The Accident Compensation Corporation (ACC) fund was hit up by about a dozen contenders within hours of floating its new $50 million ‘impact’ investment concept.
George Adams, consulting to the new ACC impact venture, said the official launch last week had clearly “shaken the tree” with 12 or so companies contacting the fund on the same day to pitch ideas.
Adams said the early line-up includes firms offering IT solutions, therapeutic recovery processes and physical equipment – all themed around the proposed ACC impact investment philosophy of improving health and safety practices in NZ.
“We’re interested in investing in anything that could reduce the [accident insurance] costs for the ACC,” he said.
The ‘fund’ – a portfolio to be managed by the ACC private markets team, headed by Martin Goldfinch – would be the largest impact investment vehicle in NZ if it hits the somewhat notional $50 million target.
Over the last couple of years several dedicated impact funds have launched in NZ including the Trust Waikato-sponsored Te Puna Hapori fund, the Impact Enterprise Fund and the $30 million Purpose Capital Fund. The $1.4 billion Foundation North is also establishing an impact fund.
But the ACC portfolio stands apart with its unique blend of the government organisation’s insurance and investment capabilities, rather than the typically wider range of social goals espoused by other budding NZ impact funds.
James Miller, ACC investment committee chair, said in a release last week: “This portfolio is first of its kind in the New Zealand market, combining ACC’s established expertise in injury prevention with its proven skill in investment management.”
According to Adams, the ACC would consider any companies, or co-investments, that fit the impact investment mandate including Australian-based firms “if there’s a direct connection to what we do and/or transferability of technology to the New Zealand market”.
However, the impact portfolio probably wouldn’t stray outside the trans-Tasman geographies, he said.
And Adams said the ACC fund would rank financial returns a priority along with impact.
“We didn’t consider the concessionary approach – we’re looking for financial returns [from the impact portfolio] in line with those we expect from all private equity investments,” he said.
The ACC will report the impact side of the ledger, too, Adams said, although this could be more problematic than bottom-line returns.
“We’ve spent some time thinking about how to measure impact,” he said. “For some investments it could be relatively easy but others will be more complicated.”
For example, Adams said if the fund invested in – say – a company that improved forklift safety, the ACC would be able to measure any decline in workplace accidents involving the apparatus and ascribe a financial cost saving.
“But it’s more difficult to measure the impact of an injury rehabilitation treatment, for instance, which might have many longer-term medical outcomes,” he said.
Adams, a former director of Bell Tea NZ, contracted with the ACC this January to consult on the impact fund, bringing a substantial health and safety experience to the table. The native Northern Irishman also has been involved in several businesses as an investor or director in several other firms, including with the Pencarrow private equity fund.
Following some criticism in the NZ parliament, the $47 billion ACC fund has ramped up its sustainable investment approach this year, selling down fossil fuel holdings and lifting weights in the renewable energy sector in May.
The ACC release says: “The new impact portfolio follows on from the announcement in June that ACC had developed a climate change policy framework with emissions reduction targets for the corporate and investment parts of the organisation; and the news last week that ACC was partnering with CORT Community Housing to fund the building of 100 new homes in Auckland for families on the public housing waiting list.”
Adams said the impact portfolio would take some time to implement investments under the usual private equity due diligence process.
“The quickest private equity deal I’ve ever seen took four months,” he said.
Given the ACC safety-first leanings, it will likely take much longer than that for the $50 million impact money to begin flowing.