No images? Click here SVA Diversified Impact FundInvestor update, June 2021 Topping out at Nightingale Ballarat Dear Investor, Since our last update in March 2021, it is with great pleasure that we can announce a $630K investment into the Newpin SA Social Impact Bond as well as the partial sale of DIF’s investment in Maths Pathway. This brings the Fund to approximately $7.5M of deployed capital (as at 31 March 2021). We also wanted to provide you with updates on the Nightingale investments and the Resolve Social Benefit Bond. Our ultimate goal remains the creation of social impact in Australia by investing in social purpose organisations that have a demonstrated track record and are looking for capital to scale. As always, we welcome any investment leads or ideas that you may have. Yours sincerely, Key investor information
Latest news and updatesAnnouncing new investment in the Newpin SA Social Impact BondA mother, her child and a Family Worker at a Newpin centre DIF’s $630,000 investment in the Newpin SA Social Impact Bond (SIB) will help fund delivery of the Newpin Program, which aims to safely reunify South Australian children in out-of-home care with their families. The Newpin Program is an intensive therapeutic centre-based program, delivered by Uniting Communities. Three centres are planned to be opened over the course of the SIB, two in 2021 and one in early 2022. The first centre will be located in the outer northern Adelaide metropolitan area, the second in inner north-west Adelaide, and the last centre in the southern metropolitan area. Key stakeholders include the Government of South Australia (outcome payer), Uniting Communities (service provider) and Social Ventures Australia (arranger and manager). Given SVA’s dual role, the investment opportunity was reviewed and supported by DIF’s Investor Advisory Committee. The rationale for this investment included the following:
More information on the Newpin SA Social Impact Bond can be found below: Maths Pathway selldownTeacher and student at Baden Powell College, a Maths Pathway school We are pleased to announce DIF has sold the majority of its stake in Maths Pathway to mid-market private equity firm Belay Capital, whilst retaining a small stake in Maths Pathway via units in the Belay trust used to acquire shares in the business. In late 2020, shareholders in Maths Pathway appointed Allunga Advisory to sell some or all of the business. Allunga Advisory ran a thorough market sounding, covering Australian VCs, family offices and strategic investors and US-based strategic investors. Belay’s investment also includes an injection of fresh capital which will help the business to expand further. Belay paid about $12 million for just over half of the business, which valued it at $24 million. DIF originally paid $1,000,002 for its shares and realised $916,986 in net cash proceeds from the sale, plus $193,123 of units in the Belay Trust, representing approximately 1.1x DIF’s original investment. Whilst not the exit we were initially hoping for, DIF's retained interest gives some further potential upside. DIF intends to full exit its position in Maths Pathway when the Belay Trust exits. The sale was covered in the Australian Financial Review article available here. We are proud of the progress that Maths Pathway has made with the support of SVA, including increasing its reach from 48,000 to approximately 85,000 students across 250 schools. Despite the impacts of Covid-19, the students who used Maths Pathway in 2020 learnt at the same rate during Covid-19 shutdowns and disruptions as they did previously. The average growth rate of 1.24 years of learning in a school year was maintained by schools from various sectors and states. Even students from low socioeconomic backgrounds achieved growth with Maths Pathway at the same rate as they would in the classroom. More information on Maths Pathway’s impact can be found below: Nightingale in the news Topping out at Nightingale Ballarat Nightingale Communities, the not-for-profit housing developer, has recently received a significant amount of media coverage. SVA is a long-term supporter of Nightingale, having invested in 3 projects, including 2 via the DIF (Nightingale Village in Brunswick and Nightingale Ballarat). These projects promise to deliver highly sustainable apartments, at cost, with 20% of apartments allocated to Community Housing Providers, and a further 20% of apartments allocated to Key Contribution Workers such as nurses, aged care professionals, and those working in the not-for-profit sector. These projects are making good progress and are on track to complete towards the end of 2021 and beginning of 2022. In April 2021, Nightingale was restructured into a not-for-profit entity (Nightingale Communities Limited), with a new constitution to better protect Nightingale’s social and environmental mission. In May 2021, one of the founding Nightingale architects publicly raised concerns around the new constitution. Subsequently, the Nightingale Board has agreed to a number of changes which will improve governance. SVA remains confident in Nightingale and its innovative model of sustainable and affordable housing development. We are supportive of recent governance changes outlined by the Nightingale team, namely plans to move to a not-for-profit structure which embeds its social and environmental mission, appoint an independent Chief Executive Officer and add additional members to the not-for-profit entity. We believe this will strengthen governance and serve Nightingale well as it continues to grow. SVA looks forward to continuing to work with Nightingale Housing on our joint mission to improve housing affordability in Australia. A more detailed update from Nightingale is available at the link below: Resolve Social Benefit Bond update Table painted by the Resolve Wellbeing group At the end of September 2020, the Resolve SBB marked its third year of supporting people experiencing mental ill-health in the Western NSW and Nepean Blue Mountains Local Health Districts. Resolve participants experienced a reduction in health service usage relative to the year prior to their enrolment in the program, including a 65% reduction in days spent in hospital. Disappointingly however, the results indicated that Resolve participants overall experienced an increase in health service usage relative to the control group. The Year 3 results therefore triggered a contractual review and renegotiation of the contract, which was approved via circulating resolution by an overwhelming majority of Resolve SBB investors in May 2021. The main change to the contract is that the baseline (counterfactual) against which results are measured will change. Health service usage in the year prior to enrolment in the Resolve Program will be used as the counterfactual, and this change will apply retrospectively, with prior year outcomes restated. The control group comparison will still be undertaken but will not be used for the purpose of determining outcome payments. After consideration of this data along with that available for the Control Group and a historical eligible population, the parties have agreed that a best estimate of the NWAU reductions that will be recorded by those enrolled over years 2-5 is 65%. The target IRR for the remainder of the contract assuming a 65% reduction is 5%. Continuation of the program will also provide an opportunity to further examine how participants are engaging with the service, and whether this is creating benefits that are not being picked up by the control group comparison. More information on the Resolve SBB can be found below: Investment Committee update Darren Smorgon will be stepping down as an Independent Advisor to the DIF Investment Committee (IC) from 30 June 2021 to pursue other philanthropic and work commitments. Darren has been a supporter of SVA’s Impact Investing team for over a decade, first assisting with the Goodstart Early Learning transaction and later sitting on the IC for SVA’s Social Impact Fund and Social Impact Investment Trust and the DIF. Darren has been tremendously generous with his time and knowledge, helping guide the team across a broad range of impactful transactions We take this opportunity to express our deep gratitude to Darren. Meanwhile, we are pleased to note that Tim Johansen has been appointed as an Independent Advisor to the DIF IC. Tim has extensive experience across real estate financing and is currently the Managing Director, Global Head of Capital at Qualitas Group. He was added to the Investment Committee in response to a strong DIF pipeline of property-related transactions. From 1 July 2021, the DIF IC will consist of Rob Koczkar, Michael Lynch and Rebecca Thomas, supported by Independent Advisors Brigitte Smith, Sarah Buckley and Tim Johansen. SVA CEO Suzie Riddell is an observer to the IC. Got a great deal referral?Do you know a high-impact organisation that is generating revenue and ready to scale? Please let us know! Our investment criteria are:
Send your referrals to makeadif@socialventures.com.au The information in this email is for general information purposes only and in passing it and any other material on to you Social Ventures Australia (SVA) is not providing you with any legal, tax, investment, financial or other advice. Nothing in this email should be construed or relied on as a representation, recommendation, endorsement, solicitation or offer by SVA or any third party in relation to any organisation, financial products or other investment. Before making any commitment of a legal or financial nature, you should carry out your own inquiries and seek such professional advice as you may require. SVA does not receive any remuneration or other benefit for passing on this information. Social Ventures Australia acknowledges Traditional Owners of Country throughout Australia. We pay our respects to Aboriginal and Torres Strait Islander Elders past, present, and emerging. We also accept the invitation in the Uluru Statement from the Heart to walk together with Aboriginal and Torres Strait Islander peoples in a movement of the Australian people for a better future. |