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SRI360 | Sustainable & Responsible Investing, Impact Investing, ESG, Socially Responsible Investing
IIX Orange Bonds Lifting MILLIONS of Women in Asia & Africa! | Robert Kraybill
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Robert Kraybill is a well-known name in the impact investment space who has created innovative financial products that channel capital into improving livelihoods across emerging markets, particularly in South and Southeast Asia.
But his journey didn’t start there.
Robert’s first big career move was at Morgan Stanley. Fresh out of Princeton, he was ready to take on the world of investment banking. But before he even made it to his orientation session, he met Durreen Shahnaz – the woman who would later become his wife and, more importantly for this story, the founder of Impact Investment Exchange (IIX) and a global leader in social impact investing.
Starting as a banker at Morgan Stanley, Robert later led investment banking for Wasserstein Perella & Co. in Singapore and then transitioned to private equity at Marathon Asset Management, focusing on the Asia-Pacific region.
Then came 2008. The financial crisis hit, and Robert saw firsthand that it "exposed the hollow promise of traditional finance’s claim to make the world better through efficient capital allocation."
He knew there had to be a better way. So, he pivoted – to impact investing.
Fast forward to today, and he’s Chief Investment Officer at IIX, a Singapore-based enterprise that helps mission-driven businesses grow and scale their positive impact. In their words, they “build pathways to connect backstreets of underserved communities to the Wall Streets of the world”.
Alongside his wife, he is transforming financial systems and developing innovative solutions that drive women’s empowerment, climate action, and community resilience. Through IIX and the IIX Foundation, their work has mobilized over $250 million in private-sector investment and positively impacted more than 100 million people worldwide.
His team pioneered the Women’s Livelihood Bond (WLB) series, a first-of-its-kind financial product that channels investment into women-focused enterprises across emerging markets.
But they didn’t stop there. After proving the success of the Women’s Livelihood Bonds, they created Orange Bonds – an investment framework designed to standardize and scale gender-lens investing, just like Green Bonds did for climate finance.
In this episode, Robert takes us through the evolution of the WLB Series and the birth of Orange Bonds.
He also explains the mechanics of blended finance – where catalytic capital de-risks investments to attract large-scale institutional funding. We also talk about IIX’s Values Impact Measurement Tool, their Risk-Return-Impact philosophy, and their ambitious goal: creating one billion sustainable livelihoods by 2030.
Join us to discover why the future of impact investing isn’t just green – it’s turning orange.
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About the SRI 360° Podcast: The SRI 360° Podcast is focused exclusively on sustainable & responsible investing. In each episode, I interview a world-class investor who is an accomplished practitioner from all asset classes.
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Additional Resources:
- Robert Kraybill LinkedIn
- IIX LinkedIn
- IIX Website
- The Defiant Optimist: Daring to Fight Global Inequality, Reinvent Finance, and Invest in Women
Intro
SPEAKER_00Up next on the SRI 360 podcast.
SPEAKER_02We have about $250 million of assets under management that are predominantly invested as loans to relatively mature enterprises that are promoting sustainable livelihoods for women in South and Southeast Asia and Africa and helping to empower women as agents of climate action. Even in fields like peacebuilding, if women have a seat at the table in conflict resolution, you wind up with more durable solutions. By empowering women, you're actually able to better address many of the other problems that we're all interested in. We want to mainstream impact investing as much as possible. We don't want this to be seen as a small sideline of philanthropists. We want to show that you can use the capital markets to do something positive. The IX Values tool is a digital verification tool that allows us to survey much larger sample sizes of beneficiaries. We use that to back up and verify the information that we're receiving from the companies that we're analyzing with first-hand reports from the beneficiaries that should be benefiting from the companies that we're working with.
SPEAKER_01Unlock the potential of your investments to improve the world and make high performance returns. Welcome to Sustainable and Responsible Investing 360. My name is Scott Arnell, and each week I sit down with a world-class investor to uncover their secrets of profitable ESP, impact, and socially responsible investing. Find out more at SRI360.com. Imagine this, it's your first day at your first job on Wall Street, you're fresh out of Princeton and ready to start your career at Morgan Stanley. You're running late, rushing to orientation, and that's when you meet the woman who will become the most important woman in your life. That's exactly what happened to Robert Craville before he even sat through his first meeting at Morgan Stanley. He met Doreen Shinaz, who would later become his wife. And importantly for this story, the woman who went on to found the Impact Investment Exchange known today as IIX and become a global leader in social impact investing. Not exactly the career milestone Robert expected on day one. He was there just to be a banker. And for years, that's exactly what he did, working at Morgan Stanley, then Credit Suisse, and eventually leading investment banking in Singapore for marathon asset management. Then in 2008, the financial crisis hit, and Robert saw firsthand how capital had been recklessly misallocated. The system he had spent years working in was failing people and failing big time. That was the turning point when he pivoted to impact investing. Fast forward to today, he's now the chief investment officer at IIX, working alongside his wife. He's reshaping finance to support women entrepreneurs and climate action. Their work has brought in over 250 million in private investment and helped over 100 million people worldwide. IIX pioneered the award-winning Women's Livelihood Bond Series and later led the effort to create the Orange Bond Labeling Framework for Gender Lens Investing, which was developed based on the green bond model. But more on that later in the episode. So please meet Robert Crayville, who's here today, to talk about Women's Livelihood Bond Series and Orangebonds and IIX's unique trademark impact measurement tool called IIX Values and everything else IIX is doing on their bold mission to create 1 billion sustainable livelihoods by the year 2030. Thank you first and foremost for being a part of this community. But it's driving me crazy that over 83% of you that listen to or watch this show regularly haven't yet subscribed to this show. So can I ask you for a favor before we start today? If you like the show and if you like what we do here and you want to support us, the free and simple way that you can do just that is by hitting the subscribe button or following us on your podcast app. It helps this channel more than you know. Thank you and enjoy this episode.
Robert Kraybill’s background and education
SPEAKER_01Robert, it's really nice meeting you. Scott, nice to meet you too, and thanks for having me on the podcast. You're a well-known impact investor. You've been living in Singapore for quite a while now, but that's not where you're originally from. So I'd like to go back to the beginning and just tell me a little bit about your childhood. Where did you grow up? What was your early life there like, and what were your parents like?
SPEAKER_02Scott, you're right. I've been in Singapore now for 20 years and have been working at Impact Investment Exchange for the last 15. I grew up though, I was born up in New York, upstate New York in Ithaca. My father was actually is well, what was until he retired a veterinarian, and he was studying at Cornell at the time. So I was born up there, but I grew up most of my life in uh New Jersey in various parts, but m for most of the time and and certainly high school years, down on the southern uh New Jersey shore, so near Atlantic City, actually. And it was a pretty nice place to grow up as a kid with the beach two blocks away. That was the early life. My father was a veterinarian, my mother was a homemaker and worked at various times. But you know, I I sort of always pictured myself that I'd be a lawyer uh when I grew up. And I guess as a child you picture that sort of as a growing up in a small town, you picture that as being a small town lawyer going into court, you know, saving people from whatever it is.
SPEAKER_01Are there any moments or experiences from those early formative years that still influence how you think about the world today?
SPEAKER_02I made the long trip from South Jersey to Princeton uh university where I did my undergraduate time. I thought I would wind up going to law school. I was majoring in math. That's sort of what you think as a child. You think, okay, I could be a lawyer or a fireman or a policeman. I've studied math and English in school, so which one do I want to study? So I started as a math major. I quickly realized that to be a math major at Princeton meant you were sort of solving the frontiers of mathematics. I wound up instead graduating as a philosophy major. Still till the very end, planning to go to law school. I had never heard of investment banking. I'd certainly never heard of, I don't think anybody had heard of impact investing at the time, but I had certainly not heard of or thought about a career in investment banking. The senior year, I sort of stumbled into that, followed some of my friends to some investment banking information sessions, and lo and behold, wound up uh working at Morgan Stanley. So I I'd say Princeton was a very eye-opening time for me. It really sort of opened my uh thinking to a lot of different opportunities.
SPEAKER_01It's not obvious to go from mathematics to philosophy.
SPEAKER_02Not entirely obvious, but I I I think there were two things. One, there is a link I was studying, sort of got into it through logic and other things that really are on the border between mathematics and and philosophy, but I wound up doing my thesis and my focus on on ethics, and and I would explain to people that was a practical study. It was a practical study of how does one live their life in a broad sense, maybe not practical and what do you do and from a day-to-day standpoint. I thought of it as a kind of a a journey to try to figure out how to live one's life in a you know ethical way. And no, I don't think I knew any of the details of that at the time. One uh one also finds a philosophy while that's the goal. It starts with pretty broad principles. And why Princeton? Great school, of the fact that it was a small, self-contained campus, but with the you know, resources of obviously a world-class university, but in a very small, self-contained little unit on its own in central New Jersey.
SPEAKER_01While you were there, you did lightweight crews.
SPEAKER_02I rode, competed in eight Ortz shells, eight plus coxswain. I had actually grown up in Brigantine in southern New Jersey. And if you know the geography of the Jersey shore, for most of the way down, you have these barrier islands, basically little sandbars that have a few blocks of houses on them. On the one side is the ocean, and the back is uh is what we call the back bays. And those are actually turned out to be a great place to learn how to row, a very flat, calm water. And so my town had a rowing club, and so I learned to row from 11 or you know, 10 or 11, I guess, and then rowed at a high school for some time at Atlantic City High School, which is probably the best public high school rowing program in the country or one of the best. When I was not recruited to row at Princeton, in fact, I walked on to the crew team, the lightweight crew team. Lightweight just means we're lightweight and there's a 155-pound maximum goal. It's a weight test. I mean, the boat, I think freshman year our boat had to average no more than 150 pounds per person, and no one could be over 155 pounds.
SPEAKER_01And so if I were standing, you could see that's me. You were a member of Cloyster Inn, which is uh eating clubs. Tell me what that's all about.
SPEAKER_02Yeah, eating clubs are sort of Princeton's answer to fraternities and sororities. They have this, I think, somewhat undeserved legacy reputation of elitism, which certainly was deserved at the time, but now I think of them as like a kinder, gentler version of fraternities. Uh for one thing, they are now all co-ed. Uh, frankly, at my time at Princeton, some of them were still all male. Cloyster was co-ed, and and all of them now are co-ed. And about half of them are selective, so you would we don't call it rush, but you would rush them the way you do a fraternity or sorority. But half of them are just sign in. They're just you want to join, you join. And so they're a much to my mind a more kind of open and inclusive version of fraternities. The other big difference is we don't live there at Princeton. 99% of people live in the dorms throughout all four years. And so the eating clubs really are that. They're eating, they're places where you eat, they're dining halls and social clubs. You're not being served by waiters and tuxedos. Not a cloister, and you're not. I mean, there's one that that still does that, but not certainly not a cloister.
SPEAKER_01In 1989, you graduated from Princeton with this philosophy degree, and as you said, you you headed straight to Morgan Stanley as a financial analyst. So what drew you to Wall Street?
SPEAKER_02There's no brilliant epiphany at that point, other than to say that I'd I'd been in school my whole life, and it felt like it would be uh good to take a break and see something of the real world and you know actually uh potentially earn some money as well before just carrying on to another three years of school. I I at the time had every intention of going to law school, and eventually I did go to law school. I mean, I had frankly had every intention of practicing until the moment I decided not to. That's another story uh to jump ahead and skip over Morgan Stanley completely. But when I did eventually go to law school after two years at Morgan Stanley and one of Credit Suisse as a derivatives uh marketer, I still had in this vision I would be a small-town lawyer, I'd be doing what everyone does in a small-town lawyer. As I got to law school, I very quickly realized that's not what my life. If I'm a lawyer, I'm gonna be a corporate lawyer. And I ultimately, though it wasn't an immediate revelation, the sense was, well, if I'm gonna be a securities lawyer or an investment banker, I might as well be an investment banker. I it was sort of how it came out. I felt like I law school, I find I joke, I say this, you know, with all due respect. And I think lawyers tend to be some of the smartest people I meet in a daily basis, but they tend to be smart in a certain way. Most of them are not particularly numerate, their minds are very good logic, but they're not a numbers people. And I was maybe one of the few in my law school class that was kind of both, and so I chose to do investment banking, feeling I'd be working on many of the same deals, but just getting at what I thought was maybe a more interesting twist on them.
Joining Morgan Stanley (where Robert met his future wife)
SPEAKER_01Going back to Morgan Stanley, you signed on as a financial analyst. What were you doing there?
SPEAKER_02At Morgan Stanley, I worked in the mergers and acquisitions department for two years. The financial analyst program is a it was and is kind of a two-year program designed for it, you know, students who just graduated from a university, particularly back then, though it's less so now, was meant to be a two or three year stint before one would go back to business school or whatever the next step was. That's relaxed a little bit now. Fewer people are going to business school and more just carrying through. But at the time it was very much it was a two-year program. You were hired for two years. And during that time, I worked in the mergers and acquisitions department, advising on or helping to advise on MA deals. You know, that was a great, I mean, it's a fantastic experience. I definitely would recommend it to people. It was a great learning experience and a great first job and a way to get to just, you know, a fantastic just skill set, financial skill set.
SPEAKER_01It was a fateful first day for you, and you showed up to your new job at Morgan Stanley, where something really interesting happened that impacted the rest of your life, and you met a young lady by the name of Doreen Shinaz, who would later become both IIX's founder and your wife. So, Robert, walk me through that first meeting.
SPEAKER_02Yes, yes, no, that's exactly right. And and not exactly in that order. We became she became my wife first and then founded IAX. On that first day, we're both recording to work. On the first day, we're meant to have a reception with the president of Morgan Stanley, greeting all the new analysts. The two of us are both running late. She's maybe a few seconds later than me, so I'm in the elevator when she runs in, appropriately frenzied that she's late to the first day. I remember being strangely calm, maybe just not realizing how what a faux pas it was. In any case, I sort of comfort her and said, Don't worry about it, we'll just sneak in the back. And so when we got up there and we walked into the back door of the room where about a hundred new 80 or 100 new analysts are sitting, president of the company up front on the stage. And of course, we look around and there are no chairs in the back, and we have to do the walk of shame down the front aisle into the very front row. And so it was, let's just say it was a bonding experience, and it's one of those things that maybe drew us together, a shared adversity.
SPEAKER_01Your time at Morgan Stanley lasted about two years, and then comes a big move to Credit Suisse, doing more investment banking, but this time you're working in derivatives marketing, which is something completely different. So, what prompted that leap?
SPEAKER_02The long story around it is not that exciting. It was literally, it was a friend of Dreen's who who a friend of a friend had worked there and had put out, let Dreen's uh friend know that they were looking for people and that they were looking for people with strong quantitative finance skills. And my residual math knowledge, together with the training at Morgan Stanley, fit that bill. I sometimes joke or or say that you know, most of the financial analysis that we as investment bankers are doing is not rocket science. It's using a spreadsheet to calculate, you know, revenues growing at 10% a year and fleshing out the implications of that. But the derivatives field is the one part of the financial world where it is a little bit closer to rocket science. The team there had a range of backgrounds, but there were rocket scientists and economists and it was definitely looking for folks with a more of a quantitative, true, hard quantitative background. And so I my my financial knowledge together with the mathematical training was a good fit there. And it was really early days in the derivatives time when I joined. They had recently set up the group to focus on derivatives, and they'd been, you know, starting to build up the team. They had a s a legacy group that was still running a very matched book where they of interest rate swaps where they would have traded an interest rate swap with one client and then traded the exact opposite max matching trade with another client, and then just kind of put them off and let them run their course to maturity. Of course, by the time I joined, they were trading and hedging these books much more dynamically, and they had moved on from you know interest rate swaps and currency swaps, which were the sort of the building blocks. And I was there really as they were pioneering credit default swaps, quantum swaps, and a variety of other forms of derivatives.
SPEAKER_01You and your wife both took such different paths, post Morgan Stanley, as we just discussed. You went into derivatives structure and credit Swiss, while she went into microfinance with Grameen Bank in Bangladesh. How did those different paths ultimately shape your respective perspectives on finance?
SPEAKER_02I should mention Grame is from Bangladesh and had grown up there and lived there until coming to university in in America. And so, in in some ways, it was natural for her to go back home, but she did it very specifically to work with Professor Mohammed Yunus at at Grameen Bank. And the world now knows Grameen Bank as Nobel Prize, uh both the bank and Professor Eunice won the Nobel Peace Prize some years ago. And he is, I think, rightly known as not the very first practitioner of microfinance, but certainly one of the very early pioneers and the one who did the most to really popularize the concept of microfinance and really educate the world that this was a concept that could do good and help people while also being financially responsible. Just as an aside, and many of your listeners may or may not know, Professor Yunus, while retired sometime from Groming Bank, is now chief advisor to the government of Bangladesh, but in that sense he's effectively interim prime minister of Bangladesh.
SPEAKER_01In 1992, you finally decide that you're gonna follow your path to the law. And you entered law school at Georgetown first, but later transferring to complete your degree at the Kerry Law School at University of Pennsylvania. What sparked that decision?
SPEAKER_02It was the normal path back then to do a couple of years as a financial analyst, a third year maybe somewhere else. And then the typical path would have been to go to business school. And I think most of our colleagues were were doing that, to going back to get MBAs. It was sort of the natural path in a way, although just going to get a law degree rather than a business degree. Doreen had a similar decision. You know, it would have been natural for her to come back from Bangladesh and do an MBA, and instead she decided to do a a degree in international relations at the Johns Hopkins School of Advanced International Uh Studies down in Washington. So we both wound up in Washington that year, and and we were married actually at the end of uh our first year of grad school. During their first year, though, she had also applied to and been accepted to a joint degree program with the Wharton Business School. And so she did after doing her first year at SICE, she was expected to her next year and a half at Wharton and then finish up at SICE. And so I was fortunate to be able to transfer up to Philadelphia and complete the last two years at Penn. Dreen and I both have that kind of financial background, and she is actually the one with an MBA uh of the two of us. And yet she also has this unique perspective of having worked in the microfinance industry, seen that really from the very early days, particularly when it was, I would say, very pure, very focused, uh not to imply it's not now, but very focused on the impact they were creating. And, you know, she had that firsthand seat and also has worked at the World Bank and the IFC. So it has much more of a development background in addition to her financial background. And so I think those are two things that we found now working together for the last 15 years at IHX is makes for a good combination. She's very deep in the development side. I'm very deep in the financial uh side, and it's a good complementary set of skills.
SPEAKER_01So you get out of law school in 1995, you become a member of the New York bar, but you go right back into investment banking and land at Wasserstein Perella working in MA and acquisition financing. So you obviously decided not to be the small town attorney. Walked me
Investment banking career - from Wasserstein Perella to Marathon Asset Management
SPEAKER_01through that moment.
SPEAKER_02Realistically, coming out of law school, nobody was recruiting for small town attorneys. They were recruiting for large corporate securities law firms in New York. And I did interview at a few of those, spent a summer at at Sherman and Sterling. But I ultimately decided if I was going to do that, if I was going to work on securities deals or MA deals, I would be well suited to do that from the other side of the table as a banker rather than a lawyer. It was also interesting at Wasserstein Perella, and and this is a firm that was at the time was you know very storied and very well known, but you know, has since been sold. And so m some of your listeners may not know about it, but Bruce Wasserstein and Joe Perella were the leading MA bankers of their era, and they had assembled a you know very interesting MA boutique focused investment bank, which interestingly most of the top people at the firm, including Bruce himself, were former lawyers who had ultimately made a switch over to banking. And that also made my switch there more comfortable. In fact, I was recruited there by someone uh with a Who had gone to Penn Law and then wound up as an investment banker at Wasserstein Perella. So made the switch, I think, very easy in that respect.
SPEAKER_01In 2000, Wasserstein Perella merges into Dresdener Kleiner Wasserstein. And then in 2004, you move with them to Singapore as the head of investment banking for Asia. So that's quite a journey from early days that Morgan Stanley, how did that move to Asia come about?
SPEAKER_02You know, Dreen and I had always, we had always talked about eventually moving to Asia. And the question was, when there came a time when the last of her siblings had moved out of Bangladesh so that her parents, who were elderly, so older than my parents, were going to be alone. And so it seemed like she wanted to make sure somebody was at least nearby. We said, well, where can we both carry on our careers within a short plane ride of Bangladesh? And the two places that came up were really Hong Kong or Singapore. And Dreen had spent summer working in Hong Kong and a weekend in Singapore, and she enjoyed her time in Singapore more, so we wound up in Singapore. It was also fortunate. It helped that Dresden Klein-Wastin had an office in Singapore. And so I was able to transfer out, which was a nice way to come out.
SPEAKER_01That explains the personal match, but what was the attraction for you in Asia Investment Banking?
SPEAKER_02It really was a personal pull out there to come out there. And so I landed needing to fill in all the blanks in my knowledge of the area. Our focus was primarily a Southeast Asia. And I didn't know the region. If you think back, so right now, obviously, you think about Singapore as I mean, we don't even say it's the Switzerland of Asia anymore because it's sort of surpassed that. But 20 years ago, it was very clear they were talking about becoming the Switzerland of Asia. And yet it was not at that point. The Asian financial crisis was not that long in the past. The first I guess it was bird flu scare, well, not scare, but actually pandemic had just passed. The economy was really just recovering from that. It was the type of place where a global investment bank, you know, might have an office, but they might not. It was not the world's most important uh financial center. And the my role, I was trying to deliver the global resources of our investment bank.
SPEAKER_01I do live in Switzerland, and uh nobody in Switzerland is saying we're the Singapore of Europe. But clearly private wealth management moved out to Singapore post-UBS crisis and scandal with the US Justice Department. But you're right now with what's happened in Hong Kong, it's definitely the center now.
SPEAKER_02I think it was always the private banking center. Uh always, you know, over the last 20 years became the private banking center, and it's become sort of the family office center now as well. A lot of family offices have moved down from Hong Kong. Now, really, Hong Kong is more of the China focused center, and Singapore is the ASEAN uh focused center, and and they're sort of more equal in most other things now.
SPEAKER_01Then in 2007, something fascinating happens. You move into private equity investing at Marathon Asset Management, still in Singapore, and I guess there you're leading private investment activities in the Asia Pacific region. Why the move out of investment banking into private equity? And what were the opportunities you were seeing at that point in time?
SPEAKER_02Well, well, it's interesting. At that time, DKW had asked me to move up to Hong Kong to start a Hong Kong office, and I was skeptical that was going to work. We were already a small office in Singapore, but holding our own against the bigger investment banks because nobody had a big office in Singapore. But at that time, all the big players were building, you know, huge franchises in Hong Kong, and I just didn't see us competing against them. And so I was resistant to that move. And at the same time, Marathon Asset Management, which was a New York-based, is a New York-based hedge fund that had established an Asian office a number of years back, was just in the process of moving from Hong Kong to Singapore. And we made the move, and they hired me to build a private asset business, so both private equity and private debt uh in Asia, which they had started doing in the US and were bringing
The 2008 financial crisis and the flaws of traditional finance
SPEAKER_02out to Asia.
SPEAKER_01And perfect timing, that was 2007, and then 2008, the global financial crisis hit. 2008 financial crisis was clearly a turning point for you. You've described it as exposing the hollow promise of traditional finance's claim to make the world better through efficient capital allocation. Can you walk us through your thought process during that important point in history? When you're an investment banker, you're always in the back of your mind.
SPEAKER_02Your friends maybe are saying to you, you know, why don't you do something real? You're just moving money around. You know, the standard answer was, well, we are doing something real. We're allocating capital in a way that's efficient and allows the economy to expand, uh, maximize its potential. You know, that would be our justific our justification for our social value as an investment banker. And look, there's obviously some kernel of truth in that. I mean, the capitalist system, I want to say it's the worst system except for all the others. So I don't want to beat up on the financial industry generally or the capital markets, but you know, when the financial crisis happened and you saw that so much capital that was supposedly being allocated efficiently was being completely misallocated in ways that were only justifiable by short-term financial gains for the people who were putting those deals together and were, you know, not only being inefficient, but were actually having terrible consequences for people who were directly involved in some of those misselling of housing loans, but also for the world financial system. And so kind of seeing that really made clear how hollow those justifications were. You know, but I didn't want to give up on capitalism or on the financial markets. And I did think that clearly there is a role, not more than a role. I mean, I I think uh capital is a crucial, you know, factor in how the world works without capital. You're not going to see growth of any kind. You know, at that time it made sense to me to be thinking about, well, let's actually try to live up to that promise and try to allocate capital in ways that actually are positive for the world. And let's actually try to use the power of business and the power of investment in good businesses to create positive social and environmental impact. And we didn't see any conflict in that. In fact, we saw that there were many opportunities where you could do just that. And of course, Doreen had that direct experience with Grameen Bank. One of the first projects she'd worked on at Grameen Bank, bringing her skills from Morgan Stanley and Wall Street, was to help Professor Eunice raise some of his first private investment capital from a U.S. investor. That was a really a wake-up call, the global financial crisis that, you know, triggered that in my mind that I should start seeing if we could really make this work in practice.
Founding Impact Investment Exchange (IIX) Foundation
SPEAKER_01Until now, Robert, we haven't really even mentioned the word impact in your career. But in 2009, just about two years after you went to Marathon, you make this fascinating career shift and move to the Impact Investment Exchange. To make things simpler, I'm going to refer to as IIX. Walk me through that decision.
SPEAKER_02When I transferred out to Singapore with basically my existing company with DKW, Doreen had come out initially with a media company, but shortly after arriving in Singapore, she had been, before we left New York, she had been preparing to teach a course at a Columbia Business School on impact investing. And the term wasn't used at the time, but on basically on concepts of social entrepreneurship and impact investing. And so shortly after arriving in Singapore, she left her job and joined the National University of Singapore in the Liquan Youth School of Public Policy as a professor of social entrepreneurship, leading a program on social innovation and social change. And that was for her a great uh time, allowed her to conduct uh research on particularly, well, on the whole sector, but particularly on uh impact measurement and how one actually goes about quantifying and and and communicating the value of the impact that's being created by companies who are seeking to have a positive impact on society. And so the research she did at the university, which was in fact funded by the Rockefeller Foundation, became the basis for the impact measurement and monitoring system that we use at IAX. And frankly, which was she also collaborated on the creation of Iris, uh, which was a Rockefeller Foundation project as well. At some point they asked her, they invited her to their castle in Ballaggio, Italy, where they were doing a bringing together a group brainstorming about what I I think actually after that meeting became known as impact investing. And it was after that set of meetings that one of the members of the Rockefeller Foundation team, Anthony Buglavin, who's gone on to do many uh wonderful things post that, he said to her, Doreen, you should start a business to promote impact investing in Asia. And that's what she did. The problem at the time, she had a just signed a uh one-year contract at the uh university and was scheduled to teach um for another year. So she turned to me and said, Well, Rob, could you just on an interim basis lead this for the first year while I uh finish out my contract and then I'll take over. That of course was 15 years ago, and and we've been working uh side by side ever since.
SPEAKER_01This was 2009. So you've been there from the beginning. I think she's referred to as the founder. Absolutely.
SPEAKER_02She is the founder. Uh, the Rockefeller Foundation did not ask me to start this company, they asked her to start the company. I'm just the first employee. She's very much the the founder and the the heart and soul behind the business. She's the CEO till today. I'm the chief investment officer.
SPEAKER_01I figured out how you got the interview, but uh I just didn't know I didn't know how the timing went on that. Tell me what was the initial vision for IIX when you formed that with her?
SPEAKER_02The initial idea and the reason why we're called Impact Investment Exchange rather than something else, is that the initial idea was to start a social stock exchange, uh effectively a stock exchange that would only list and trade securities issued by social enterprises or other mission-driven organizations. We incorporated the company, and the first day we had a meeting with the Monetary Authority of Singapore, the regulator, uh the financial regulator in Singapore, and we said, well, we'd like to set up uh an exchange. And to their credit, they didn't throw us out. They very patiently over the next year explained to us, I think that was not something they they hadn't licensed a new exchange in about 40 years, and it wasn't a particularly easy thing to do. You know, we kept at that, and we ultimately worked with the government of Mauritius to set up the rules and regulations governing a separate impact board on the stock exchange of Mauritius. But that's sort of a separate story. So that was the original thesis. What we wound up, as we found that was going to be harder than we had initially thought, we wound up doing a whole variety of different activities focused on promoting impact investing. And so I would say, even to this day, when I describe what IX does, I don't focus on one particular thing. I say, hey, we are about promoting impact investing, initially in the region, but uh increasingly on a global basis. That takes a variety of forms. Now, in the early days, we a very large percentage of what we did was focused on advocating for impact investing, getting the word out about impact investing, convincing people that impact investing and social entrepreneurship were even concepts that made sense or deserved attention. We met a lot of resistance, and I'm sure there are quarters where you still meet resistance, but at the time, just explaining to people that the concept was that you're going to invest in businesses that were trying to not just make money but also do something good for the world seemed to be we'd either hear, well, isn't that what charities are supposed to do? And how could those businesses possibly make money? Or alternatively, well, if they can make money, why aren't they doing it for free? Why aren't they giving these things away? So it was kind of an uphill battle just to get the word out. We were, I think, safe to say, the the first impact investing firm in Southeast Asia. And we at early days we ran conferences, we did a lot of events, did a lot of just uh awareness building, and we still do many of those things. We don't we do all of those things still, they're a smaller part of the business now. We also from the very beginning have had a strong research and advisory capability. Our very first assignment was actually to conduct research on the social enterprise landscape in Southeast Asia for the Asian Development Bank. And we continue to have a team that conducts research for governments, multilaterals, um, impact investors, foundations, and increasingly runs programs for government agencies and advises on impact investing. Again, from the very beginning, uh, there's been a big focus on impact measurement, stemming from doing this research at NUS, and that still runs through everything we do. The system and methodologies have evolved quite a lot in the last 15 years, but it still comes from that core basis of the work that she was doing as a professor at NUS. It really underpins everything we do. So whether we're investing money, we're advising people on investing money, or we're just doing research, we're looking at and applying those impact measurement tools. We fairly quickly, and I'm really just maybe talking about all the different things we we do now. A few years in, we we began offering a capital raising service for high-impact enterprises that was looking to match high-impact enterprises that were looking typically for seed capital or early growth capital with impact investors. And we have continually been doing that business. I think we're certainly the largest and certainly the most successful in the impact investing space. When we began this, we would run cocktail parties and invite the entrepreneurs to present to a bunch of angel investors. We still do some of that, but it's evolved into much more of an online crowdfunding platform. And of course, as the market has evolved, you know, at the time there were really, I don't want to say no dedicated impact investment funds, but there were very few dedicated impact investment funds. So we were really looking at angel investors, family offices. But now as the market has evolved and there are more and more dedicated impact investment funds, we also are advising our clients on raising capital from those
IIX today – a high-level overview
SPEAKER_02funds.
SPEAKER_01Give me a high-level overview of IIX today. Just to put things in context for people who aren't familiar with you.
SPEAKER_02Aaron Powell We are and continue to be based in Singapore. Prior to the pandemic, most of our people were in Singapore, but since the pandemic, we've now have about a third of our people, so about 30, 30, 35 people in Singapore, and the rest another 60 or so outside of Singapore, with one or two exceptions in South and Southeast Asia. And that has been our historical core area of focus, the developing markets of South and Southeast Asia. So our most active markets are really Indonesia, Vietnam, Bangladesh, India, Cambodia, the Philippines. We have over time, you know, expanded and we do work in the Pacific Islands, we do work in other small island developing states. We've begun doing work in Africa and have even done some work in the Western hemisphere as well. In addition to all the aspects of our business that I described before, we are also now managing and investing capital as well. And we we can talk in more detail about that, but that's the side of the business that I directly look after. And we have about $250 million of assets under management that are predominantly invested through as loans to relatively mature enterprises that are promoting sustainable livelihoods for women in South and Southeast Asia and Africa and helping to empower women as agents of climate action. But we do also have some smaller funds that are focused on providing capital to earlier stage high-impact enterprises as well. We started looking at equity into early stage ventures. We then evolved and we were doing straight debt. And where we are now, actually, and I wouldn't mind talking about this in somewhat more detail, is what we found is that what we're doing is we're investing flexible capital in a way that in instruments that are self-liquidating but are tailored to the needs of early stage ventures. You know, we really started with a broad mission to promote impact investing in developing countries. And so we don't have a single thesis. We don't just do healthcare. However, over time, we have narrowed down to some broad mission goals. And in particular, we are focusing on empowering women and women entrepreneurs, particularly at the intersection of gender and climate. And it's a large focus of ours that in order to combat the climate crisis, we need to empower and make sure we're empowering all people in society and not leaving women out of that equation. I don't want to say we are exclusive to focusing on women empowerment and climate action. Those are our two main themes. And many of our investment products are limited and focused only on
IIX’s theory of change
SPEAKER_02those areas.
SPEAKER_01So let's dig into IIX's theory of change. What is the problem or the problems that you're trying to solve?
SPEAKER_02Aaron Powell Our general theory of change, and it's more about the markets than it about any particular sector. My own view on this. And our our view is that it's extremely important to channel capital into businesses that are serving and possibly impacting society. That is both a, in many cases, can be a much more efficient use of capital than more traditional philanthropic endeavors, is crucially important to avoid the uh, you know, the worst impacts of some, certainly not all, but some traditional industry. So we are more about, I'd say we're more about promoting the concept of impact investment than we are about any particular impact outcome. That said, we also have a very strong view that empowering women is something that can both be done in a financially sustainable and very financially um prudent manner, and also is important both because it's the right thing to do, because women should have as much opportunity as anyone else in society, but also that by doing so you are able to solve and address so many of the other issues affecting society. And so we see that as whether it's in microfinance, that empowering women with greater earning capacity not only helps them and empowers them, but helps their family in a disproportionate way. We see that involving women in climate action and in decision making around climate change helps to really supercharge the climate initiatives that we're working on. We see it even in fields like peacebuilding, that if women have a seat at the table in conflict resolution, you wind up with more durable solutions. If there's any one singular kind of thesis, uh theory of change that we have, it's that by empowering women, you're actually able to make a better address many of the other problems that we're all interested in solving. The parts of the firm that I directly oversee include Impact Partners, which is the capital matching platform that I described before. So that's where we're actually working directly with uh high impact enterprises. We're helping them to become investment ready through providing technical assistance. And then we are matching them to a pool of impact investors that we've cultivated over time. Some of that happens online, a lot of that happens offline. And that is the business I describe now that we've been running for about 12 years, probably the most successful capital matching platform in the impact investment space. We then have a number of facilities where we are managing and investing capital ourselves. That Impact Partners is an advisory business, but where we're actually managing capital, investing capital. And there I will break it down into two main categories. The first is the Women's Livelihood Bond series. And the second is what it is our smaller investment funds, which have we could I'll talk about the way those have evolved over time, but which we are now bringing together under the label of what's called the Orange Capital Fund.
The birth of the Women’s Livelihood Bond
SPEAKER_02So if I describe the Women's Livelihood Bond first, the genesis for the women's livelihood bond came out of some brainstorming that we did. We said, you know, we're raising capital for lots of high-impact enterprises through our impact partners business. But it's painstaking work. And each deal takes time to put together, idiosyncratic. It's very difficult. And I think this was Dreen's inspiration. Wouldn't it be better and more efficient to bring together a portfolio of businesses that investors could invest in, have them make one investment decision on the portfolio as a whole rather than making these investment decisions on each of these enterprises? And so from that genesis, we grew out the women's livelihood bond. So the idea is exactly that. We, through our loan origination, we source and originate loans to a portfolio of high-impact enterprises that are advancing sustainable livelihoods for women. Initially, this was Southeast Asia. It's expanded now to be South and Southeast Asia and East Africa. We screen those businesses based both on financial, operational, and impact uh characteristics. We then conduct due diligence on these firms, both the financial and operational due diligence and impact due diligence. And once we have a portfolio that we're comfortable, we negotiate loan terms with them. And then we go out to investors and effectively sell a bond to investors, and we use the proceeds of the sale of that bond to fund these loans that we've arranged. The loans that we make, then, if things work out the way they're supposed to, that funding allows those organizations to expand their enterprises, expand the impact they're having, expand the good work they're doing. But also, since these are, after all, high-impact enterprises and not charities, they are earning a return as they do that. They're able then to pay us interest on the loans we make and eventually repay the loans. We use that, uh, the interest they pay us and the return of principal we receive from them to then service the bonds that we've sold. That idea has evolved over time, but it's stayed pretty much the same. It's grown over time. The very first, we've now successfully structured and sold six of these bonds, raising $228 million through the sale. The first bond was very small. It was $8.5 million. The WLB6, which we sold in December 2023, was $100 million. So we've grown the scale, and with that, we've grown the number of organizations we're lending to. The impact thesis we're serving with this is as the name implies, we're looking to invest in companies that are going to be able to provide sustainable livelihoods for women in developing markets. And our reason for doing this, of course, is to be able to channel as much capital as possible to those goals. And to do that, we knew, I think, from the very beginning, that if we're going to do that at scale, not do it a few million dollars, but do it in the hundreds of millions of dollars, that we wanted to structure, and we knew we had to structure a product that could be acceptable to institutional impact investors. So as this has evolved, of course, the first bond at eight and a half million didn't attract many institutional investors, but as the bond has grown and we've built a track record, we have started to attract institutional investors to the point where the last bond, the 100 million, was sold almost exclusively to enter funds and other institutional investment managers. We we still include some of our family office supporters who've been with us uh from the early days, but most of those are now sold to pension funds. Now, we do have, and the women's livelihood bonds are what your listeners would know as a blended finance instrument. While we focus on the bonds we sell, we're selling to private sector investors, to pension funds, to family offices, and others. But the bonds are have some credit support that reduces their risk. In each structure, the bonds account for about 90% of the capital, and they're the senior part of the capital structure. We also have about 10% of the capital is in the form of subordinated notes. And those have been invested by a range of foundations and mostly government development organizations.
SPEAKER_01Sorry to interrupt, because the blended finance part, are they taking a lower return? So you can crowd in a higher return private investor? Are they taking first loss? How are you structuring this?
SPEAKER_02So the key point is they are taking first loss. That's the key element there. They are providing protection for the senior bondholders. We also have a second layer of protection, which is a guarantee of each of the loans we make. We have a partial guarantee of each of the loans we make. In the early bonds, that was provided by USAID. In the most recent bonds, that's been provided by CEDA, the Swedish development agency. And so investors benefit from both that partial guarantee, and it's it's only a partial guarantee, and the first loss layer. You mentioned earlier the women's catalyst fund. That first loss layer we channel into the bonds through the women's catalyst fund. So the women's catalyst fund allows us to pool this type of concessionary, which is clearly concessionary funding, that then serves to de-risk the bonds and provide a the appropriate level of risk return and impact for the private sector investors.
SPEAKER_01These women's livelihood bonds, these are listed on the Singapore Exchange, correct?
SPEAKER_02The six bonds we've sold, each one has been listed on the Singapore Exchange. I I should point out that the first three of those bonds have matured already. And so they've had a successful life. We we raised capital, we use that capital to make loans to organizations as organizations went on to grow their businesses, expand their impact, have paid us back, and we've been able to pay back the bondholders. And so that's the case for the first three. The next three remain outstanding still, and they are all listed on the Singapore Exchange. We do that for a number of reasons. One, simply we want to mainstream impact investing as much as possible. We don't want this to be seen as a small sideline of philanthropists. We want to show that you can use the capital markets, some of the most powerful tools in the world, to do something positive. And a stock exchange is in some ways the most visible institution of the traditional capital markets. And so we feel strongly about listing them in order to have show that impact investing has a place at the table in the global financial markets. So that's one. And in some cases, it meets the mandate of certain institutional investors that they can only invest in listed products. So we have sort of both these very practical reasons for doing it as well as the more lofty idealistic reason for listing
Development of Orange Bond Principles
SPEAKER_02the bonds.
SPEAKER_01And these are referred to as orange bonds. That's right.
SPEAKER_02So we've from the beginning, they were women's livelihood bonds. And after we'd done three or four, we sort of scratched our head and we said, look, this is working well. We've shown this can work. We've shown this does work. We've shown that we've identified investors who want to invest in empowering women. We've found opportunities to do that, to invest to in a way that empowers women. Why are we the only ones doing this? I don't want to say we're the only ones investing in this, but there were very few. Certainly the Women's Livelihood Bond 1 was the first gender lens investing product to be listed on a stock exchange anywhere in the world. And even by the time we were doing the fourth bond, there were very few other examples of gender-focused or women-focused bonds. And so we said, how do we change that? And we looked at green bonds as an inspiration, and we saw that how green bonds, which had initially started as a relatively small asset class, had once, as the market evolved and as there were standards in place, in that case by the International Capital Markets Association of what is a green bond, that helped to encourage more issuers to issue green bonds, more investors to be actively buying green bonds. And we wanted to do the same in the gender lens investing market. And so we set out with the support, the critical early support of the Australian Department of Foreign Affairs and Trade, and pulled together a group of like-minded partners from really all sectors, investors, law firms, NGOs, organizations that were working with women impact investors, we brought together a steering committee and put together, and that steering committee put together and adopted what have now become the orange bond principles, which, just like the green bond principles, and frankly, like the social bond principles and the sustainability bond principles, are govern what can be uh labeled as an orange bond. And so the WB5, I think was the world's first orange bond. We've now labeled all the all of the women's livelihood bonds as orange. And so, of course, all of our bonds are listed at now as orange bonds. But the point of creating the orange bond principles was to encourage more other uh issuers of orange bonds. And so we're very happy now that we've had success in labeling other bonds as orange. There's a bond that was issued by IKEA that is a refugee. The use of proceeds was to support women refugees that has been labeled orange. And we're most interestingly, we're now engaged with a number of issuers that range from US CFDIs to a Japanese trading company to sovereign bonds in some of our Asian markets. In fact, I think this has been announced that Bangladesh is planning to issue the world's first sovereign orange bond. And we're working also in Indonesia with support from the Ford Foundation on developing the orange bond market for Indonesian issuers. So we're starting to see real traction in this, which was the whole point in developing those standards.
SPEAKER_01But who makes the determination that an issuance is officially orange?
SPEAKER_02We were very clear from the beginning, it couldn't just be me deciding. And so we've done we were spent time on as members of committees for what's called the International Capital Markets Association. They're a group that does set standards for capital markets in many areas, but they are the ones who sort of set the standards for what are green bonds, and they have now a category called social bonds. And we were advisors on the social bond uh working committee for many years. And we've modeled this very much on that. And so there is a set of principles that have been adopted not by us, but by a broad steering committee. There are a group of what we call orange bond verifiers, which are independent organizations that are both trained and empowered to effectively study and verify whether bonds that claim to be orange are actually meeting the orange bond principles. We are one of those organizations, but there are many others. Increasingly, many of them are small impact investment firms. Some are the same firms that are certifying green bonds. We're very consciously modeling this just like the green bonds frameworks. So when a bond is issued, it has what's called a second-party opinion that attests to the fact that it meets the standards of the orange bond principles. We've had a very good track record of the six bonds we've issued. These tend to be four-year bonds, has been the structure we've done. And the first three have reached their maturity date, and we've retired all of them completely with no defaults to the bondholders. So the bondholders have received their full all their coupons and all their principal back.
SPEAKER_01I'd like to go through the end-to-end process here a little bit. If I've understood what you said before, you describe that you are going out and making loans to different people, and then you're effectively packaging and syndicating that into the bond. Is that the order it goes in?
SPEAKER_02What we do is we very much identify the loans that we want to make. We arrange the loans, we basically do all the due diligence, we negotiate the terms, we do that across the entire portfolio. So in the latest WOB6, I believe there were 10 borrowers. So there are 10 loans in that portfolio. We arrange the loans, and it's only at that time we go out to investors and we're able then to tell them by buying this bond, this is where your money is going to go. Where it's going to go to these 10 organizations. We can already, as we're going out to them, we can describe to them what we expect to accomplish, what we expect to return to them financially through the coupon, but also what impact we expect this investment to be able to create through those companies. And we're able to build out an impact framework in a fair amount of detail because we do know where all of the money is earmarked for before we issue the bond. And so that's something that investors are not just buying the bond and saying, okay, use the money well. We trust you. We we're telling them exactly where the money is going to go before we sell the bond. Makes our life harder, but it makes the sales process easier because investors can get comfort then both with the impact as well as the credit risk that they're taking.
The risk-return impact philosophy
SPEAKER_01I want to ask you about something that you call the risk return impact philosophy that guides your investing activities.
SPEAKER_02So that's something that runs through everything we do. We think about risk, return, and impact. And I think just as a traditional investor is thinking in their portfolio about risk and return and looking to balance those and find the efficient frontier where they're getting the most return given the risk. And they may, investor who can tolerate more risk might look for one set of investments, one who wants lower risk might look for a different set. But they're looking at balancing risk and return. We frankly think all investors, but certainly dedicated impact investors, should be balancing, bringing a third axis into that equation or a third variable into that equation, and that and that's impact. And I think every investor should be thinking about how much they value impact. Now, for some investors, they may that may be zero, and so it falls out of the equation. But I think for many investors, there is a positive value they put on impact. And so you're looking to optimize the trade-off of risk, return, and impact. So, you know, you're looking at, and each investor is going to put a different value on impact, and some may be willing to trade off, take higher risk if there's higher impact, some may be willing to take lower return if there's higher impact. And so we think all investors should go through that process and think about it in that way. When we're selecting our portfolio, we are thinking about finding companies that meet all of our impact goals. You know, we start out with, as I mentioned, with the women's livelihood bonds. We're looking at investing in companies that are providing sustainable livelihoods for women. We're looking specifically at how they increase women's income, how they empower women both economically and in other aspects of their lives. And we're also have been, ever since the WLB4, which we call the WB4 Climate, we've been also incorporating various environmental goals as well into the bonds, so that we're typically finding that all of the loans we make are empowering women, but about a quarter to a third are also having positive impacts on the environment. And so we have standards that we're setting out for that. And then we won't lend to companies that don't meet those standards a certain level, but we also are very consciously ones that are we feel are having the greatest impact. We will be willing to take lower returns on those loans, or possibly we'll lend to earlier stage companies if they're having very high impact. We're doing that in the context of a balanced portfolio that we think will then be acceptable to investors who we know are doing their own balancing of impact versus risk and return.
SPEAKER_01What are the returns on the first bonds that are already retired? Are these fixed returns or what is the coupon?
SPEAKER_02These bonds have all been four-year bonds. They're all denominated in US dollars, and they do all offer a fixed return during the four-year life. Of course, at the time we issue, the level of depends on where global interest rates are. We've generally issued at about 250 basis points so far swaps, if that means anything to you. I I will say that what it means to me is it it's a level that is meant to be relatively low risk for investors. We're market this to institutional investors as a relatively low-risk product. And that is because we are selecting what we think is a strong portfolio of companies and loans that we're making, but also because that portfolio is diversified across countries and across sectors. And then, of course, because bondholders benefit from the first loss capital that we bring in through the Women's Catalyst Fund and from the guarantee, the partial guarantee of the Swedish government. So between all of those, we feel that, and investors have agreed with us that this is a relatively low-risk product and high impact. So I we we see institutional investors looking at this and saying this is to them very high impact, but at the same time offering a modest return, but a return that's appropriate for the risk they're
Examples of loans from the WLB series and their impact
SPEAKER_02taking.
SPEAKER_01I think I kind of got my arms around how this works from an investor perspective. Could you give a one or two specific examples of loans that you've made and the type of impact generated from this WOV series?
SPEAKER_02I'll give two examples. And without naming, you know, without putting names on the companies per se, one of the loans that, in fact, was recently repaid was to an organization in Cambodia that is a processor of organic and other forms of rice that are grown in environmentally friendly, sustainable fashions. And they work with a wide range of smallholder rice farmers. They help provide them training in cultivation methods that are environmentally friendly and therefore are there, then can meet the organic standards or the other standards that they're looking for. And then they would buy, process, and market this rice primarily into the European uh market. That's an example of a company that is working with women's smallholder farmers, helping them to improve their livelihoods and their income by basically improving the value, allowing them to cultivate a higher value crop and in the process both helping the women and their community and helping the environment. So that's a good example. We made a loan to them fairly early in their development. They've since actually received funding from the IFC and have expanded quite significantly. Another type we often are lending to companies that are themselves lenders, and so those can be uh Finance institutions of the kind like Ramin Bank that is lending to women entrepreneurs to help them start small businesses. We also lend to agricultural lenders. To take an example, there's a non-banking finance institution in India that we've lent to that lends primarily to farmer producer organizations, which are effectively a form of cooperative of smallholder farmers. They are helping these cooperatives to support their members both to improve their crop yields and help them better market their produce. So you know those are just two examples of the types of companies we're we're supporting.
SPEAKER_01What's a representative's ticket size for these loans?
SPEAKER_02So it's grown over time, but we're trying to not to have it grow too much. It's a we typical ticket size of between three million and fifteen million on each of these loans.
SPEAKER_01You're lending to intermediary financial institutions.
SPEAKER_02We're certainly not lending to individual women, that's for sure. We're not always lending to intermediaries. As I described with the first example there, we are lending to some operating companies, uh, agricultural processing companies. We've lent to solar rooftop solar companies, we've lent to other clean energy companies. But I'd say about 80% of the companies we lend to are lenders themselves, making very small loans.
Measuring impact through IIX’s Values tool
SPEAKER_01One thing that stands out to me uh about your approach is regarding impact measurement through the IIX values, which is something you've trademarked. And that's a tool that you've developed for impact measurement. Can you tell me what is this and how does it work in practice?
SPEAKER_02I will say very briefly that this has developed out of from the very beginning of IAX, as I mentioned, we've had a strong focus on impact measurement. And so our methods have generally focused a lot on not just taking data that we get from the companies we're working with, packaging that up, but rather actually verifying data with interviews with and beneficiaries. So we will we spend a lot of time talking to women in the field. And the IX Values tool, which we developed right before the pandemic and came in very handy during the pandemic, is a digital verification tool that allows us to survey much larger sample sizes of beneficiaries through a mobile phone technology. And so we use that to back up and verify the information that we're receiving from the companies that we're analyzing with firsthand reports from the women or other beneficiaries that should be benefiting from the companies that we're working with. I do want to spend a little time on the Orange Capital facility and just very briefly take you through the history there. We started, and I think you mentioned the IX Growth Fund, which about 10 years ago, we came up with the idea to do early stage investing in high-impact enterprises in the region. And we raised a small amount of money and made pilot investments in a range of businesses as basically seed equity investments. So the two things we learned from that one is we've these businesses have actually all done quite well and are having the impact that we were hoping that they would have. But 10 years on, we're still nowhere near seeing exits from those businesses. What we found from that is you know early stage equity investors are very difficult to manage. We then the next uh smaller fund we had uh was the Orange Loan Facility, which was making basically straight loans to early stage businesses, which was fine. And and but what we found there was that the need for regular interest payments and regular you know servicing of that debt was not always what these early stage companies needed. And so we're now in the process of structuring what we're calling the Orange Capital Facility, which is going to continue to focus on supporting early stage and high impact businesses, but doing so with flexible uh capital. That is both has a defined mechanism to eventually be paid back to us, but we'll be very flexible in the timing of that in a way that will ensure that we're not burdening these companies with fixed debt service payments.
SPEAKER_01So that's about 25 million US fund? We're hoping to raise substantially more than that over time.
Goal to create a billion sustainable livelihoods by 2030
SPEAKER_01I was going to just ask you about scale. You're trying to create a billion sustainable livelihoods by 2030. How do you plan to maintain the quality of impact when you're trying to hit those kind of numbers?
SPEAKER_02Aaron Powell As we've grown the women's livelihood bond, you know, it's a question we've had to grapple with. You know, it if we want to go from a $50 million bond to a $100 million bond, I guess there's two ways to do that. You can either double your loan size, which means you're lending to a larger company, and or you can, you know, lend to twice as many companies. I mean, we're trying to balance that, but we generally like to continue to lend to companies that are young enough and small enough that our capital really makes a difference. We don't want to continually increase our loan size to the point where we're making loans that to to very large institutions. We want to make sure our money really is making a difference to the companies we lend to. And so what that means is we're gonna have to continually build our teams to be able to make more and more loans rather than just make larger and larger loans. And so that is a key point that we're focused
The biggest challenge in impact investing today
SPEAKER_02on.
SPEAKER_01If you had to name the single most important challenge in the impact investing space at this point in time, what would it be? It's catalytic capital.
SPEAKER_02And by that I mean the type of concessionary first loss or other risk-bearing capital that can leverage in much larger amounts of private sector funding. We're seeing that large-scale institutional investors want to make impact investments, but they are not able to give up return or take higher risk. And so we need a small but very important layer of that catalytic capital that can leverage in much larger amounts of private sector capital. And that's what we're seeing in the blended finance instrument and the women's livelihood bond. We see you know very high leverage on the catalytic capital that goes into
Contact info
SPEAKER_02that.
SPEAKER_01Robert, I know you have a hard stop. So I just want to thank you for your time. I've enjoyed it. It was good talking to you. You know, tell everyone the best way they can find out all the great things that you guys are doing at IIX. Do you have a website? Do you have social media? What do you?
SPEAKER_02People can find us at www.ixglobal.com. We're all over social media. You'll have to ask my kids how to find us, though. You can read The Defiant Optimist by our founder, Professor Doreen Shinaz, which tells the story in with much more pizzazz than I can. Very good.
SPEAKER_01And what's the best way for people to contact you?
SPEAKER_02Reach out to me at rcrabil at ixglobal.com.
SPEAKER_01Okay. Robert, thanks again. Thank you, Scott. And goodbye, everybody.
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