HESTA has committed $20 million as a cornerstone investor in Australian Unity’s inaugural issuance of mutual capital instruments, an ASX-listed impact investment product.
The $56 billion industry super fund has made the investment through its $90 million Social Impact Investment Trust, managed by specialist impact manager Social Ventures Australia (SVA).
Australian Unity reported its $100 million issuance of ASX-listed mutual capital instruments (MCIs) will allow retail investors to invest in impact vehicles, alongside large institutional investors.
It is aiming to target the $104.4 billion co-operative and mutual enterprise (CME) sector, which previously was reliant on retained profits to expand their operations.
Legislative change in 2019 enabled the creation of MCIs, providing the opportunity for mutual entities to access permanent capital without compromising their mutual status.
Rebecca Thomas, executive director of impact investing at SVA said the issuance of Australia’s first MCI was an opportunity for retail and institutional investors to directly back an impact-driven organisation of the scale of Australian Unity.
“We’ve seen extraordinary growth in Australia’s social impact investment market over the past few years. Much of this growth has come from unlisted assets classes,” Ms Thomas said.
“The sources of investment for these opportunities have come mainly from family offices, high net worth individuals and institutional investors, but this raising by Australian Unity can also be accessed by retail investors.”
She added the success of the raising could result in a pipeline of similar issuances, with the “potential to drive the growth of larger scale social impact-focused organisations within the mutual market”.
HESTA chief executive Debby Blakey said the fund was excited to be the first investor to support Australian Unity in bringing MCIs to market, with both entities sharing a “long-term interest” in Australian social infrastructure.
“As patient, long-term investors we see an exciting opportunity to invest in the fast-growing care economy that can generate strong returns for HESTA members while helping to create growth and jobs in the industries where they work,” Ms Blakey said.
“Investing in the health and community services sector will also support a faster, higher-quality COVID recovery and the long-term resilience of our economy.”
Australian Unity group managing director Rohan Mead added capital raised through the offer will be used for opportunities including near-term expansions or growth within businesses and backing entities where third-party funding has been used previously.
“The use of proceeds may also extend to merger and acquisition opportunities across our business platforms – to increase investment in social infrastructure and to help support business considerations in important mutual sectors such as private health insurance, banking and friendly societies,” Mr Mead said.
“We also note that as a superannuation fund, HESTA covers about 22 per cent of our 7,000 employees and supports our commitment to a predominantly permanent workforce in this key area of community need.”