Impact Investing In Asia

The Capgemini/Merril Lynch “State of the World’s Wealth” 2011 reports that for the first time, there are as many high net-worth individuals (HNWIs) in Asia Pacific as in Europe with HNWI assets invested in the region growing to US $8.6 trillion. Despite this shifting of assets, Asia’s impact investment market still lags significantly behind Europe and the US.

 

Currently philanthropic giving – which we are correlating with social engagement – in China is around 0.35% of GDP as compared to 2.1% in the US, according to the Hudson Institute.

 

Should impact investing be positioned as an opportunity to show faith in a social entrepreneur in a frontier market, as an opportunity to tap bottom of the pyramid consumers as highlighted in the Next 4 Billion report, or be seen to provide underserved populations with increased access to key goods and services?

 

Early findings of the impact investment market in Asia, suggests that total invested capital of between US $90 to 250 billion, or 1-3% of the total assets currently being invested in the Asia Pacific region, could be deployed across key sectors to capture annual revenues of between US $100 and 350 billion by 2020.

 

Discussion questions:

·         Does the level of philanthropic giving reflect impact investing?

·         What is the best way to encourage private HNWI investors to allocate investments intosocial enterprises, especially small and growing businesses?

·         Do we need the multi-laterals and/or institutional impact investors to lead this charge or will private impact investments be sufficient to shift economic power down the pyramid?

·         What are the tipping points which will drive local governments to recognize the power ofsocial enterprises and create favourable regulations? Will it ever happen? Will it matter if it doesn’t?