Creating an impact.

A stock exchange solely for social enterprises is in the works in Singapore.

FOUNDER and chairwoman of Impact Investment Exchange Asia (IIX) in Singapore Durreen Shahnaz is seeking to create the Impact Exchange a social enterprise exchange. “By investing through the Impact Exchange, impact investors can significantly lower their market research and due diligence costs, as well as have liquidity in their investments thus allowing for more impact and wealth to be created and brought into the space,” she says.

For many social enterprises, the quest to build capital is a difficult one. The simple fact that they may not be able to generate returns for investors creates a big hurdle for them.

On the other hand, investors that are seeking to make investments that benefit society (impact investments) may not know how to look for the appropriate social enterprises to invest in that are profitable and suit their personal passions. The costs of market research and due diligence is quite high, and there is no liquidity for these impact investments.

Therefore, through the exchange, these issues can be dealt with.

The IIX is a social enterprise with a mission to provide social enterprises in Asia with greater access to capital, enabling them to expand the impact of their activities more rapidly.

Pioneers for what would be Asia’s first social enterprise exchange in a couple of months, Shahnaz and her team at IIX sought to create the exchange to bridge the gap between investors and social enterprises. The Impact Exchange will list social enterprises in the Asia-Pacific region and would expand to other parts of the world.

Tranparency and liquidity

In an email reply to StarBizWeek, Shahnaz says: “The exchange will create transparency and liquidity for impact investments while showcasing the social and environmental listing criteria along with the financial sustainability of the social enterprise.”

Shahnaz: ‘The exchange will create transparency and liquidity for impact investments while showcasing the social and environmental listing criteria along with the financial sustainability of the social enterprise.’

“Many impact investors want to make impact investments based not only on the social enterprises’ financial viability, but also on their mission alignment with the investors’ particular passions. Creating a match of an impact investor and social enterprise is thus quite difficult, and effective platforms are imperative to creating this match.”

This is the reason the IIX established Impact Partners, which is Asia’s first private placement platform that has seen investment opportunities of at least S$68mil (RM163mil).

“By creating a public trading platform, Impact Exchange, we are taking the next step in evolving the social capital markets, tremendously helping both social enterprises and impact investors,” she says on the rationale for the exchange.

On the profitability of the exchange, Shahnaz says that although she and her team expect the exchange to be profitable in the near future, the core focus will always be to help social enterprises and impact investors.

The social enterprise scene in Singapore is one that is growing. The industry will only move forward starting with launch of the exchange, and also with the help of Singapore’s social enterprise alliance. A toolkit with useful information for those who are keen to start a social enterprise is available on the website: https://www.raise.sg/. Like Malaysia, there are no legal forms that are specifically available to social enterprises in Singapore.