Impact investing in action (2235.YR.014580.1)

General information

Type:	OPT	Curs:	2	Period:	S semester
ECTS Credits:	1.5 ECTS

Teaching Staff:

Group	Teacher	Department	Language
Year 2	Lisa Hehenberger	Dirección General y Estrategia	ENG

Money can be an incredibly effective tool for social change. Impact investing - the support of social and environmental projects with a financial return - has become a hot topic on the global stage. And it has the potential to completely restructure the global economy, making social and environmental responsibility integral to how we move money through society, rather than an afterthought.
Impact investments seek to generate social and/or environmental impact in addition to financial returns. This emerging investment strategy can be applied across all asset classes in diversified portfolios, while addressing critical issues such as energy, water scarcity, climate change, community development, access to financial services, health, sustainable development and education. Often times impact investors are the first investors in a Social Enterprise.

A new generation of investors and social entrepreneurs are recognizing that many challenges facing the world can only be solved through integrated solutions that can successfully combine business acumen, capital markets, and policy objectives.
Though impact investing has gained in popularity and is now being taught in many universities, it is still a very young field intellectually. The theory is in relatively elementary stages of development and empirical research has been limited. The concept is inherently appealing to many, but we do not have the kinds of intellectual frameworks that would help social entrepreneurs, their funders, and policymakers make wise decisions about how to use it to the greatest benefit. This analysis requires looking at limits and weaknesses of popular approaches to impact investing with the same intensity as we trumpet their strengths.

The course is designed for a broad range of Esade students including those who, during their professional careers, are considering a leadership position in asset management; are interested in understanding the specifics of adding a third dimension in investment analysis to the traditional binary risk/return considerations; interested in advising social enterprises; planning to serve as board members or volunteers; funding or investing in social enterprises; or interested in leveraging business to serve social transformation.

The main goal of this course is to introduce students to the impact investing world and offer them the opportunity to experience the job of an impact investor.

At the end of the course, students should:
- Be familiar with the basic principles of impact investing.
- Understand the everyday practices of impact investing funds.
- Gain practice on making investment decision, including the sourcing and selection of opportunities and the structuration of deals.
- Be able to reflect about how impact investing approaches can help address societal challenges.
Having achieved these learning objectives, students will be better prepared for a career in the field of impact investing, and more broadly in the impact economy. This can include positions in impact investment funds, asset owners, intermediaries, or foundations.

1. Session 1: Introduction to the Impact Investing Process and Screening In this session we will get to know each other and set the basis for the course. We will do a brief introduction to impact investing, with a focus on the impact investing process, and we will introduce MCE Social Capital, the impact investing fund with whom we have partnered for this course. We will introduce the screening process, from identifying potential investment opportunities to selecting those that better fit the fund¿s mission and strategy.

2. Session 2: Deal Screening and Introduction to Due Diligence We will reflect on how to do screening and decide which deals make it to the next stage. We will prepare initial term sheets and we will introduce due diligence and how to integrate impact in the due diligence process.

3. Session 3: Due Diligence in Action and Impact Measurement The third day we will carry out the due diligence process, analyzing whether the potential investees can achieve their financial and social objectives, the risks they might encounter, and the role our financing will play. You will have an opportunity in class to ask the questions you have prepared to the CEO, CFO and COO of the companies you are conducting due diligence on. We will also discuss impact measurement and how to define impact objectives for the investees. You will then be able to finalize your due diligence reports.

4. Session 4: Deal Structuring The fourth day we will discuss how to structure the deals with the investees, including the different parts of the term sheet: amounts, rates, guarantees, covenants, impact metrics, etc.

5. Session 5: Investment Decisions Finally, on the last day students will present their investment decisions to an `investment committee¿ formed by MCE and Esade professors, and we will reflect on the whole process. We will also have a guest speaker who is an impact investment practitioner join the class and answer your questions regarding developing a career in impact investing.

This short, elective course will have a very practical orientation, as students will work on real cases and investment opportunities presented by an impact investment fund. Apart from an introductory session to impact investing and to the strategy of the impact investing fund, the other sessions will be focused on the students carrying out the different parts of the investment process, including screening, due diligence, deal structuring and investment decision.
Students are expected to work independently in groups and to use class hours to present their strategy, get feebdack from classmates and professors, and adjust those strategies accordingly. For this reason, students need to attend all five sessions and have an active participation in the classroom. Additional articles, reports, and videos will be posted on eCampus to help students understand the impact investing process and their role as investment analysts and directors.

There will be some practical readings but we will mostly work with real investment opportunities to be analyzed.

Group	Teacher	Department
Year 2	Lisa Hehenberger	Dirección General y Estrategia