Diversified Impact Fund
INVESTOR UPDATE | DECEMBER 2022
Dear Investor,
As we approach the end of 2022 we are pleased to share an update on activities of the SVA Diversified Impact Fund (DIF) over the past six months.
With the completion of the Nightingale Village precinct development and full repayment of the DIF loan investment in July 2022, some SVA Impact Investing team members and alumni enjoyed a recent launch event alongside the community of new residents and other community stakeholders. The six-building housing development comprises 203 new apartments in Brunswick, Victoria; we profile below those joining the community through Nightingale Housing’s innovative sale process whereby priority social groups are eligible for a ballot.
This month the DIF Investor Advisory Committee also approved an extension of the DIF investment period from 21st December 2022 to no later than 31st March 2023. The extension will enable the DIF to make a loan to a named project approved by the DIF Investment Committee, but unlikely to meet conditions precedent to drawdown prior to 21st December 2022. The extended investment period will continue until first loan drawdown or 31st March 2023, whichever is sooner.
As noted alongside publication of the DIF Annual Investor Report on 28th October 2022, the DIF will not be making a third capital call in 2022. SVA has determined that given the DIF pipeline and its investment repayment profile, any deals approved for close before the end of the investment period will be funded with recycled capital from recent fully realised investments. We anticipate that future capital calls may be made in subsequent years (after the end of the investment period) to enable follow on equity investments in existing portfolio companies, as is permitted under the DIF Information Memorandum terms. A capital distribution of the balance of matured investment returns will be considered in the new year.
As we move into 2023, we look forward to working with our portfolio of investee organisations to continue driving social and financial returns. Drawing close to the end of the DIF investment period SVA is turning its mind to the learnings from this five year investment phase of the DIF in the context of its three objectives: to deliver direct social outcomes, to act as a market catalyst and to influence broader system change. We will provide an opportunity for you to contribute your insights and observations to this process in the new year, and we look forward to sharing more with you soon.
We thank you for your ongoing support of the DIF as we continue our focus on driving social and financial outcomes throughout the term of the DIF.
We wish you a safe and restful end of year, and look forward to providing more updates
in 2023.
Kind regards,
Matthew Deeble
Acting Executive Director, Impact Investing
Social Ventures Australia
Rebecca Parkinson
Director, Impact Investing
Social Ventures Australia
Key investor information
Investment Period Extension
In December the DIF Investor Advisory Committee approved an extension of the DIF investment period from 21st December 2022 to no later than 31st March 2023. The extension will enable the DIF to make a loan to a named project approved by the DIF Investment Committee but unlikely to meet conditions precedent to drawdown prior to 21st December 2022. The extended investment period will continue until first loan drawdown or 31st March 2023, whichever is sooner. The DIF will continue to pay SVA management fees under the investment period fee structure until the conclusion of the investment period. The DIF will not consider other investments during this time.
Capital calls and Distributions
As noted alongside publication of the DIF Annual Investor Report on 28th October 2022, the DIF will not be making a third capital call in 2022. SVA has determined that given the DIF pipeline and its investment repayment profile, any deals approved for close before the end of the investment period will be funded with recycled capital from recent fully realised investments. We anticipate that future capital calls to enable follow-on equity investments in existing portfolio companies may be made in subsequent years (after the end of the investment period). The timing and volume of investee company future capital raisings and follow-on opportunities is of course uncertain, however we anticipate that any call is unlikely to occur prior to December 2023. Investors will be provided with notification of a capital call at least 30
days in advance. A capital distribution of the balance of matured investment returns will be considered in the new year.
Unit Price
The unit price as at 30 September 2022 was $0.5190 (unaudited), down from $0.5239 (unaudited) as at 30 June 2022. Quarterly unit prices are available here.
Nightingale Village launch event
On the 13th November 2022, SVA Impact Investing Directors Matthew Deeble and Tim von Ess, and SVA Impact Investing alumni Alex Oppes, attended the launch event for the Nightingale Village precinct which was partially funded by SVA’s Social Impact Investment Trust alongside the DIF. This project is a community and environmentally focussed housing development which opened in Brunswick, Victoria in July this year and the second of Nightingale’s projects that SVA’s Impact Investing team has financed.
Jeremy McLeod Co-Founder of Nightingale Housing & Founder of Breathe, Alex Oppes former DIF Investment Director & Tim von Ess SVA Investment Director
The precinct itself comprises 203 new apartments within five kilometres of Melbourne’s CBD. To promote fairness, apartments are allocated via a ballot process rather than auction. The ongoing affordability of apartments is protected through a resale caveat attached to the title which stipulates maximum resale price. As noted in the DIF Annual Investor Report, all apartments have been sold. Amongst the buyers of the apartments, there were:
- 27 apartments allocated to Community Housing Providers (CHPs), who in turn rent these at reduced rates to those experiencing disadvantage
45 key community contributors, including 15 first home buyers
7 individuals with disability, including two first home buyers
1 First Nations person
63 first home buyers, in addition to the first home buyers included in the
categories above
Community celebrations in Bulleke-bek public park
The celebration took place on the newly created
Bulleke-bek public park on the northern fringe of the precinct, created by the local council in consultation with Nightingale. Despite the weather forecast, the event was well attended by project architects, investors, CHPs, lenders, project consultants as well as a number of State politicians. Most of those attending were from the instant community of new residents – living proof of the
project's success.
The DIF team is incredibly proud of its involvement in this project. Not least because SVA’s funding allowed Nightingale (a not-for-profit enterprise) to unlock additional finance from NAB to demonstrate the model at scale, complete its largest single project yet, and deliver housing for over 200 families.
It also brought to life a sustainable development model for the local council to guide other developers to follow - achieving outsized impact for SVA’s investment.
The Future of the DIF & SVA focus
The DIF was designed with three objectives: to deliver direct social outcomes, to act as a market catalyst and to influence broader system change. As we reach the close of the DIF investment period SVA is turning its mind to the learnings from this phase of the DIF to help inform new opportunities to support social investment in Australia. We are now considering what fund models, financial instruments and structures effectively meet both investee capital needs and investor appetite. With a view to social sector demand we are in the process of developing a structure that best serves investee and investor requirements whilst capitalising on SVA's deep expertise. We look forward to sharing more with you soon, and will provide an opportunity for you to contribute your insights and observations to this process in the new year.
Fund portfolio
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.
