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Social Investment Initiatives
Old 09-17-2014, 01:14 PM   #1
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Social Investment Initiatives

There is a movement driven by Governments and various private investment companies to promote "social impact investing". It seems like a way to get people to invest in various infrastructure or community based businesses that would not normally be able to get at funding from individual investors. Also it looks like a neo-liberal market based approach to replace funding that might once have come from taxation. It also looks like a smaller scale and riskier version of municipal bonds. Often the debt instruments are only tradable in a market place setup by the company that sells them. They remind of the micro loan movement.

Would you ever invest in these, what is you opinion of them being widely marketed to maybe unsophisticated investors.?

New UK study looks to turbo-charge social impact investment | Guardian Sustainable Business | Guardian Professional
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Old 09-17-2014, 01:35 PM   #2
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Isn't this another name for PPP (public-private partnerships)? We've seen PPPs for many years, and usually in the success column. Things like stadiums, convention centers, etc.
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Old 09-17-2014, 02:31 PM   #3
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Isn't this another name for PPP (public-private partnerships)? We've seen PPPs for many years, and usually in the success column. Things like stadiums, convention centers, etc.
In the programs I've seen there isn't any public funding and they are being marketed to the small investor. One I saw was to fund a small hydro electric project. It claimed a 6% to 9% return for a 25 year debenture and the only way you can sell your investment was on a forum on the companies website

https://www.abundancegeneration.com/
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Old 09-17-2014, 02:37 PM   #4
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Originally Posted by nun View Post
There is a movement driven by Governments and various private investment companies to promote "social impact investing". It seems like a way to get people to invest in various infrastructure or community based businesses that would not normally be able to get at funding from individual investors. Also it looks like a neo-liberal market based approach to replace funding that might once have come from taxation. It also looks like a smaller scale and riskier version of municipal bonds. Often the debt instruments are only tradable in a market place setup by the company that sells them. They remind of the micro loan movement.

Would you ever invest in these, what is you opinion of them being widely marketed to maybe unsophisticated investors.?

New UK study looks to turbo-charge social impact investment | Guardian Sustainable Business | Guardian Professional
This sounds like a wonderful opportunity-for some other investor.

Ha
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Old 09-18-2014, 07:29 AM   #5
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It seems like a way to get people to invest in various infrastructure or community based businesses that would not normally be able to get at funding from individual investors.
I didn't understand this part from reading the article. Why can't these businesses use traditional investment approaches? Are they targeting individuals because nobody else would buy them?

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Often the debt instruments are only tradable in a market place setup by the company that sells them. They remind of the micro loan movement.
This would scare me to death.
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Old 09-18-2014, 07:48 AM   #6
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I didn't understand this part from reading the article. Why can't these businesses use traditional investment approaches? Are they targeting individuals because nobody else would buy them?
That's a good question, why can't they get some private equity or do an IPO? The "social" aspect is really important and some projects like to get financing from the local community so that might be a reason for the approach, but I wonder whether they would stand up to the due diligence required to get more conventional financing.
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Old 09-18-2014, 07:59 AM   #7
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There is a movement driven by Governments and various private investment companies to promote "social impact investing". It seems like a way to get people to invest in various infrastructure or community based businesses that would not normally be able to get at funding from individual investors. Also it looks like a neo-liberal market based approach to replace funding that might once have come from taxation.
Doesn't sound like we're talking about stadiums or bridges here.

Sometimes putting the word "social" and "community" in front of something makes a lot of people feel good about the investment.

Feel-good projects and making a profit are often two different things (maybe that's why they can't get traditional funding--or justify taxing for it).
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Old 09-18-2014, 08:37 AM   #8
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Doesn't sound like we're talking about stadiums or bridges here.

Sometimes putting the word "social" and "community" in front of something makes a lot of people feel good about the investment.

Feel-good projects and making a profit are often two different things (maybe that's why they can't get traditional funding--or justify taxing for it).
There definitely is an eco and investing in the local community aspect. Also the investments are often not very liquid, I suppose to stop people removing capital from what would be a small pool. I get very nervous when I see promises of 6% to 9% returns on anything today, but with low liquidity that doesn't have a Government guarantee of principal like FDIC.
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Old 09-18-2014, 04:36 PM   #9
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I looked a bit more closely at the terms of the investment offered by abundancegeneration.com (a company that specializes in renewable energy projects) and this is what I found

Annual management fee 1.5%
The 6% to 9% return includes return of principal. It looks like the average annual investment return might be 3%, which is 1.5% after fees......a pretty bad investment.
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