JP Morgan & GIIN survey highlights higher impact investment commitments
Widespread commitment to allocate 19% more capital to impact investments in 2014 compared to 2013 revealed by JP Morgan and the Global Impact Investing Network (GIIN) survey.
125 global investors, including fund managers, banks, foundations, development finance institutions, and pension funds surveyed by JP Morgan and GIIN expect to commit 19% more capital to impact investments in 2014 compared to 2013, as satisfaction with the financial returns and the social and environmental impact of these investments remains high.
Spotlight on the Market, the 2014 edition of the JP Morgan and GIIN annual impact investor survey reveals market growth amidst greater government support, new product and fund launches, and widespread impact measurement.
The survey also provides detailed insight into asset allocation trends across regions, sectors, and financial instruments from the largest-ever respondent group, up 26% this year from 2013.
Among the key findings:
Rise in capital allocations and number of transactions expected in 2014
• Expected commitments of $12.7bn expected by survey participants in 2014, up from $10.6bn committed in 2013, a 19% increase
• 31% anticipated increase in the number of deals
• $4.5bn fundraising target among asset managers in 2014 versus $2.8bn raised in 2013
• Collectively, respondents manage $46bn in impact investments, of which 70% is invested in emerging markets and 30% in developed markets
• Development finance institutions manage 42% of total assets, followed by fund managers that manage 34% of total assets
• Microfinance and other Financial Services each account for about a fifth of respondents’ impact investment assets (21%), followed by Energy (11%) and Housing (8%)
• Allocations are primarily in private markets; 44% of assets are currently invested through private debt and 24% through private equity
• More investors plan to increase the percentage of their portfolios invested in Sub-Saharan Africa, Asia and North America, relative to other regions
• More investors plan to increase the percentage of their portfolios allocated to Food & Agriculture, Healthcare, and Financial Services (excluding Microfinance); the highest number of investors plan to decrease the percentage of their portfolios allocated to Microfinance, relative to other sectors
Investor motivation and satisfaction
• 91% of investors surveyed reported financial returns above or in line with their expectations
• 99% reported social and/or environmental impact above or in line with their expectations
• Over 50% of investors are seeking competitive financial returns
• Responsibility, efficiency and client demand among top motivators for making impact investments; shortage of quality deals and lack of appropriate capital remain top challenges
Amit Bouri, Managing Director at the GIIN and co-author of the report said: “With more respondents than ever, this survey offers an unprecedented view into the impact investing market, which has tremendous momentum in 2014. The survey demonstrates increased capital commitments and diversity as many investors are making allocations across investment instruments, sectors, and regions. Overall, we see an increasingly sophisticated global impact investing market, supported by growing investment track records and high-level collaboration among governments and major investment institutions.”
Spotlight on the Market is the fourth in a series of reports, started in 2010, that present perceptions of the impact investment market as well as portfolio performance from a sample of impact investors.