Two India-focused impact funds, of $1 bn each, launched during GSG summit

Impact investing in India has grown to be a billion-dollar-a-year industry, with the potential to grow 20-25% a year

Two wholesale funds -- India Impact Fund of Funds (IIFF) and the India Education Outcomes Fund (IEOF) -- to further the growth of impact capital in India were launched on Wednesday during the fourth annual Impact Summit hosted by the Global Steering Group for Impact Investment (GSG) in New Delhi. 

The IEOF is a first-of-its-kind $1-billion fund that will use funding at scale from development finance institutions (DFIs), foundations, and other institutions to align with the government's agenda of providing quality education with better learning outcomes, while the IIFF will be a $1-billion pool of equity and debt funds to finance impact enterprises focused on social and environmental impact, a GSG press release said. The IIFF will align itself with India's own social and environmental goals and the UN's Sustainable Development Goals (SDGs), added the release. 

"One of the biggest gaps in the impact investment ecosystem was that bulk of this existing investment coming into India is all equity. There is very little debt. We thought that to truly galvanise the India impact investing ecosystem, we need to make sure there is a long-term affordable debt in all stages, from venture debt, to growth debt, that can further catalyse the economy," said GSG CEO Amit Bhatia. 

The summit brought together hundreds of impact leaders from more than 50 countries to "mobilise the power of impact". GSG is an independent global steering group catalysing impact investment and entrepreneurship to benefit people and the planet. The GSG was established in August 2015 as the successor to and incorporating the work of the Social Impact Investment Taskforce established under the UK's presidency of the G8. The GSG currently has 21 countries, plus the EU, as members.  

"When it comes to how we invest, there is an exciting shift underway, one that takes the current thinking about financial risk and returns and adds a third dimension — impact — that measures positive outcomes for society and the environment. Under this new financial model, social impact matters just as much as a company's bottom line," said Sir Ronald Cohen, GSG founder and chair. 

Addressing the summit, Ratan Tata, Chair of Tata Trusts, said, "Impact investment being planned by the GSG in various fields would go a long way in meeting the needs of developing countries, including India. The investment is going to meet the needs of the developing countries that need investment in infrastructure, connectivity, education and medical facilities. With these kinds of investments, which would be monitored, it will be part of 'new India', which Prime Minister Narendra Modi is trying so hard to establish."

This was the first year that the Impact Summit was hosted in Asia, reflecting the growing power of India's impact market. Impact investing in India has grown to be a billion-dollar-a-year industry, with the potential to grow 20 to 25 per cent a year. The sector is now focused on scaling new models of impact, which will call for unlocking additional sources of capital.  

By 2020, GSG aims to grow investment capital from $150 billion to $300 billion and the number of people benefiting from this will grow from 500 million to 1 billion.

The current global impact capital base of $230 billion is growing rapidly, but the world needs an estimated $2.5 trillion annually to attain the SDGs by 2030, GSG said in its release.