Impact Investment Trust, an investment company offering exposure to a portfolio of funds investing for impact in developing countries, is planning to raise up to $150m via an IPO on the London Stock Exchange.

The Company will issue up to 150 million ordinary shares at $1.00 per ordinary share.

With Initial structuring and test marketing costs funded by UK aid from the British government (under the DFID Impact Programme), Eighteen East Capital has been working towards the IPO since September 2015, enlisting further financial support from the Swiss government (SECO) along the way.

Thomas Venon, Director at Eighteen East Capital, told Africa Global Funds that Impact Investment Trust is designed to make impact investing accessible to all categories of investors. 

“It combines the tried and tested London Stock Exchange investment trust structure with the expertise, resources and track record of a DFI manager to provide developing countries SMEs in high impact sectors with much needed growth capital,” he said.

He added that the Company is targeting private wealth managers, private banks and retail investors.

The Offer for Subscription, Intermediaries Offer and Placing are due to close at 1.00 p.m., 1.00 p.m. and 5.00 p.m. respectively on July 5, 2017.

Applications will be made for all of the ordinary shares (issued and to be issued) to be admitted to the premium listing segment of the Official List and to trading on the premium segment of the London Stock Exchange’s main market and the Social Stock Exchange Segment of the NEX Exchange Main Board. 

It is expected that Admission will become effective and that dealings in the Ordinary Shares will commence at 8.00 a.m. on 10 July 2017. 

Impact Investment Trust has been established to present investors with the opportunity to gain exposure to a diversified portfolio of funds providing SMEs across developing economies with the growth capital they need to have a positive impact on the lives of the world’s poorer populations. 

The focus of the Company’s investments will be on delivering sound financial returns and measurable development impact. 

The Company has appointed Obviam AG as its investment adviser to provide investment advisory services to the Company. 

“The trust will be managed by its independent board, chaired by Jean-Michel Severino. Obviam AG will be responsible for sourcing opportunities and conducting due diligence,” commented Venon.

Impact Investment Trust’s investment objective includes the aim to generate a net 8% annual portfolio internal rate of return (IRR) over the long term by investing in a portfolio of investments in underlying funds, with a diversified weighting amongst funds, fund managers, geographies, sectors and vintage years primarily in Africa, Asia and Latin America.

The Company shall generally invest in underlying funds with committed capital of $50m to $200m, and shall not invest in funds with committed capital at first-closing in excess of $250m.

“The focus is on SMEs, we therefore want to ensure against style drift,” said Venon.

By investing in underlying funds that invest in high impact sectors, the Company aims to increase the availability of goods and services that are fundamental to the development and growth of local economies. 

The Company will invest across sectors, but will seek to primarily invest in sectors that provide important and scarce goods and services to local populations, such as education, healthcare, small-scale energy production, basic infrastructure, agricultural and forestry value chain, and access to financial services. 

The Company said it may also invest in other sectors such as retail, manufacturing, industry, entertainment etc. in a manner that is aligned with the impact thesis of job creation and economic growth.  

Once the proceeds of the issue are fully invested, the Company’s portfolio is expected to comprise of 10 to 15 Investments. 

Venon said that 40% of the fund’s assets are likely to be invested in Africa: “There are a number of African funds in our pipeline.”

When asked about investing in first-time fund managers, Venon said: “We can [invest], but conscious of the fact that for many of our investors this will be a first foray into impact investing, the focus will be on more experienced managers.”