Chris Hart, the Executive Chairman of Impact Investment Group, shares his personal experience of how the company grew into an R1bn assets under management. The concept of impact investing emerged almost 20 years ago, when Chris Hart was working for Investment Solutions (now known as Alexander Forbes Investments). At that time, there was pressure to allocate a portion of the portfolio to sustainable, responsible investing. However, the pension funds that were invested were not there for experimental or charitable purposes; instead, they needed to deliver returns ultimately to the actual clients. In addition, challenges with the various legislations meant it was difficult to manage the investments. So, Chris Hart started Impact Investing, which aimed to answer the questions that they were struggling with at Investment Solutions. The company worked on designing a suite of products that would be regarded by institutional funds as credible and investable. The company decided that they needed a rolling portfolio to give performance results that would be smoothed out over time and reduce risks in the portfolio while getting higher returns. Diversification was one of the things they took on board, as traditional asset classes were getting stale in South Africa. After the conceptualisation phase was over, the company moved to the operational stage of the business, which started in a Parktown office, in a relationship with another company called etfSA which was running exchange-traded funds under a Category II Financial Services Provider Licence. The company built the business, and after building the track record of the business, gained substance and credibility.
The beginning of Section 12J
Section 12J is a tax incentive introduced by the South African government in 2009 to encourage investment in small and medium-sized enterprises (SMEs). As Chris mentioned earlier, it was implemented as part of the Income Tax Act to incentivise investors to provide equity finance to SMEs, which historically have had limited access to funding. By investing in a Section 12J company, investors can receive a tax deduction of the amount invested in the company, which can be used to reduce their taxable income in the year the investment was made. This tax incentive has become a popular investment option for high-net-worth individuals and corporates looking to reduce their tax liabilities while supporting the growth of SMEs in South Africa.
Initially, Impact struggled when it started with section 12J, but it eventually grew by leaps and bounds. The timeline below shows the growth of Impact through Section 12J.
Section 12J Timeline
The Beginning of Section 12B
Impact Energy Solutions is a subsidiary of Impact Investment Group, and it focuses on investing in renewable energy projects in South Africa. The company was founded in 2022 and is led by experienced energy industry professionals who are passionate about creating sustainable and environmentally friendly energy solutions for South Africa.
In terms of Section 12B, this tax incentive is designed to encourage investment in manufacturing and production assets in South Africa. Impact Energy Solutions has been able to take advantage of this incentive by investing in renewable energy production assets, such as solar power plants and wind farms. These investments not only generate clean energy but also provide jobs and contribute to the development of local communities.
Overall, Impact Energy Solutions is an important part of Impact Investment Management’s portfolio of investments, and its focus on renewable energy aligns with the company’s broader vision of creating positive social and economic impact in South Africa. The use of Section 12B tax incentives has enabled the company to make strategic investments in the renewable energy sector and contribute to the growth and development of the South African economy.
Chris Hart is a renowned South African economist and strategist who has had a successful career spanning several decades. He has worked for several high-profile organisations, including the Standard Bank Group, the Investment Solutions Group, and the Centre for Risk Analysis. Throughout his career, Chris Hart has been a regular commentator on economic issues in various media outlets and is known for his thought-provoking opinions and analysis. His expertise in economics and finance has been invaluable to the organisations he has worked for, and he continues to be highly regarded by his peers and colleagues.
In addition to his work as an economist and strategist, Chris Hart is also one of the founders of Impact Investment Management, a venture capital firm that specializes in investing in SMEs in South Africa. Through Impact, Chris Hart has been able to apply his knowledge and expertise to identify and invest in high-growth potential SMEs that are poised to make a significant impact on the South African economy. Chris Hart’s involvement in Impact has been crucial to its success, and he continues to be an active participant in the firm’s management and decision-making processes.
Over the years, Chris Hart has been involved in various initiatives aimed at promoting economic growth and development in South Africa. He has played an instrumental role in establishing Section 12J as a tax incentive for investing in small and medium-sized enterprises (SMEs), which has helped to mobilize significant capital towards this sector of the economy. Chris Hart is widely regarded as one of the pioneers of the Section 12J tax incentive and his expertise has been instrumental in its success.
The vision of Chris Hart and Impact Investment Management is to create a positive impact on the South African economy by investing in small and medium-sized enterprises (SMEs). Chris Hart and his team believe that by supporting these businesses, they can help to create jobs, stimulate economic growth, and contribute to the development of the country as a whole. Their focus on Section 12J investments is driven by their belief that this tax incentive can be a powerful tool for unlocking capital and directing it towards SMEs that have the potential to drive positive change in their communities. Chris Hart and the team at Impact are committed to using their expertise and resources to identify and support promising SMEs and to help them reach their full potential. Through their work, they hope to create a more prosperous and inclusive South Africa for all.
Overall, Chris Hart’s career has been marked by his commitment to promoting economic growth and development in South Africa. His expertise in economics and finance has been invaluable to the organizations he has worked for, and his involvement in establishing Section 12J as a tax incentive and co-founding Impact Investment Management has helped to mobilize significant capital towards SMEs in South Africa. He is widely regarded as one of the most respected economists in the country and continues to be a thought leader in the field of economics and finance. With his visionary approach and dedication to promoting economic growth and development, Hart is an asset to South Africa’s economy and the broader business community.