Australian specialist impact investment firm, Brightlight Group, will establish an on-the-ground NZ presence after winning the lead manager role on the new Trust Waikato-sponsored Te Puna Hapori fund.
Brightlight is also working with the NZ Ministry of Foreign Affairs and Trade (MFAT) to design a public-private impact investing strategy for the Pacific Islands.
Mark Ingram, Brightlight chief impact officer, said the Sydney-headquartered group planned to appoint “three to four” people in NZ – including directors and management – as the business developed on the back of the Te Puna Hapori venture.
Spun out of the Australian Christian Super fund in 2016, Brightlight registered a NZ entity this February. The group, which currently manages upwards of A$350 million of impact investing assets, is also a contender in the yet-to-be-decided race to run a $15 million plus specialist fund for Foundation North.
As reported this May, Trust Waikato planned to launch the Te Puna Hapori impact fund in the September quarter with the aim of bringing other like-minded investors along for the ride.
At the time, a Trust Waikato spokesperson said: “The [Te Puna Hapori] fund differs from the ‘shovel ready’ infrastructure approach in that the fund focuses on community driven essential services infrastructure projects that are typically undercapitalised by more conventional investments in the market.”
A just-released information memorandum (IM) for the Te Puna Hapori fund names Brightlight as investment manager and Huber Social, another Australian firm, as impact manager. Trustees Executors acts as supervisor for the new venture.
“Brightlight in partnership with Huber Social, apply a lifecycle application of responsible and impact investment criteria to enable tangible impact outcomes for investors including impact due diligence and assessment, pre-investment and impact management, measurement and reporting post-investment,” the IM says.
Ingram said the fund operates as a debt vehicle targeting returns of 3-4 per cent above the official cash rate. The IM forecasts annual management fees of 1 per cent plus expenses of about 0.7 per cent.
“We will build the pipeline of investment opportunities,” he said.
The new fund had “line of sight” of up to $30 million, well on the way to its target level of $50 million, Ingram said. Under the structure, the fund has senior (Class A) and unsubordinated (Class B) debt tranches, aiming for at least $40 million and $10 million, respectively, at launch. Trust Waikato has underwritten the Class B tranche with a $10 million allocation. The minimum investment has been set at $750,000.
According the IM, Te Puna Hapori would be “the first impact debt fund of its type in New Zealand, and a groundbreaking opportunity for progressive investors to effect community-level change while maintaining market-rate returns”.
Ingram said Brightlight would identify opportunities in sectors such as community housing, education, healthcare and energy that fit both the impact and financial goals of the fund.
The company already had over $180 million of underlying investments in the frame, “so we know we can call on capital raised early”, he said.
As well as the community trust sector, the new fund had seen interest from other wholesale investors including energy funds, charities, philanthropic groups and family officers.
In Australia, Brightlight operates as an impact fund-of-funds provider as well as investment originator.
About $150 million of the group’s current $350 million under management is sourced from the Brightlight founding organisation, Christian Super. The group also landed a $110 million impact investment gig from the Australian Communities Foundation last September.
Ingram said the remainder mainly comes via charities, family offices and smaller super funds.
“It’s more difficult for larger super funds to invest through us,” he said.
While impact investing has a longer history in Australia, Ingram said NZ is well-placed to surpass its trans-Tasman cousin in the sector. Aside from the Te Puna Hapori fund, a couple of other local impact investment offers have launched in NZ over the last couple of years including the Impact Enterprise Fund and the Purpose Capital Fund. Offshore providers like the US-based 57 Stars are also testing demand for impact investing in NZ.
“There’s a real growth opportunity in NZ,” Ingram said. “We want to help build the impact investing market there. Australia does not deploy its impact capital that cleverly. If NZ does it well, it could blow Australia out of the water.”
He said the Te Puna Hapori fund could serve as a flagship for impact in NZ, opening up broader opportunities such as the MFAT Pacific Islands “blended finance fund”.
Ingram, an ex-pat Kiwi, originally moved to Melbourne as a diplomat 15 years ago to reopen the NZ consulate to Victoria.