Trust Waikato is targeting a third-quarter kick-off date for its new impact investment fund dubbed Te Puna Hapori.
A spokesperson for the $400 million community trust, said the Trust Waikato sponsored impact fund “construction is progressing at a good pace and the current focus is on its capital raise”.
“Trust Waikato expects to see the fund soft launch between July and September and build from there,” the spokesperson said. “The 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.”
The Trust Waikato move comes on the back of rising interest in impact investing in NZ among other charitable funds – including fellow community trusts Foundation North and BayTrust. A handful of other private ventures such as the Impact Enterprise Fund and the Purpose Capital Impact Fund have launched recently. ASB even entered the fray with its own impact investing option added to the bank’s KiwiSaver and retail fund menu last year.
Dennis Turton, Trust Waikato chief executive, says in a recent communiqué that “Te Puna Hapori, is a private debt fund that ensures community assets are retained in community hands while offering investors risk-adjusted market rates of return”.
“The sector focus of the fund includes education, health, water infrastructure, community hubs and housing,” Turton says.
He says the pivot to impact investing reflects the Trust Waikato position that “its philanthropic dollars are not enough to alleviate the harm that is going on in its communities”.
Furthermore, Turton says the government “may have different priorities and not enough dollars” to fully support local communities.
Trust Waikato has yet to reveal how much it would allocate to the new impact venture but the broader fund, advised by Australian consultant JANA, kept its head above water in a difficult year.
Over the latest financial year – a period that ended with the coronavirus-triggered record market volatility in March – Trust Waikato returned 0.3 per cent compared to its -2.1 per cent for its strategic asset allocation benchmark.
The Trust spokesperson said the underlying managers “outperformed their benchmarks” while strategic tilts to offshore currencies and cash paid off.
Post March 31 the fund reduced its cash exposure and increased holdings of “higher yielding assets”, the spokesperson said.
“These assets have helped Trust Waikato to achieve a return of 9 per cent per annum over the 10 years to April 30, 2020.”
According to its 2019 annual report, the Hamilton-based community trust has over a dozen underlying fund managers including Generation Investment and Schroders Australia for global equities. Mint Asset Management and Devon manage the fund’s Australasian equities with ANZ taking care of local fixed income and cash. PIMCO and Wellington run the Trust Waikato international fixed income assets while Bentham has global credit responsibilities.
The Trust also has a hefty exposure to unlisted assets including a $70 million allocation to property, split between Australian managers Investa and QIC. Unlisted infrastructure represents about $50 million of the total portfolio, managed by NZ firm Morrisons and the Utilities Trust of Australia.
About $10 million is also invested in local private equity manager, Pencarrow.
JANA, which has several NZ clients including BNZ, has served as Trust Waikato investment adviser since 2009. The consultancy firm is part-owned by BNZ parent, the National Australia Bank.
In a release, Bill Dwyer, JANA senior consultant, said: “It has been a privilege to partner with Trust Waikato for more than a decade and to have helped it deliver the sustained investment outperformance which has allowed it to realise its philanthropic vision for vibrant and resilient communities.”