Triple Point, a provider of investment solutions for private and institutional investors, has launched its Impact EIS service, which will target investments in commercially successful companies that earn a proper market return for investors whilst making a positive social impact.
For financial advisers, it offers an opportunity for them to use their traditional analytical skills to assess the opportunity but also to build long-term relationships based on a deeper collaboration around the values as well as the investment principles of their clients.
The Triple Point Impact EIS is initially raising GBP10 million and offers investors a portfolio of between 8 and 12 fast-growing companies across four key sectors – the environment, health, inequality and children and young people. The funds raised will provide scale-up capital for revenue-generating companies, which have the potential to achieve returns of 5-10 times.
The capital should be deployed over 12-18 months and the target is to exit investors four to seven years after allotment. The offer is available all year round, for a minimum investment of GBP25,000. Triple Point seeks to align its interests with its investors and maximise returns by limiting the costs for investee companies and not charging arrangement fees.
Increasingly, investors want to do well from doing good. No longer is it enough for many investors that the investment schemes they commit to, such as ethical funds, just avoid social damage. Nor are they happy to give up a fair market return to support companies that make a positive impact, which is what many socially responsible funds offer.
Triodos, the sustainable bank, recently found that nearly two thirds of UK citizens would prefer their money to support companies that are not only profitable, but that also have a positive impact on society and the environment. Academic research also backs up this investment approach. Research from Friede, Busch and Bassen, authors of the Sustainable Journal of Finance, showed in a recent study entitled, ‘ESG and financial performance’, that, in 90 per cent of 2,200 peer reviewed research papers there was a positive or neutral correlation between the two.
What is also important to understand is that this approach is not simply catering to the investment philosophy of a cohort of more progressive individuals. In fact, taking positive societal contribution into account when analysing prospective investments provides fundamental critical insight into a company’s viability and potential long-term business performance.
Increasingly, Impact Investing is rightly seen as a subset of commercial investing that happens to be sustainable and make a positive impact. One of the rationales of impact investing is that the long-term risk adjusted returns will be superior because the investment approach is in tune with the forces shaping the global economy. This is because it takes into account the risks and opportunities for businesses of transitioning to a more sustainable, low carbon economy where companies will increasingly be penalised for their negative social impacts.
A Government review commissioned last year, led by Elizabeth Corley, chair of Allianz Global Investors, reported that “there is growing interest among individuals for their investments to have a positive impact on society as well as produce financial returns.” The review also said that the Impact Investing market required further development to cater for retail investors.
The Government has made clear that it supports the expansion of the Impact Investing sector and is backing moves to facilitate further retail investment into Impact Investing by encouraging greater transparency, a more robust governance framework and better measurement of outcomes so investors can be clear on the positive impact their investments have made.
Advisers should view Impact Investing as offering them an opportunity to take a key role in an investment approach that will increasingly be seen as standard, and represents the future of growth companies and personal investment. They should not see it as a separate discipline, but rather as an EIS product that involves all the traditional skills of financial analysis, asset allocation and client care, to ensure that they meet their clients’ objectives.
Triple Point, with over GBP800 million in assets under management has a strong track record in tax-efficient VCT and EIS investing, and a 14 year track record in delivering strong returns for its clients. The firm has supported 44 EIS and 18 VCT qualifying companies in that time, and has in the past two years successfully returned GBP130 million to investors.
Belinda Thomas (pictured), Head of Sales and Investor Relations at Triple Point, says: “We are delighted to launch the Triple Point Impact EIS, which looks to back companies that maximise financial returns while also having a positive impact on society. The Impact EIS is the fruition of several years of development and is a response to growing demand from investors for principled investment products. Its Impact Investment strategy reflects and capitalises on the macro forces shaping global growth, with the opportunity for superior long-term returns. And for advisers, it allows them to fully utilise their core financial analysis skills while also developing wider relationships with their clients.”