System innovation in finance for the good of people and planet - everywhere!
The Largest, Most Ambitious and Exciting Impact Investment Fund to Date.
Permanent Capital. Structured as a patient/permanent capital vehicle, the aim is to enable a diverse group of impact, corporate and institutional investors to own a stake in both the Transform Global platform - and the dynamic portfolio of SDG 360 Fund Investments (and ongoing distributions).
Designed to list. The aim is to position for an offering on a recognised exchange 3-6 years from launch. Should it be possible at the time, this will be structured as a digitised security with embedded governance - depending on market conditions, infrastructure and regulation.
SDG focussed. Fund level investments will be made into the broad tent of ‘Maximum SDG Impact’ - into cycles of 7 stages of £360m (see below) alongside a special opportunities allocation and a pre-agreed £360m equity investment into Transform Global itself.
Deal-flow for the SDG 360 Game-changer fund will come from the sources shown to the right, with the focus being the themes and sub-themes of the UNs 17 Global Goals for Sustainable Development.
One big benefit of the model is that all key ecosystem stakeholders are fully incentivised to collaborate, with the scale, technology and support from Transform Global to best enable it.
Alongside the special opportunities fund and liquid market-based impact investment allocations, this holistic 360-degree structure enables a volume of catalytic impact investments - to help build out the rest of the ecosystem around the world.
Supported by the Augmented Intelligence decision support engine, and supportive technology, the SDG 360 Game-changer Fund structure has the potential to dramatically lower the failure rate and speed up the process for making high impact investments worldwide. This is especially so for the catalytic investment models and for the fund structures and platforms the world needs.
The Deal Flow Pipeline and Investment Diversity
The Breakthrough Innovation in Portfolio Theory
Using the ‘butterfly basket’ portfolio design - 360 capacity-building investments of an average £1m will be made every cycle, which will initially be over 3 years (120 a year) but over time, this cycle would migrate to making 360 x £1m investments each year, plus follow on rounds;
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To help guide which investee companies should receive follow on investment, and to best add value to help ensure success, 50% of the £1m investments will go into the investee company, and 50% will be spent to deliver a comprehensive program of incubation and acceleration support (though co-investment may also be raised).
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From those selected for an initial £4m follow on round, £3m will go to the investee company and £1m will cover costs of this same added value acceleration support. This is in addition to the investment management fees which deliver supportive infrastructure.
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Data gathered in the investment process then feeds into the augmented intelligence decision engine - all to help drive impacts and returns across the portfolio. Investee companies compete on impact and return criteria to receive multiple follow on rounds.
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If worthy, companies can raise whatever is needed to succeed and scale (each cycle includes 360 x £1m (£500k + £500k) 90 x £4m (£3m + £1m); 30 x £12m; 12 x £30m; 6 x £60m; 3 x £120m; and 1 x £360m - or £587m for that single entity).
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In addition, there will be a £360m special opportunities allocation to fill impact investment gaps and to enhance returns (investing into enabling funds and deals).
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As noted above - a B Round of £360m will be invested into Transform Global itself (so the fund investors have a stake in the success of Transform Global - and as Transform Global is fully capitalised with performance options - stakeholders and talent are incentivised to ensure the SDG 360 Game-changer fund is a roaring success).
The 'Butterfly Basket' Portfolio Structure
The ‘butterfly basket’ portfolio structure is designed to deliver a revolution in impact investment.
Starting with a volume of discovery and capacity building deals (where the £1m and £4m investments come with added value help and support included) investments compete for progressively larger rounds (should they need them - which not all investments will).
Co-investment can and will be raised at each stage for the individual deals, and potentially for the whole portfolio.
Risk starts higher with early-stage investments - but lowers over time as the size of investments increase (shown left to right on the ‘butterfly’).
With the volume of early-stage capacity-building investments, (which allows for healthy levels of failure), impacts start off as medium (many smaller ventures and the learnings along the way will deliver impact), but increase along with the scale and success of larger and later-stage investments.
At the left-hand side of the portfolio, financial returns will likely start low, but increase through the multiple stages, all to deliver attractive fund level returns and do so alongside - and in addition to - high priority and highly catalytic social and environmental impacts.
Technical Highlights
Competitive and AI selection. A key component is the technology and processes (which are developed alongside those for BIGCrowd) which can capture normally ignored data to power an augmented intelligence engine to best support investment selection.
Management and fees. Fees are 2% of the net capital base - which at scale and with the butterfly basket design, adequately provides for the investment infrastructure to process a volume of transactions. In target projections - fees are £180m p/a on the £9 billion, rising to £230m p/a after the target £2.5 billion IPO 4 - 6 years later. Fees cover SDG Fund Management costs and also the corporate finance professionals and support - provided by Transform Global.
Zero carry - but aligned incentives. Performance incentives will be based on combined impact, investment returns and valuations, and will be in the form of performance-based fund units - with vesting criteria to ensure long term interests of stakeholders are intelligently aligned.
Blending on and off-market impact investing. An SDG 360 Game-changer Fund breakthrough allows for a share of liquid balances to be invested with a diverse group of top managers and market-based impact investors - of the type that can also give liquidity when required. Returns enable ongoing investment capacity to be maintained and grown.
Results of impacts and returns. Based on conservative projections the SDG 360 Game-changer Fund strategy enables over £14.6 Billion of book value Impact Investments to be made over 10 years, and to deliver attractive risk-adjusted returns of between 6 - 12% - plus systemic and significant impacts. Assumptions for these projections are available on request.