a. What is impact investing?
Impact investing is an investment strategy whereby capital is invested in a company, organisation, business enterprise or fund that has the primary intention of addressing a social and/or environmental need and delivering positive impact by applying a sustainable business model using market-based income generating strategies.
These entities deploy investment capital to provide social and environmental impact returns as well as financial returns. The financial returns range from a return of principal capital to meeting or beating market rates.
b. What are impact investments?
Impact investments are investments intended to create positive social or environmental impact as well as yield a financial return. Impact investments are considered an emerging asset class by various financial institutions.
c. How does impact investing differ from SRI?
Impact investing differs from socially responsible investing (SRI) by the nature of the intention and primary purpose of the investment strategy.
SRI is a passive screening investment strategy that defines which companies to exclude from the investment portfolio, based on specific criteria, such as a product sold (for example, tobacco or oil) or the business model applied. SRI portfolios are optimized for financial return while achieving some social and/or environmental return.
Impact investing is an active investment strategy that seeks out high impact businesses that proactively create positive social or environmental benefit. The investment return is optimised for social and/or environmental return; the financial return can be sacrificed for the impact return.
d. Who are impact investors?
Impact investors are financial investors who actively seek to place capital in funds or high impact businesses to harness the positive power of enterprise to deliver a social or environmental impact. This type of capital is classified as impact capital. Impact investors can be broadly classified according to their primary investing objective– either impact-first or finance-first.
Impact-first investors seek to optimise social or environmental impact with a floor for financial returns. These investors primarily aim to generate social or environmental good, and are often willing to give up some financial return to achieve maximum impact.
Finance-first investors seek to optimise financial returns with a floor for social or environmental impact. These investors seek to integrate social and environmental value drivers into investment decisions or view returns in a way that creates social value (e.g., clean technology).
e. What is a high impact business?
A high impact business is social and/or environmental enterprise or entity with a social and/or environmental purpose. Its primary purpose is to address a social and/or environmental problem or need with the intention of producing positive impacts.
High impact businesses are not defined by legal or corporate structure such as a non-profit or non-governmental organisation. High impact businesses are
Any business, regardless of legal or corporate structure, can be a high impact business as long as it meets the defining characteristics for a high impact business delivering either or both a primary social or environmental impact in a sustainable, market oriented way.
A high impact business may be a:
· non-profit, non-dividend distributing business (i.e., one which reinvests all its surplus income into the purpose of the business)
· For-profit business with a dividend policy that stipulates when dividends will be paid out.
a. What are the financial return expectations of Impact Capital?
Impact capital’s primary purpose is to achieve a social and/or environmental return. The financial return of impact capital can range from principal only or principal plus a nominal return measurable to market rates, typically high single digits to low double-digit financial return. The return may or may not be a real return (to account for inflation). Some investors will be willing to accept a lower financial return in exchange for high levels of measurable impact, while others may demand high financial and social returns. As with any investment, the return expectations will be proportionate to the perceived risks of the project.
a. In a nutshell, what does Nexii do?
Nexii’s core activities include the operation and support of our impact platforms: the Impact Exchange Board (iX), the Impact Capital platform (iC) and the Impact Opportunities Platform (iOP). We also provide consulting and training services, tools and social finance mechanism creation. Our field building activities play an advocacy role in building the stature and sophistication of impact capital markets.
b. Why and by whom was Nexii established?
Nexii’s roots lie in the GreaterGood group of companies, namely the GreaterGood South Africa Trust, GreaterCapital and the South African Social Investment Exchange (SASIX). This group of companies was also built from inception in 1997 by Nexii’s founder, social entrepreneur and Ashoka fellow, Tamzin Ractliffe. Nexii was conceptualised as a high impact enterprise with the primary purpose of increasing and improving the flow of capital to high-impact social and environmental initiatives.
c. How does Nexii make its money?
Our revenue streams include issuers’ registration, admission and listing compliance, listing and transaction fees, consulting services, and specialized technology services and license fees.
