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02/27/2013 03:59 PM     print story email story  

$1.5 Billion Social Impact Fund Launches News

An investment fund has registered with the SEC to conduct a $1.5 billion offering that would enable the general public to invest in sustainable businesses in developing countries.

TriLinc Global Impact Fund, which calls itself an "impact investor", wants to support companies that provide measurable social and/or environmental returns in addition to competitive financial returns in developing countries.

They say they will use the proceeds to create a pool of money that invests in small and medium-size businesses in "carefully selected" developing countries with growing economies. They will invest through a global network of local sub-advisors, building a diversified portfolio that includes direct loans, convertible debt instruments and trade finance.

Rather than focusing on start-ups, TriLinc concentrates on established businesses, which have also have a hard time getting financed.

Founded by Gloria Nelund, a former CEO of a division of Deutsche Bank, her goal is to attract significant investment capital to help solve some of the world's most challenging problems.

"I have always been a big believer that the key to economic growth and environmental sustainability is a thriving middle class and that the critical driver of a successful middle class is "responsible" small and medium-sized businesses," she told Forbes in an interview.

The University of Utah is creating the Center for Global Impact Investing, with the goal of teaching students how to create large-scale societal change through investments and business.

In 2010, the university's business school launched the University Impact Fund - a joint venture with Brigham Young University and two individual investors.

Social impact investing will soon be the new venture capital, says an article in Harvard Business Review. "Just as the formation of the venture capital industry ushered a new approach and mindset toward funding innovation within the private sector, impact investment has started to bring opportunities to harness entrepreneurship and capital markets to drive social improvement," they say.

One example is Fresno, California's "Health Impact Bond," which is being tested to see if financial markets can be deployed to invest in the health of a community. Green bonds would allow everyone to invest in clean energy.

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