Transcript here - Sustainable Investing Challenge

INFORMATION SESSION
Dave Chen, Adjunct Professor of Finance & Program Director of Impact
Investing, Kellogg School of Management; Equilibrium, Chairman
Cynthia Wong, Vice President, Morgan Stanley Global Sustainable Finance
Founding Partner
Presenting Partner & Lead Sponsor
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Presenters
Dave Chen
Adjunct Professor of Finance &
Program Director of Impact Investing;
Equilibrium, Chairman
Cynthia Wong
Vice President, Morgan Stanley Global
Sustainable Finance
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Kellogg-Morgan Stanley Sustainable
Investing Challenge
• Pitch competition for teams of graduate students
• Develop an institutional-quality innovative investment vehicle that is
designed to drive both competitive financial returns and positive
environmental and social impact
Sectors Addressed (2016)
Technology
1%
Other
24%
Transportation/Logistics
2%
Agriculture/Food
18%
Education/Hum
an Capital
10%
Healthcare
8%
Finance
5%
Energy/Environment
32%
Financial instruments used include:
• Asset backed securities
• Exchange traded note
• Insurance instrument
• Loan funds
• Mutual funds
• Outcomes-based securities
• Private equity
• Real assets
• REITs
• VC funds
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Overview for Student Teams
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Who can participate
• Teams of up to four (4) graduate students
• Limit of one (1) Executive MBA student per team
• Can form teams across different graduate programs or universities
2016
2015
2014
2013
2012
Participating
teams (#)
104
127
71
52
37
Student
entrants (#)
440
380
229
159
113
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What is required
• Two-page prospectuses must be submitted by February 15, 2017,
11:59PM CT (upload through site)
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Prospectus Required Elements
Investment thesis
• Fund size
Target geography
• Investment size and investment
criteria
Size of addressable market
• Due diligence process
Estimate of scalability
• Returns and cash flows (If
Assumptions
instrument requires
Risk factors
concessionary returns,
Diagram of fund or instrument
proposed migration path to
Asset class and capital
achieving market rate returns)
structure
• Time horizon
Fees and incentives
• Environmental or social impact
Target investor pool(s)
• Metrics for social impact
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Mentors
• We recommend that every team select a mentor from your school or
personal/professional networks
• If requested, we will match teams with a financial professional who has
experience in your chosen instrument type and/or sector (request through
site)
• The deadline to request a first-round mentor is January 18, 2017, 5PM CT.
• All ten (10) finalist teams are required to have mentors
“Our mentor was fantastic—we couldn’t have asked for more. He introduced
us to people, flew to be with us during the competition. He was so
generous—one of the best parts of the competition, if not the best!”
- Former participant
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Judges
• Judges are senior executives and investment managers from:
• Global “mainstream” investment firms
• Pioneers in impact firms
• Major DFI’s (development financial institutions)
• Innovators in NGO’s
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Judging criteria
• Applicable to both the first and final rounds of the competition:
Creativity & Financial Innovation (25%)
• Has the team proposed an innovative investment vehicle that is designed to drive both returns and
impact? We are looking for either:
– An innovative financial structure or
– A known investment approach applied creatively to a problem previously outside the scope or
reach of a social or environmental challenge
• What’s interesting about this project? Is it just like a dozen others or truly innovative?
• Does the proposal have a unique capital structure, e.g., including different forms of capital,
employing diverse types of institutional investors?
• Does the proposal uncover new ways to drive returns, a new asset class, or a new cash flow or
value stream?
Impact and scale (25%)
• Does this provide a scalable solution that can mobilize sufficient capital and forge significant
environmental or human impact?
• Are there specific metrics for impact? Is the impact real and persistent?
• Does the impact derived from the proposed approach stem from the financial levers rather than
ancillary charitable remains?
• Has the team demonstrated diligence in defining and projecting impact to be derived?
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Judging criteria
Feasibility (25%)
• Does the investment thesis seem plausible?
• Are there real sources of risk-adjusted market rate returns here? (even if considering a gestation
period with concessionary returns)
• Could you see institutional investors responding to and funding this?
• Was the thesis thoroughly researched and is there strong evidence of financial depth that
incorporates the overall economy?
Quality of due diligence and financials (20%)
• How thorough and deep is the research on the thesis?
• Do the returns and cash flow projections hold water? Has the team demonstrated strong financial
logic and validity of key financial assumptions?
• Have the key investment questions relating to returns, asset quality, underwriting, and risk
management (both market-based and non-market) been identified and addressed?
• Does the team have the skills needed to execute? Have they defined the skills needed on the
investment team?
• Are the proposed fees and incentives reasonable?
Presentation (5%)
• Has the team been clear, compelling, and concise with their proposal?
• For the final event: Have all team members participated in either the original presentation or Q&A?
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Finals
• Ten (10) finalist teams chosen by March 6, 2017
• One month to further refine your proposal and prepare your pitch
• Final event on APRIL 7,
2017 in NYC at Morgan
Stanley’s offices
• Travel and hotel expenses
covered by the Challenge
2016 winners Terra Limpa, from USC Marshall at
Morgan Stanley offices in Hong Kong
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What’s at stake?
• 2017 Milken Institute Global Conference: Paid registration ($12,500 value
per person) and chance to present
• $10,000 prize for first place team
• $5,000 prize for runner up
• Potential job opportunities with firms involved in sustainable/impact
investing
• Chance to network with and get feedback from leading financial
professionals. Previous judges have included senior leaders from:
– Morgan Stanley
– OPIC
– Generation Investment Management
– World Bank
– MacArthur Foundation
– CalPERS
– Water Asset Management
• New this year: Eligibility for a finalist team to apply for a 1-year fellowship
to further develop the investment concept.
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Previous finalist teams
Terra Limpa, USC Marshall (1st place, 2016): increasing private investment in
agriculture in Angola to revitalize land productivity, eliminate landmines and
create a new class of smallholder farmers.
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Previous finalist team
Blue Forest Conservation Notes, Haas at UC Berkeley (1st place, 2015):
monetizes shared benefits of forest management, alleviating historic
droughts, reducing the risk of devastating forest fires, and generating jobs.
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Previous finalist team
CampoColombia, National University of Singapore Business School: (Runner-up,
2015): empowering displaced farmers in Colombia through real estate.
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Previous finalist team’s pitch
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Webinars
Video Title
Presentation
Learn about the Kellogg-Morgan Stanley Sustainable Investing
Challenge
View
Step up to the Challenge and form your team today
View
Kellogg Professor David Chen on recent developments in the
challenge
How would you change the world? Sustainable Investing
Challenge 2016 winners 'Terra Limpa' from USC
Red Ribbon Fund from Darden School of Business, University of
Virginia
Double Green Cores from Bogor University
View
View
View
View
Additional educational and informational webinars are available for viewing
here. (also on the site)
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www.sustainableinvestingchallenge.org
facebook.com/sustainableinvestingchallenge
@SI_Challenge
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