HESTA has committed $20 million as a cornerstone investor in Australian Unity’s inaugural issuance of Mutual Capital Instruments (MCIs), helping to establish a new capital source for the For Purpose, Mutual sector in Australia.
The $100 million issuance of the ASX-quoted MCIs has the potential to expand Australia’s impact investment market, allowing retail investors to invest for social impact alongside large institutional investors.
The $56 billion industry fund has made the investment through its $90 million Social Impact Investment Trust (SIIT), managed by specialist impact manager Social Ventures Australia (SVA). The SIIT aims to catalyse the development of Australia’s impact investment market through developing a pipeline of investments designed to earn an appropriate market return and a measurable social impact.
MCIs represent a potential new source of capital for the $104.4 billion co-operative and mutual enterprise (CME) sector, which was previously reliant on retained profits to expand their operations. Legislative change in 2019 enabled the creation of MCIs, providing the opportunity for mutual entities like Australian Unity to access permanent capital without compromising their mutual status.
“We’re very excited to be the first investors to support Australian Unity to bring MCIs to market as we both share a long-term interest in building this country’s social infrastructure,” HESTA CEO Debby Blakey said.
“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. 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.”
As a large mutual with a 180-year history, Australian Unity has built a diversified, but thematically-linked portfolio of health, wealth and care products and services that meet the wellbeing needs of its members and customers, while delivering community and social value.
“Capital raised through the offer will be used for a range of opportunities, including pursuing near-term growth opportunities within the individual businesses as well as investing capital where third party funding has historically been used,” Australian Unity Group Managing Director Rohan Mead said.
“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 consolidations in important mutual sectors such as private health insurance, banking and friendly societies.”
Mr Mead welcomed HESTA’s investment as reflecting a shared commitment to helping address Australia’s social infrastructure challenges in areas such as health and aged care.
“We also note that as a superannuation fund, HESTA covers about 22 percent of our 7000 employees and supports our commitment to a predominantly permanent workforce in this key area of community need,” he said.
Rebecca Thomas, Executive Director, Impact Investing at SVA said the issuance of Australia’s first MCI was a unique opportunity for retail and institutional investors to directly invest in 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. 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.”
“Bringing this MCI to market with an organisation with the expertise and deep community links of Australian Unity provides the potential for the development of an entirely new social impact investment product that’s available to both small and large investors alike.”
“The success of this raising could see a pipeline of similar issuances, with the potential to drive the growth of larger scale social impact-focused organisations within the mutual market.”