Southeast Asia & Asia Pacific

GenderSmart Regional Brief December 2020 Thank You to Our Supporters

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1 Summary

Gender lens investing is still in its early stages but growing rapidly in the region, with an increasing number of investment vehicles in almost all asset classes. Snapshot

Activity has surged over the last three years—with 39 gender- smart investment funds and vehicles in the region deploying $350M USD 350M in 2017-2019, compared with 33 deploying USD 43.3M in the last decade. There is also the Asian deployed (2017-2019) Development Bank’s ambitious target of “making 55% of all sovereign and non-sovereign investments meet the stringent requirements to be categorised as contributing to gender mainstreaming”. 90%

Funds span from under USD 5M to over USD 500M, with the of gender lens capital in most prevalent sectors including healthcare, education and Southeast Asia has targeted agriculture. Almost 90% of capital invested using a gender MFIs lens in Southeast Asia has targeted microfinance institutions (MFIs), given that they largely serve female customers, and investments which promote women’s financial inclusion . 9% However, women-led businesses are largely underfunded: 9% of total PE and VC funding in East Asia goes to female-led of total PE and VC funding in East Asia goes to women-led companies. As for the amount of median funding, female-led companies companies received only 40% of that going to male-led companies in East Asia. A Growing Focus on Diversity and $1.2T Gender Equality the finance gap for women-led MSMEs in East Asia and Pacific Gender diverse firms and funds in East Asia are reported to have an 18% increase in internal rate of return (IRR) compared to the median, while VC/PE funds managed by 52% gender-balanced teams proved to have higher total-value to of private investment vehicles in paid-in multiples relative to firms dominated by women or Asia have a gender-balanced IC men across emerging markets.

In East Asia, women have relatively better representation at 64% the senior leadership level for the private equity and venture capital sector, compared to the rest of the world. Globally, of Chinese investment only 10% of senior investment professionals are female in firms are female-led developed markets and 11% in emerging markets, yet in China, the percentage was 15% and 12% for other countries in East Asia (including Southeast Asia) 2 State of the Field

Growing Gender Lens Investment Top sectors for gender- smart investing in the region* 70% of active investment vehicles were set up in or after 2017, and capital has raised by 350% from 2018, to USD 815M in 2019. 1. Healthcare This rise has been largely driven by the private market. 2. Education 3. Agriculture Many of the gender lens investment funds are still raising capital, 4. Consumer with at least 67% of the investment vehicles open to qualified 5. Femtech investors. 6. IT 7. Consumer technology 8. Financial services 9. Food 10. Fintech

*source

3 Market Gaps and Potential

Market Gaps and Potential

Demand Side

Funding challenges Better data on business types Gender inequalities have Most women-owned or and needs deepened during COVID- women-led enterprises in Little existing research 19, as women tend to be Southeast Asia are describes the preferences, “low-paid and/or casual microenterprises, often at seed needs, or objectives of workers, with greater risk of and early stages and seeking prospective recipients of wage loss and smaller amounts of capital than gender lens capital, whether unemployment, limited many investors are willing to women-led or -owned access to healthcare and invest . businesses, businesses with a protective items.” large percentage of female This financing gap is a challenge staff, or businesses that serve but also a trillion dollar female customers. opportunity. In East Asia and Pacific, the finance gap for Social norms and context women-led MSMEs (Micro, Small Gender equality in workplaces & Medium Enterprises) is $1.2 is broadly recognised, but trillion. In Indonesia and women continue to encounter Vietnam, only 23% and 29% of discriminatory attitudes and women-led firms have bank practices . For instance in loans or lines of credit, Vietnam, the perception that compared to 29% and 44% for “women should be primarily firms led by men. responsible for child and family caretaking” is a norm that influences women and managers as decision-makers in recruitment and promotion.

4 Market Gaps and Potential

Market Gaps and Potential

Supply Side Opportunity to widen asset classes, themes and the investor base Given the size of the population and diversity of countries in East and Southeast Asia, gender lens vehicles do not cover all asset The lack of classes for all countries. There is a need for a greater number and diversity. local investors In East and Southeast Asia, female entrepreneurs or businesses focused on products and services for women, or with women- impacts the powered value chains, are still less visible in pipelines. Investments into women-owned or women-led enterprises account for less advancement than 10% of gender lens investments in Southeast Asia, as investors reported finding it difficult to source qualified investees. of gender China is a bright spark here: 64% of Chinese firms are female-led, finance in the and 33% of these outperform the next-best emerging market (Latin America and the Caribbean). There are many examples of region female-led VC and PE firms in China, such as Asia Alternatives, GGV Capital, and Capital Today.

Cambodia and Indonesia are smaller and underserved markets where women-owned and led SME's comprise the majority of unmet financing demand.

The lack of local investors has several consequences for the advancement of gender finance in the region. It increases the time required for deal sourcing, decision making and due diligence, increases the perceived risks associated with investing in the region, and limits investors’ ability to provide high-touch support to their investees.

Building consensus on definitions and data Gender-disaggregated data and gender specific impact metrics can be challenging to get for both early stage private companies as well as publicly-listed companies. Japan is the only country in Asia that mandates gender data disclosure from companies with over 300 employees.

Despite the strong momentum, one of the biggest challenges is awareness and acceptance of gender lens investing products by public and private investors. Many funds feel the need to brand as “impact investing” as opposed to “gender lens investing” to gain buy-in. Many investors also have preconceived notions about gender lens investing and the potential for returns. 5 Regional Players: A Snapshot

Types of Gender Lens Investors in the Region, and Examples

Market-driven investors who leverage gender metrics to increase market value and/or reduce risk

Value-driven investors who believe in commercial viability before proven success

Philanthropic and mission-driven investors who are catalytic and attract commercial investors through concessional capital and their own success stories

Private Market Funds and VC With a Gender Lens

There are 23 active vehicles targeting East and Southeast Asia and a total AUM of USD 815M in 2019, a 350% growth from USD 180M from 13 vehicles in 2018.

The average target fund size has also increased 6.7x to USD 111M in 2018. The average capital raised per investment vehicle increased to USD 39m in 2019 from USD 14M in 2018.

Growth has been led by equity-based investment vehicles (USD 576M in 2019), followed by mezzanine investment vehicles (USD 131M in 2019), which have the flexibility to invest in both debt and equity.

There is a snapshot of active gender-smart funds below - this is not an exhaustive list.

6 Regional Players Snapshot of active gender-smart funds

The ANGIN (Angel Investment Network) Indonesia The first gender lens fund in Indonesia was established by 15 local HNWIs to support and invest in businesses led or owned by female Women Fund entrepreneurs. The fund has made five investments to date and provided training to more than 100 women-led businesses.

Bamboo Capital Partners Southeast Asia Bamboo Capital Partners launched the CARE- SheTrades Fund in 2019 in partnership with CARE CARE- Enterprises Inc and The International Trade Center SheTades (ITC). The fund will invest in women-led/owned Fund: USD75M businesses in South and Southeast Asia.

BIDUK Flexible debt products designed to close the funding Indonesia gap for women-owned Small and Growing Businesses (SGBs) in Indonesia. Launched by Athena Loans range between Global Alliance in March 2019. USD 15k-75k

BlueOrchard ASEAN region JAWEF is a three-tiered fund that leverages first-loss and mezzanine tranches to mobilize institutional Japan ASEAN Women investors in the senior tranche. Empowerment Fund: USD 241M

Capital 4 Development (C4D) India, The Dutch impact investment manager launched Indonesia, and their Asia Fund in 2018, raising USD30m at the first the Philippines close in 2019. The fund supports SMEs that address and solve local challenges and/or industry Asia Fund: inefficiencies. USD30M

7 Regional Players

Snapshot of gender-smart funds: continued

Emerging Markets Impact Investment Fund (EMIIF) Indo-Pacific EMIIF will invest in funds that target early and growth stage SMEs using a range of non-grant financial instruments such as loans, equity and guarantees to USD 40M encourage additional investment into investee funds from private investors. Its investment strategy uses a gender lens to identify and make investments in SMEs that are women-led, provide products and services for women and girls, or promote gender equality in their workplaces.

Moonshot Ventures The Indonesia Women Empowerment Fund (IWEF) Southeast Asia launched in 2019 and invests in disruptive tech Indonesia Women solutions led by gender-balanced start-up teams. Empowerment Fund: USD 20M

Patamar Capital and Beacon Fund Southeast and Patamar partnered with Investing in Women to South Asia establish a Southeast Asia-focused gender lens investing evergreen fund which provides debt and Beacon Fund: equity to women’s SMEs. Now fully invested into 14 USD 50M companies.

Root Capital Indonesia Provide loans to agricultural businesses in Indonesia, with a focus on Sumatra's coffee cooperatives - n/a where women play a key role as farmers and leaders.

Sasakawa Peace Foundation Asia Investments to date: BlueOrchard Microfinance Fund (BOMF) and Japan’s ASEAN Women Asia Women Empowerment Fund (JAWEF). Impact Fund: USD 100M

8 Regional Players

Snapshot of gender-smart funds: continued

Shinsei Bank Group Japan One of the largest financial groups in Japan. Their Child-care Support second fund, HATARAKU Fund, was launched in Fund: USD5M / 2019, targeted at care economy innovation. HATARAKU Fund: USD 50M

Small Enterprise Assistance Fund (SEAF) Asia SEAF’s strategy focuses on women-led firms, women’s sectors, women’s products and role models that commit to gender equality. Four vehicles including Women Opportunity Fund

Teja Ventures Asia Founded in 2018, they aspire to make gender lens investing a mainstream approach, by selecting VC Fund focused companies which use technology to unlock on the 'She ecosystem impact for women and with Economy' commercially scalable business models.

YCAB Ventures Indonesian firm that invests in economic Indonesia empowerment activities to end poverty and reduce Indonesia inequality. Through its microfinance activities, YCAB Women Ventures has financed over 150,000 women-owned Empowerment businesses through 600,000 loans. Fund: USD 20M

YellowDog Founded in 2016 and currently with USD100m in South Korea, Vietnam AUM, the South Korea-based VC firm is one of four and Indonesia VC firms led by a female managing partner in the Yellowdog country. Empower's Fund: USD 5M

9 Public Market Gender Lens Funds

Asia has the second largest number of public market investment vehicles after North America, and it’s growing rapidly with a total AUM of USD 478M. 5 of the 10 funds in Asia launched after 2017. As of 2020, there are 7 open-ended funds, 2 exchange-traded funds, and 1 listed-gender bond. 8 of the 10 funds are based in Japan, underpinned largely by Japan’s policy on Womenomics. With the exception of Daiwa’s Women Supporter Mother Fund with an AUM of USD332M, the average AUM of Asia public market investment vehicles is relatively small compared to their global counterparts.

Meritz The Woman Securities Investment Company - Equity The first gender-lens public market fund in South Korea, launched 2018. It's an open-end fund with AUM of around USD 2M, investing in listed companies across various industries that promote gender equality in South Korea. They have invested in 30 listed companies across various industries. Most of their investors are retail (gender equality is not yet a common stock- picking strategy among institutional investors in South Korea).

Daiwa Women Supporter Mother Fund (Japan) (MOWOSUPP:JP) Daiwa introduced the fund (nicknamed “Tsubaki”, meaning Camellia Flower in Japanese) in March 2015. It is the largest public market gender lens fund in Asia, with an AUM of USD 332M. The fund invests in “companies considered to help women to play an active role from an ESG perspective, companies supporting women’s active participation in society, companies providing products and services that target women or are popular among women, and companies benefiting from increases in women’s incomes” BNY Mellon Dreyfus Japan Womenomics Fund (DJWAX, DJWCX, DJWIX, DJWYX) BNY Mellon has launched two gender lens open-end funds, Women Power Japan Equity Mother Fund (MOB5EMLS:JP) in Japan in 2014 and Dreyfus Japan Womenomics Fund in the U.S. in 2018, with an AUM of USD 18M and 2M respectively. BNY Mellon Dreyfus Japan Womenomics Fund invests at least 80% in Japanese-listed companies with a belief that it will benefit from the Japanese Government’s “Womenomics” initiatives.

Nomura Asset Management NEXT FUNDS MSCI Japan Empowering Women Select Index ETF (2518 JP)

Nomura launched the index in May 2018 on the Tokyo Stock Exchange. The fund tracks the MSCI Japan Empowering Women JPY Index, investing in Japanese companies that are committed to promote gender diversity in the workplace.

10 Regional Players

Gender Bonds

ADB Gender Bond In 2017, ADB issued its first gender bond to finance gender Asia and the empowerment projects in Asia and the Pacific. The bond was Pacific purchased entirely by Dai-ichi Life Insurance Company, Limited of USD 90M Japan.

IIX Women's Livelihood Bond 2 (WLB2)™ The first Women’s Livelihood Bond (WLB1) was oversubscribed by Southeast Asia investors, and raised US$8M in private capital to empower 385,000 underserved women across Southeast Asia to transition USD 100M from subsistence to sustainable livelihoods. The second Women’s Livelihood Bond 2 (WLB2) is a debt security issued over 3-4 tranches that benefits at least 1 million women across Asia.

Krungsri (Bank of Ayudhya) Women Entrepreneurs Bond Thailand One of Thailand’s largest universal banks with 70% female workforce. The bank has committed to annual public reporting on USD 220M the allocation of funds to women-owned businesses.

National Australia Bank Gender Equality Social Bond Australia National Australia Bank sold USD 384m Gender Equality Social Bond in March 2017 to institutional investors, supporting Australian organisations that advance gender equality in the USD 384M workplace.

QBE Gender Equality Bond Multiple, inc QBE Insurance Group Limited, headquartered in Sydney, issued a Australia USD 541m gender equality bond in 2017 and used the proceeds USD 541M to finance and/or refinance investments in organisations that are fostering workplace gender equality.

PUBLIC SECTOR Japan Government Pension Investment Fund (GPIF) The largest pension fund in the world (AUM USD1.6T) considers gender equality crucial in achieving stable returns in the long-term and invested in MSCI Japan Empowering Women Index (WIN) in 2017 before any data linking workplace gender equality and stock performance existed. Now, WIN is one of their best performing indices. GPIF aims to encourage data transparency among corporations and requires that all indices be built based on publicly available information. GPIF also aims to invest in other gender-focused indices outside of Japan.

11 Regional Players Advocacy Networks, Consultancies and Accelerators

30% Club Japan 30% Club Japan is an organisation aiming to Japan improve gender balance on boards and in senior management at corporations.

Frontier Brokers (Network and Incubators) Asia and the Frontier Brokers comprises a network of 7 impact Pacific investment firms implementing 4 projects using a gender lens to address weaknesses in the current ecosystem and stimulate more appropriate types of capital reaching social enterprises. Frontier Incubators is a group of 31 incubators from 17 countries from across Asia and the Pacific.

Impact Connect Building gender-equitable and flexible debt Cambodia and financing in Asia-Pacific that links small and medium Indonesia enterprises (SMEs) with access to finance.

Investing in Women Philippines, Investing in Women, established in 2016 by the Indonesia, Australian Government, improves women’s Vietnam and economic participation as employees and as Myanmar entrepreneurs and promotes women’s economic empowerment.

Lean In China China Founded in 2013 by Virginia Tan (She Loves Tech), it is now one of Asia’s largest communities for women (100,000 women across China).

Pacific RISE Pacific Pacific RISE is a programme launched in 2016 by the Australian Government’s Department of Foreign Affairs and Trade (DFAT), with a goal to attract at least USD10M of new private investment into the 14 Pacific island countries by July 2021.

Villgro Philippines Philippines An early stage incubator. They launched the “WE Rise” accelerator in response to COVID-19 to help women entrepreneurs unlock capital. 12 Barriers and Innovations

Private Equity/VC

While most gender lens investment vehicles have a similar compensation structure like traditional PE/VC funds, some have created innovative impact- based incentive structures. For instance, Capital 4 Development Partners combines carry distribution with gender-based targets for their C4D Asia Fund. Carry distribution would reduce by 50% if a gender-based target is not achieved. Similar incentive design is used by Bamboo Capital Partners for their CARE SheTrades Impact Fund.

To incentivise more funding, some are using de-risking mechanisms and other catalytic programmes, such as that by Australian Government and Australia’s Department of Foreign Affairs and Trade (DFAT) Investing in Women (IW). Grant capital is provided to multiple gender lens fund managers to cover some of their costs and improve their pipelines.

A number of gender lens fund managers in East and Southeast Asia are actively developing the gender lens investing ecosystem by supporting a much broader base of entrepreneurs than are in their investment portfolios (with specific programs like ‘Founders Office Hours’ and coaching for entrepreneurs pre- investment), connecting with other fund managers to share pipeline, building and sharing new tools and more.

LPs in South East Asia have been driving more private impact investors to invest with a gender lens investing mandate. In some cases private impact investors have launched funds specifically to align with LP intent to invest with a gender lens. Some local LPs have also joined together to channel capital using a gender lens e.g. ANGIN Women Fund.

DFIs, governments, multilaterals and foundations have attracted commercial investors to gender lens investments in the region through de-risking mechanisms including providing grant capital, investing in junior tranches, providing first-loss capital, and adding technical assistance.

13 Barriers and Innovations

Public Market Strategies

Japan appears to be the only country in Asia that mandates gender data disclosure from companies with over 300 employees. Those companies must disclose at least one indicator around gender equality in the workplace and work-life balance. They must also share an action plan to improve the above- mentioned areas internally and externally. Additionally, Japan’s Investor Stewardship Code and Corporate Governance Code ensures appropriate information and transparency is publicly disclosed. Such data disclosure requirement contributes to the creation of indices such as MSCI Japan Women Empowerment Index (WIN) and its sub-indices, which have been invested in by large mainstream investors including GPIF (with around USD 4.4B as of March 2019).

None of the Asian retail investment vehicles are involved in shareholder advocacy. However, globally ~38% of retail investment vehicles are involved in shareholder advocacy.

Sources

The Sasakawa Peace Foundation (2020). Gender Lens Investing Landscape: East and Southeast Asia. Investing in Women (2020). The Advance of Impact Investing in Southeast Asia. GIIN (2018). The Landscape for Impact Investing in Southeast Asia International Finance Corporation (2019). Moving Toward Gender Balance In Private Equity and Venture Capital Value for Women (2020). How To Invest With A Gender Lens: A guide for investors in emerging markets SME Finance Forum. MSME Finance Gap Database. Accessed: 2 December, 2020. Investing in Women (2018). Attitudes to equality: Understanding social norms, perceptions and practices around gender in Indonesia, the Philippines and Vietnam Investing in Women (2020) Investigating gendered social norms affecting women’s economic participation related to recruitment and promotion in Vietnam Asia Pacific Forum (2020). The Impact of COVID-19 on Women and Girls: A Snapshot of Responses from Nine National Human Rights Institutions in the Asia Pacific Region World Bank World Development Indicators

14 Notes and Acknowledgements

This brief was written for anyone working or investing in Southeast Asia and Asia Pacific, in advance of the GenderSmart regional deep dive discussion in December 2020. It is designed as a snapshot, to provide context and a springboard for discussion, and is not intended to be exhaustive by any means. There are many other noteworthy ecosystem actors not mentioned in these pages.

In particular, we want to acknowledge the organisations who work on gender issues in the region and have contextual expertise relevant to gender-smart investing. They have been omitted from this and other regional briefs for the sake of brevity, but leaders in these organisations are not often invited, resourced or equipped to be at the table in investment decision making or investment conversations. Good gender lens investors want to include, wherever possible, data and insights from key women’s rights or civil society organisations regarding gender patterns relevant to those investments. In developing local ecosystems, it is important to build opportunities for and ability of these organisations to do gender analysis of markets, to provide relevant technical assistance to investors or their investees and to determine how specific gender patterns inform risks and opportunities in investments. Criterion Institute is writing a brief to help investors understand how to find and work with such organisations. Stay tuned for that release.

Thank you to numerous contributors to this brief: Bonnie Chiu and Yu Shan at The Social Investment Consultancy, Kaylene Alvarez and Ramona Ridolfi at BIDUK, Jennifer Chien from IIX, and Diana Tjoeng and Rachel Jones at Good Return. Additional guidance and edits were provided by Sana Kapadia and Suzanne Biegel at GenderSmart, and Joy Anderson at Criterion Institute. 15