Impact investment deals have continued to flow through 2020, according to specialist investment manager Conscious Investment Management.
CIO Matthew Tominc noted that Conscious Investment Management focuses on social infrastructure like disability housing, deep impact, such as social impact bonds, property, including affordable housing, and environmental infrastructure.
“Our typical model is to partner with charities and some commercial enterprises to acquire property that they can manage to make impact,” Tominc said. “We really developed it in response to looking for impact investments ourselves and finding that we can make financial decisions throughout our team. But we also know that we have to have the right asset management partner to make the positive impact.”
By partnering with charities, investments are aligned with the needs of the communities they are serving, Tominc noted.
“Nobody on our investment teams has the experience of living in disability housing or requiring social housing,” Tominc said. “Who are we to say how disability housing, social housing needs to be built there? We can’t make that decision alone – we should be partnering to deliver the best impact.
Conscious Investment Management’s impact fund has approximately $45 million in assets under management, with an allocation to a diversified portfolio of global impact investments, targeting a financial return of at least 7% pa over the medium term after fees, before tax, while having a positive social and environmental benefit.
“Ultimately, we’re directing capital flows, and that’s an incredible privilege,” Tominc said. “It’s also a responsibility because if we build the wrong accommodation or incentivise the wrong conduct, which private capital might do in the absence of thinking about both sides of impact investment, it could cause an unintended adverse consequence.”
While the impact investing sector remains nascent, its growth remains strong and deals continued through 2020 for Conscious Investment Management, Tominc said. Another area of investment priority for the fund is environmental infrastructure, including community rooftop solar. Demand for rooftop solar remains strong, Tominc said.
Social and disability housing remains an attractive area for investment as well.
“We already have committed capital, which means we can make investments and we can get on with it,” he said. “This is about fundamentally bringing people to housing, and in the case of disability accommodation, the rent is paid by the commonwealth government.”
However, the pipeline for social and disability housing remains tight, he added.
“Of the four, the one that we don’t have as much investment pipeline is social and affordable housing, and this is an area we’ve been focused on for a really long time,” he said. “We’d love to see more investment pipeline and more structured investment pipeline, but that has to be done in conjunction with government. It’s potentially great from an economic perspective and a post-COVID-19 recovery perspective, and looks at the really big challenges with homelessness and the need for social housing, which is felt everywhere. We’d really love to find a way to bring those two things together.”