investing Network (GIIN) Director of Research Abhilash Mudaliar says that the “Asia-Pacific region has been the fastest growing impact investing market worldwide over the past five years.” He adds that countries in the region provide a dynamic business environment centered on increasing investment activities.
According to GIIN, Southeast Asia’s impact investing ecosystem opened the way for the investment of $904 million through 225 direct deals from Private Impact Investors (PII) since 2007. PIIs include fund managers, family offices, pension funds and others. Meanwhile, 289 direct deals via Development Finance Institutions were able to generate $11.3 billion in investments.
The investment volume varies per country, with the top three largest markets being Indonesia, the Philippines and Vietnam. These countries account for over 60 percent of the capital made. The values are affected by the social and economic challenges faced by the countries. These issues present investors with the chance to invest in companies that offer big returns and solutions for the issues.
When it comes to investment sectors, financial services, energy and manufacturing are at the top, accounting for 80 percent of the total capital deployed. It is also worth noting that sectors such as education, health care and workforce development are gaining ground as the market grows stronger.
Most of the capital from impact investing in the Asia Pacific come from North America or Western Europe-based investors. Local investors led by rich families and high net-worth individuals are beginning to participate more as well, and they are expected to grow rapidly in the next years.
Same impact investing trend found in Canada
A report called “Market Momentum: Impact Investing & High Net Worth Canadians” by Toronto-based impact investing platform SVX finds the same trend in Canada.
The report claims that high net-worth Canadians are more interested in impact investing with many of them already active impact investors that are planning to increase their portfolio in the next years. This spells good news for impact entrepreneurs that want to get funded as both Canada and Asia Pacific offer promising opportunities.
If there is one takeaway from these, it is that investors have become smarter. They look beyond financial performance when it comes to investing, a new trend that is paving the way for a better future for everyone.
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