Social enterprise investment fund closes with $9M

Tuesday 4th December 2018

Social enterprise-focused Impact Enterprise Fund closed out with $9 million last week, having put a ninth of that to work in a health tech firm.

The fund raised another $1 million since February before its final close on Nov. 28 from a broad range of wealthy individuals and cornerstone stakes from the Tindall Foundation and St John's Trust Board.

The tie-up between the Akina Foundation, New Ground Capital, and Impact Ventures was seeking between $10 million and $15 million and had planned to close the fund earlier. However, investment manager Chris Simcock says it was pretty slow progress with a lot of time spent educating people about impact investing, in which an investor seeks to achieve a social good outcome as well as a commercial return.

"We run into the old school way of thinking where people split philanthropy and investing and view them as two distinct options rather than being to combine the two," Simcock said.

The fund is managed by a general partner joint venture between social enterprise incubator Akina and boutique investment house New Ground Capital. Simcock's Impact Ventures provides corporate finance and advisory services to the fund.

Simcock, an Edmund Hillary fellow, was part of the investment banking team at First NZ Capital, but gave up working on deals for the big end of town to pursue his social and environmental values.

The fund's close came just as it made its first investment – a $1 million stake in digital health platform Melon Health. The investment was part of a $3.3 million capital raising alongside Lance Wiggs' Punakaiki Fund and Stephen Tindall's K1W1. The funds will support Melon's expansion in the US, where it's had some success securing customers including New York-based insurer Oscar Health.

The Impact Enterprise Fund targets a 15 percent internal rate of return as a long-term investor and has identified clean energy, agriculture technology, education, healthcare and sustainable food production as sectors ripe for investing.

Simcock said transport is a sector that he's become increasingly interested in, and he's considered an opportunity in that space since the fund launched nine months ago.

About 200 business proposals have crossed Simcock's desk and 20 went to the fund's investment committee. Two were on the cusp of being completed, but fell over in the final negotiation of commercial terms, he said.

Simcock said the fund has 25 companies on its active list, where potential investments are either live or in focus.

"We're seeing great deal flow," he said. "Markets are still expensive, but there’s plenty of good deals out there."

(BusinessDesk)

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