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IIX Women's Livelihood Bond: IIX Sustainability Bonds: Changing Finance, Financing Change

April 11, 2016

Impact investing has been revolutionary in the history of capital markets. The concept refers to investments with the intention of generating positive social impact over and above financial returns. Over the last six years, impact investing has moved from the margins to the mainstream with an estimated market size of $46 billion in 2014 (World Economic Forum, 2014), shifting the paradigm on how the world blends impact with financial returns. But there is more to be achieved. A 55% annual growth rate would be required to reach the target market size of $1 trillion by 2020 (J.P. Morgan, 2010). This exponential growth can be achieved only by unlocking mission-oriented capital at scale, by bringing in new actors from the private sector to support sustainable development and by developing innovative financial products that can channelize resources to high impact entities - which in turn can deliver scalable and sustainable market-based solutions. Leveraging its expertise in innovative finance, Impact Investment Exchange Asia (IIX) sets out to achieve this by developing a new financial product that seeks to bridge the current gap between development and finance: the IIX Sustainability Bond (ISB). ISBs are debt securities that pool together in a single portfolio, a group of high-impact entities that have undergone a rigorous due diligence process based on both social and financial criteria. This unique pooled structure allows underlying borrowers to access large amounts of capital that they would not otherwise have been able to raise individually. ISBs are designed to be sustainable instruments, offering attractive rates of risk-adjusted returns to impact investors who are interested in a double bottom line. ISBs will be listed on the Stock Exchange of Mauritius, adding an additional layer of secondary liquidity, mission protection and transparency. IIX's commitment-to action to the Clinton Global initiative, the first ISB, is the Women's Livelihood Bond (WLB), a $20 million debt security designed to unlock capital for Impact Enterprises (IEs) and Microfinance Institute (MFIs) that are part of the sustainable livelihoods spectrum for women in South-East Asia. The WLB is projected to empower over half a million women with access to credit, to market linkages, to natural resources and to affordable goods and services. This will, in turn, help them transition from subsistence to sustainable livelihoods and redefine the dominant narrative from viewing women as victims to recognizing them as solutions to development, change and progress. This Blueprint Paper, developed by IIX's sister non-profit entity Shujog, aims to provide an overview of the bond mechanics by outlining the key steps involved in the bond structuring process. Supported by the Rockefeller Foundation, a visionary catalyst in the impact investing space, this preliminary paper will capture the progress made to date by IIX on product, pipeline and partnership development. A subsequent paper will be published post bond issuance which will capture the key steps involved in selling the bond to investors and listing it on the Stock Exchange of Mauritius. Shujog hopes this paper will act as a roadmap for other stakeholders in the space to create similar instruments that are designed to change finance and finance change.