The South African Mergence High Impact Debt Fund has received a “Gold 4-Star” rating from the Global Impact Investing Rating System (GIIRS).

This is one of only two funds in South Africa to have been rated by GIIRS, an international organisation specialising in measuring impact investing, that is investing which seeks not only to produce a financial return but also to make a positive social and economic impact.

The Mergence High Impact Debt Fund, managed by Mark van Wyk of Mergence Investment Managers, was formed in 2010 to provide South African institutional investors with long-term capital growth while promoting environmental, social and governance (ESG) criteria.

The fund has returned 9% over five years, beating its benchmark of CPI+3%.

The fund invests via debt in mainly unlisted companies that create a positive social and/or economic impact beyond the financial return.

The investments are targeted into sectors identified in the National Development Plan Diagnostic Report (the precursor to the National Development Plan), such as education, health, housing, enterprise development and transport.

Van Wyk said: “Worldwide it has been notoriously difficult to measure impact investing consistently, but this is gradually changing as methodologies and metrics are refined.”

“Investors can now get analytics on the underlying investments and measure the positive contribution that projects are making to addressing social needs,” he said.

The GIIRS rating process involved close scrutiny of the investee companies within the High Impact Debt Fund, each of which was rated individually following completion of a questionnaire and interviews.

The investee companies also are able to find value in the GIIRS rating process via the comparable performance data they received upon completion in their individual Company Ratings Report and Improve Your Score tool which highlights specific practices they can implement to improve their social and environmental performance.