Smart money coming in, good for the environment and profits.
The (small) giant returns Australia’s first B-Corp joins the A-list of investors in sustainable operations
13 Dec 2013.
There are no second acts in American lives, or so says F Scott Fitzgerald.
Not so in Australia, where Danny Almagor is well in to his third act and he’s only in his 30s.
As an engineering student he was inspired to launch the Australian chapter of the-then fledgling, and now global, not-for-profit Engineers Without Borders (EWB).
“It’s tough having to raise cash if you are not selling anything other than ‘feel good’,” recounts Almagor, “but I think we did a really wonderful job in trying to shift the mentality of engineering. If anyone’s a problem-fixer, it’s an engineer. We build the infrastructure that makes the world go round.”
Then, almost as a sideline, Almagor became an accidental entrepreneur to earn some cash (he wasn’t paying himself a salary) by launching the successful corporate health group Medivax with a doctor friend.
The third act started when he married Berry Liberman and the pair were inspired to start a social impact investment business. “On my journey [at the time of EWB and Medivax], the left hand was the non-profit and the right hand was for profit. I felt I was being pulled in opposite directions.”
He sold his stake in Medivax and that money, together with a substantial inheritance to Liberman, became Small Giants, which invests in sustainable companies and projects.
While the investments might have the feelgood factor, Almagor says they provide returns in the 20 per cent-plus range for higher-risk ventures and the 8 to 10 per cent range for more conservative investments.
“We generally analyse our opportunities in a similar way to a non-impact investment – but we are not about ‘return or die’,” he says. “The first question for us is, is it good for people, is it good for the environment and is it creating the world we want to live in? If the answer is ‘no’ to any of those factors we are not interested. We do it differently, but we need a return, we are not philanthropy.”
Last year Small Giants became Australia’s first certified B-Corp.
This US-based certification system is similar to the free-trade stamp of approval, where companies commit to values and standards around the environment, employment and governance.
Spot audit checks are undertaken by Deloitte to make sure certified companies are still walking the talk.
Small Giants’ investments include a half share in TOMOrganic, which makes organic feminine hygiene products, a property portfolio that includes an eight-star energy-rated apartment complex in Melbourne and Hub Australia, a professional community that promotes innovation.
“We are already across all of the asset classes,” says Almagor, “but we are getting better at finding better opportunities. We are now bringing other people in with us.”
To this end the Impact Investment Group was created to offer outsiders syndicated investments.
The future, says Almagor, can only get better. “I think the next generation of inherited wealth, Gen X and, increasingly Gen Y, are really interested in social impact investing and many people will try to align what they believe with what they do. If the only decision an investor makes is what is the most return for the risk taken, they are missing a huge opportunity to make a big impact.”
