Labs

The Milken Institute's signature tool for generating solutions is the Financial Innovations Lab.® Each Lab assembles a multidisciplinary group of investors, industry experts and public officials to tackle a specific financing or policy question. During an intensive daylong workshop, they explore the problem from every angle. It's a roll-up-your-sleeves approach that encourages collaboration and practicality. The results are fully documented in our Financial Innovations Lab Reports — and the recommendations are ready to be put to work in the marketplace and the policy arena.

2018

31

July 2018

Financing Resilient Urban Infrastructure in Global Cities: Los Angeles

Wells Fargo Center Library Hub at 333 South Grand Avenue in Downtown Los Angeles.

The Lab is part of a series of workshops, held in partnership with AECOM, that will examine ways to engage and accelerate new forms of capital to the infrastructure space and explore innovative value capture mechanisms to close the funding gap across a handful of global cities.

The Lab will bring together a group of investors, government decision-makers, project developers and industry experts to address the current challenges through more innovative financing and policy design. This workshop will have participants focus on the revitalization of Los Angeles’ Union Station as a case study, and map out practical, real-time solutions to finance the current funding gap. Participants will explore the areas of public-private partnerships, tax increment financing, and discuss the newly approved Opportunity Zone legislation. Attendees will also review past transit projects to asses lessons learned. The session will provide an opportunity to map out a strategic plan, with concrete action items, to scale market demand.

This event is one in a series of Financial Innovations Labs. This Milken Institute research tool brings together researchers and policymakers with business, finance and professional practitioners to create market-based solutions to business and public policy challenges. The findings of these interactive Labs are publicly distributed. Previous topics have included residential energy-efficiency, small-business financing, archaeological discovery and conservation, and biomedical research and development. (Click here for samples of reports from previous Labs.)

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27

February 2018

Growing the U.S. Green Bond Market

 Milken Institute’s Headquarters, 1250 Fourth Street, Santa Monica

The Lab is part of a two-day Symposium (hyperlink to:http://www.treasurer.ca.gov/greenbonds/index.asp), co-hosted by the Milken Institute, Environmental Finance, and California’s State Treasurer John Chiang. The state has been a leader in environmental initiatives, pioneering policies on everything from cap-and-trade to electric vehicles. As the effects of climate change become a daily reality, California can once again lead the way in designing financing mechanisms that can support environmentally friendly infrastructure. Green bonds offer an opportunity to align incentives and meet the needs of states, project developers and investors. However, challenges have prevented the market from scalable growth.

The Lab will bring together a group of investors, government decision-makers, issuers, underwriters and industry experts to address the current challenges through more innovative product and policy design. Participants will map out practical, real-time solutions in areas of green label standardization, streamlined legal disclosures, accessibility to data and benchmark pricing in line with financial and environmental credit ratings. Attendees will also review potential programs to attract different types of investors, from a green Build America Bond to an aggregated regional pool of smaller issuances. The session will provide an opportunity to map out a strategic plan, with concrete action items, to scale market demand.

This event is one in a series of Financial Innovations Labs. This Milken Institute research tool brings together researchers and policymakers with business, finance and professional practitioners to create market-based solutions to business and public policy challenges. The findings of these interactive Labs are publicly distributed. Previous topics have included residential energy-efficiency, small-business financing, archaeological discovery and conservation, and biomedical research and development. (Click here for samples of reports from previous Labs.)

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2017

25

September 2017

Financial Innovations Lab Report Launch Event: Financing Models to Expand Access to Electric Vehicles in California

La Kretz Innovation Campus
525 S Hewitt Street, Los Angeles, California 90013

The Milken Institute is pleased to invite you to a special launch event for our latest Financial Innovations Lab report: Financing Models to Expand Access to Electric Vehicles in California. This event will take place on Monday, September 25 from 2:00 to 4:30 pm at the La Kretz Innovation Campus, 525 S Hewitt Street, Los Angeles, California.

As a leader in environmental initiatives, California has been able to incentivize the adoption electric vehicles (EVs) through rebates and other operational incentives, but there is still a gap in the adoption rates of these vehicles in disadvantaged communities. This specific subset of the population is disproportionately exposed to pollution and is often excluded from the new car market because of the financial commitment. The Milken Institute convened a Financial Innovations Lab in April to workshop solutions that can help make EVs more accessible to disadvantaged communities. The report synthesizes the discussion and outcomes of the session, explores the barriers that exist, whether financial or awareness and identifies solutions and next steps for greater community adoption. Please click here for the full report.

The launch session will bring together representatives from the investment community, local government, community leaders and industry experts to discuss the actionable next steps necessary to implement the financial models discussed in the report.

Event Agenda

2:00-2:30 p.m. – Registration
2:30-3:00 p.m. – Introductory Remarks and Summary Presentation of Financial Innovations Lab Report: Financing Models to Expand Access to Electric Vehicles in California
3:00-4:00 p.m. – Panel Discussion: Actionable Next Steps for Successful Implementation of Solutions 
4:00-4:30 p.m. – Q&A and Concluding Remarks

About Financial Innovations Labs

This event is one component of a series of Financial Innovations Labs. This Milken Institute research tool brings together researchers and policymakers with business, finance and professional practitioners to create market-based solutions to business and public policy challenges. The findings of these interactive Labs are publicly distributed. Previous topics have included residential energy-efficiency, small-business financing, archaeological discovery and conservation, and biomedical research and development. (Click here for samples of reports from previous Labs.)

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2016

14

September 2016

Investment in Asia’s Infrastructure

Singapore

Housing 62% of the world’s population, Asia has a significant need for sufficient and reliable infrastructure to meet the demands for economic growth in the region. Current estimates show about $8 trillion in infrastructure development is needed by 2020 and the region suffers from a largely underdeveloped bond market, leaving most projects to be financed by traditional bank loans. The goal of this Lab is to explore and prioritize different funding mechanisms needed to meet the vast demand in the region.

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29

July 2016

New Models for Financing Vaccination Programs

Jakarta, Indonesia

Donor funding alone is insufficient to bring new vaccines to the market, particularly as countries become more economically stable and graduate from traditional funding sources. New pools of capital must be tapped to scale up funding and make current aid more effective. The goal of this Lab is to review, prioritize, and prepare for implementation of financing mechanisms of vaccine programs. 

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2015

12

October 2015

Investing in Africa’s Infrastructure

London

To generate ideas on how to most effectively deploy private sector investment in Africa’s infrastructure, the Milken Institute in collaboration with the U.S. Agency for International Development, convened experts from the public and private sectors for a Financial Innovations Lab in October 2015. The Lab provided a deeper dive into the 2014 Lab on Investing in Energy Infrastructure in Africa. Participants discussed the types of products that could be most effectively deployed in Africa, the policy and capital markets development that would be necessary to deploy capital , and the types of products that the domestic and international investors could participate in.
Lab participants identified a number of barriers to investment, including:
  • Credit and sovereign risk
  • Financial risk and limited product offerings
  • Deal Implementation
Operational solutions to address these risks such as creating a deal “exchange” and a shadow ratings system were explored. These solutions would create a framework for investors to increase liquidity and transparency in an otherwise less well-known market. The Institute’s report further outlined financial solutions to attract institutional investor capital. These solutions included the creation of project bonds to raise both domestic and international capital, infrastructure debt funds that would lead to the creation of a synthetic secondary market to enhance liquidity, infrastructure banks and quasi-public permanent capital facilities that would leverage public funds to attract private investment through public private partnerships, and 
equity funds with the government serving as first-loss capital

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16

July 2015

Financing the Control of Tuberculosis

Joannesburg, South Africa

South Africa has the third-highest incidence of TB in the world after China and India. It also has the second-highest incidence of MDR-TB after India; in 2013, that incidence was 860 per 100,000 people. Within South Africa, a high concentration of TB patients work in the mining industry, which in 2013 employed more than 500,000 direct workers and another 500,000 indirect workers and where TB rates currently run as high as 2,500–3,000 per 100,000 workers, or 10 times the WHO designation for a health emergency.
This Lab was designed to delve deeper into specific funding gaps and financing models that were explored in the April 2015 Lab, New Partnership Models to Address Tuberculosis. Participants discussed the largest funding gaps in TB financing and the types of collaboration and funding that are attractive at each stage of the value chain. The Lab used South Africa’s gold mines as the context in which to build a pilot project to implement one of the following proposed models:
  • Micro-levies or taxes on some part of the gold market to help fund TB prevention and treatment.
  • Social Impact Bonds to monetize cost savings from a reduction in cases of the disease as a payout for investors in a service intervention program.
  • Pooled Donor Trust to distribute grants to organizations to meet R&D needs for TB, specifically coordinating among mining companies and other extractive industries.
  • Investment Guarantees and Loan products to fund parts of the TB value chain that could generate profit, such as vaccines or diagnostics.

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14

April 2015

Collaboration and Financing: New Partnership Models to Address Tuberculosis

Wellcome Trust Conference Centre, 183 Euston Road, London

The economic burden of tuberculosis on governments and businesses in affected countries has been estimated in the range of billions of dollars per year. From prevention to treatment, the direct and indirect costs of the disease are staggering and will plague emerging and frontier markets for decades through lost productivity and health care expenditures. Traditional sources of funding from governments and donors are inadequate to support all of the necessary interventions. New industry stakeholders must be engaged and new financing models must be developed to scale up resources from industry, investors and donors. 

With a goal of promoting wider implementation among key stakeholders, this session will bring together a small group of industry leaders, donors and global health experts to review financing mechanisms, from a social impact bond to risk mitigation tools that support new investment funds. These models could provide funding at various stages of the product development value chain, ensuring that both prevention and treatment are better capitalized to make a significant impact. The session will provide an opportunity to map out next steps toward increased adoption of the relevant models.

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03

February 2015

Creating Mechanisms for Conservation Finance in Asia

Singapore

Conservation of natural resources is one of the most significant global challenges we face today. It impacts our environments, our communities and our health. This is specifically important in Asia, as development and growth have contributed to habitat destruction, the extinction of species and the pollution of natural resources.

To meet global conservation needs, an estimated $300 to $400 billion must be invested. In order to bridge the current funding gap, a fundamental shift needs to happen to include not only traditional donors and funders, but also new potential capital sources such as banks, financial intermediaries and institutional investors.

Some industry experts suggest that new investors, such as high net worth individuals, pension funds, endowments, family offices and mainstream retail investors could provide as much as $200 to $300 billion annual for conservation activities. However, this shift to more market-based funding would require that projects produce long-term cash flows to support conservation while also generating a positive financial return for investors. To meet this need, investable cash flows from conservation projects would need to be at least 20 – 30% greater than current levels.

To this end, the Milken Institute Asia Center convened a day-long Financial Innovations Lab in February 2015 with industry stakeholders, NGO’s, donors and investors to discuss the potential innovative financing mechanisms for conservation. The Lab was based on a previous pre-Lab workshop which addressed current funding gaps and barriers to investment, to help conservation organizations better understand how to find the right types of financing to meet their needs.

The Lab participants reviewed existing case studies and explored various emerging financial tools to attracting a larger audience of investors. The participants created a series of financial and policy recommendations for implementation. The financial recommendations included exploring innovative financing options such as:

  • Conservation community investment notes
  • Social and development impact bonds
  • Investment and revolving funds
  • Better positive ESG screenings
  • Risk-sharing products such as guarantees or advanced market commitments, specifically tailored to conservation

The policy recommendations developed included training and educational platforms to help bridge the communication gap between the conservation industry and the financial community, a mapping of natural capital for conservation projects, allowing conservation NGO’s to serve as investment advisors to certify projects as investable opportunities, and requiring regional and domestic banks to develop better understanding and implementation of sector level ESG policies and guidelines.  

The results from the Lab, including recommendations for next steps for implementation, have been published: view full report here. For more information, contact Caitlin MacLean, Director of Innovative Finance at cmaclean@milkeninstitute.org

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2014

27

October 2014

Moving Past the Barriers: Investing in Energy Infrastructure in Africa

London

To generate ideas to expand energy infrastructure investment in the region, the Milken Institute, in collaboration with the U.S. Agency for International Development, convened experts from the public and private sectors for a Financial Innovations Lab in October 2014. The Lab, titled “Moving Past the Barriers: Investing in Energy Infrastructure in Africa,” included senior leaders in private-sector energy investments, multi- and bilateral organizations, and corporations, along with representatives of financial institutions. Exploring ways to improve efficiency in transaction management and widen access to capital, they produced concrete solutions Africa can pursue now to close the significant funding gap.

Lab participants identified a number of barriers to private investment in energy infrastructure, including:

  • A shortage of technical competence. Investments currently require intensive expertise in the infrastructure sector in Africa as well as the financial environment in each country. Since structuring bankable deals requires great effort, it takes seven years, on average, to close a project in sub-Saharan Africa  
  • Lack of robust pipeline with appropriate risk/return pricing
  • Absence of track record and history of successful deals. As a result, many deals require a sovereign guarantee or credit enhancement
  • High currency/FX risk. Many investors cannot take liquid currency risk in Africa. Typically, hedging is either expensive or unavailable and therefore projects may be unbankable
  • High political and regulatory risk. There is no assurance of government continuity or regulatory predictability

The Institute’s report outlines strategies for alleviating the major risks addressed at the Lab and expanding the financial tools to engage the largest pools of institutional investor capital. Among them:

  • Developing an independent credit rating agency to provide more security and standardization of infrastructure investment projects
  • Identify investors for each level of risk and assemble a portfolio of projects for investors
  • Address investors’ concerns regarding technical expertise in infrastructure by creating familiar financial structures
  • To address the challenge of investments requiring sovereign guarantees, private-sector investors will work with public agencies to create a guarantee or funding mechanism to reduce credit risk

Results from the Lab, including recommended next steps for implementation, will be published soon. For information, contact Caitlin MacLean, associate director of Financial Innovations Labs, at cmaclean@milkeninstitute.org.

 

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11

August 2014

Industrial Diversification in Bangladesh: Opportunities and Challenges

Singapore 

Like many other developing countries, Bangladesh has been able to leverage its low-cost labor to fire its economic growth and attract domestic and foreign investment. This has provided short- and medium-term growth, making Bangladesh second only to China in global export in the ready-made garment market.

Despite its strong position in certain manufacturing sectors, Bangladesh faces a variety of economic challenges. What new industries must expand in order to diversify the economy? How can the country position attract more foreign direct investment?

To address these issues, the Milken Institute, in partnership with the Bangladesh Enterprise Institute, convened a two-day Financial Innovations Lab™, "Industrial Diversification in Bangladesh: Opportunities and Challenges." The Lab brought together government leaders, investors, finance experts and economic development thought leaders to analyze best practices that apply to the country and to provide leaders in Bangladesh with specific recommendations. Based on lessons learned from countries like Singapore that moved from a labor-intensive economy to one focused more on capital and high-skill industries, the discussion led to the beginning of a framework taking the Bangladeshi economy forward.

As next steps, the Milken Institute will prepare a report outlining an implementation plan that can be used by the public and private sectors in Bangladesh. 

For more information, contact Caitlin MacLean, associate director of Financial Innovations Labs, at cmaclean@milkeninstitute.org. 

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25

March 2014

Implementing Solutions to Increase Financial Access for Underserved Populations in Israel

Jerusalem

Significant segments of Israel's population are not served by formal financial institutions and as a result do not participate in the country's economy. Without access to traditional credit services and savings products, personal finances are strained and small businesses cannot grow.

The supply of potential financing options is limited by a lack of transparency and standardization in credit scoring and the measurement of poverty as well as inadequate incentives for the highly concentrated banking sector to offer adequate credit and savings options. The demand for such options is stunted by the lack of community-based and non-bank institutions as well as a general gap in financial literacy programs.

There are a number of financial inclusion initiatives and programs either under way or being developed in Israel today. However, many regulatory, financial and operational gaps need to be filled to ensure success. Toward this end, the Milken Institute and Citi are convening a Financial Innovations Lab. to craft a roadmap to creating workable business models that will act as the basis for institutions and interest groups to help Israel's underserved markets access financial services.

This workshop will address mobilizing new sources of capital for community investment, asset-building and savings products, consumer access to credit, pre-paid and credit cards, and U.S. best practices and models for microfinance practitioners. The diverse backgrounds of attendees - government experts from the Ministry of Finance and Bank of Israel, senior officials from financial institutions, and leaders of domestic and international community development organizations such as Accion US Network, the Corporation for Enterprise Development and the National Federation of Community Development Credit Unions - will facilitate the discussion of the actual application and implementation of solutions as well as the required policy and regulatory adjustments.

Results from the Lab, including recommended next steps for implementation, will be published soon. For information, contact Caitlin MacLean, associate director of Financial Innovations Labs, at cmaclean@milkeninstitute.org.

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08

January 2014

Moving Past the Barriers: Implementing Public-Private Infrastructure Financing Solutions

Washington, D.C.

Infrastructure development is critical to the overall competitiveness of every sector of the economy, and it is essential if the U.S. is to increase exports of agricultural products, energy, manufactured goods and raw materials. The demand for innovative infrastructure financing continues to grow, yet scaling up current programs and implementing new funding models has been slow to progress in the United States.

With new proposed legislation at a national level and state programs beginning to spur investment, the time to plan for implementing new financing models is now. There has been some success in attracting private capital to augment public investment in infrastructure, from private activity bonds to the TIFIA program and state infrastructure banks, but whether and how current models and approaches can be adapted and scaled to attract the amount of investment needed remain open to debate.

This Financial Innovations Lab, held in Washington, D.C., in coordination with the U.S. Department of Agriculture's Office of Energy Policy and New Uses, will bring together a group of investors, government decision-makers and infrastructure experts to evaluate emerging financing models and craft recommendations to break past the log jams impeding implementation. Proposals for national or regional finance authorities, a national infrastructure bank or center of excellence, as well as the expansion of existing programs, including state financing agencies, will be vetted for viability and potential impact. The session will provide an opportunity to map out a strategic plan with concrete action items to catalyze increased investment.

Results from the Lab, including recommended next steps for implementation, will be published soon. For information, contact Caitlin MacLean, associate director of Financial Innovations Labs, at cmaclean@milkeninstitute.org.

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2013

16

October 2013

Affordable Housing in Israel

Jerusalem

Israelis face an extremely difficult housing market: Rentals are scarce and real estate is expensive. The struggle is exacerbated by the fact that a dramatic rise in housing costs over the past five years has not been matched by an increase in average household incomes.

At the same time, public housing solutions have dwindled over the last few decades. Worse still, investors are increasingly attracted to the luxury home market - largely for foreign buyers - which puts pressure on developers to increase profits at the expense of providing affordable housing options.

All of these challenges underscore the complexities of the issue. Resolving them requires a new set of affordable housing instruments for policy and program development in Israel.

Toward this end, the Milken Institute Israel Center is convening a Financial Innovations Lab to craft a roadmap that will help mobilize new sources of private capital, leverage current capital already committed to the housing market, and create tools for communities and local governments to engage developers in creating public-private partnerships for affordable housing.

Lab participants - including government representatives from entities such as the National Economic Council and Ministries of Finance and Housing, private-sector investors, academics, philanthropists and social entrepreneurs - will review best practices from abroad and design funding models that can leverage public funding with private capital to increase access to financing for affordable housing. The diverse cross-section of attendees will help focus the discussion on the actual application and implementation of solutions as well as the required policy and regulatory adjustments.

Results from the Lab, including recommended next steps for implementation, will be published soon. For information, contact Caitlin MacLean, associate director of Financial Innovations Labs, at cmaclean@milkeninstitute.org.

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02

October 2013

Breaking Past the Plateau: New Innovative Finance Models for Global Health

London

The interest in innovative finance has grown since the creation of the first advance market commitment over 10 years ago. Government spending continues to decline, and public- and private-sector investors alike are attempting to get the most leverage from their capital. As the financial product landscape develops, where are the new innovative financing mechanisms? How can we break past the plateau that has followed the success of models like IFFIm and prize competitions and take steps toward implementing the next generation of innovative finance?

With a goal of promoting wider implementation among industry stakeholders, this Financial Innovations Lab brought together a small group of investors, donors and global health experts to review the nascent financial mechanisms aimed at making aid more efficient and effective and to design new models to engage the capital markets through various impact investing platforms. The session provided an opportunity to map out next steps toward increased adoption of the relevant models.

Participants discussed the potential for more donor-based models, such as a social impact bond, to be applied to areas like malaria eradication, given the limited commercial market for drugs and treatments for the disease. For areas in global health that have more market opportunities, such as developing new vaccines for tuberculosis, participants discussed more traditional financing models such as venture capital, private equity and long-term debt models.

Results from the Lab, including recommended next steps for implementation, will be published soon. For information, contact Caitlin MacLean, associate director of Financial Innovations Labs, at cmaclean@milkeninstitute.org.

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30

July 2013

Innovations in Heritage Financing

Jerusalem

Steven Zecher, head of regional development and project finance at the Milken Institute Israel Center, describes the potential structure of a heritage asset district.

Israel possesses one of the highest concentrations of archaeological resources in the world. Cultural heritage drives tourism and development throughout the country. However, the true economic value of these assets has yet to be realized. Funding challenges, ongoing maintenance difficulties and an inability to generate revenue prevent these important resources from being leveraged to provide local and national economic growth.

At the same time, both the public and private sectors wish to support new models that can appropriately value and utilize cultural resources. Learning from best practices in financing economic development, there are mechanisms that can leverage current heritage funding initiatives into a sustainable pool of capital for a variety of project types and capital needs. Heritage asset districts, for example, are a region-based solution for economic development that can create a sustainable balance between preservation, conservation and development.

Building on the Institute's previous work exploring potential models that incentivize investment in cultural heritage, the Lab focused on creating heritage asset districts to utilize the value of cultural heritage to spur economic development in communities throughout Israel while simultaneously ensuring the conservation of priceless national treasures. Lab participants reviewed the potential projects, as well as the structure and organization of the model, and advised on the necessary steps to implement such a model in the near term. Participants included representatives from the Prime Minister's Office, the Ministry of Finance, and the Antiquities and National Parks authorities, as well as experts in economic development and the tourism industry.

Results from the Lab, including recommended next steps for implementation, will be published soon. For information, contact Caitlin MacLean, associate director of Financial Innovations Labs, at cmaclean@milkeninstitute.org.

 

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08

May 2013

Structuring a Catalytic Financing Facility for Nutrition

London

Undernutrition is the largest single contributor to child mortality worldwide, a factor in one-third of deaths among children younger than 5. Less well-known is the fact that undernutrition also costs billions of dollars in health-care expenditures and lost productivity, which severely encumbers regional and global competitiveness. Yet undernutrition remains one of the most overlooked, under-prioritized and underfunded issues in global development despite the existence of cost-effective interventions.

Addressing undernutrition in the developing world is not only an investment in health but also in long-term economic growth. The funding gap for preventive and treatment measures is an estimated $10.3 billion.

To bridge the gap, a steering committee was formed in early 2013 at the request of the Scaling Up Nutrition (SUN) donor network and charged with developing proposals for a catalytic financing facility. The aim is to attract new capital to accelerate results and increase longer-term, country-led financial support.

As part of this effort, the Milken Institute convened a two-day Financial Innovations Lab in London to determine whether a catalytic facility of this kind is needed and to debate its goals, activities and structure. Lab participants included a broad mix of government representatives from countries most affected by undernutrition, bilateral and multilateral donors, foundations, representatives of private businesses, and finance and nutrition experts.

Participants discussed the proposed facility partnering with a limited number of high-burden countries to accelerate the rollout of large, prioritized, high-impact nutrition programs. The objectives were to demonstrate that results at scale can be achieved rapidly and cost effectively while leveraging additional resources from domestic sources and donors.

Results from the Lab, including recommended next steps for implementation, can be found here. For information, contact Caitlin MacLean, associate director of Financial Innovations Labs, at cmaclean@milkeninstitute.org.

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02

May 2013

Reinventing Israeli Capital Markets: Creating a Financial Platform for Global Growth

Beverly Hills

Israel's entrepreneurs capture a limited part of the global technology value chain, generally involving high-end R&D. At the same time, Israel's capital markets are suffering from a decline in liquidity and a decrease in portfolio investment. As a result, Israel's long-term growth is restricted, since innovation in the technology sector creates a multitude of economic ripple effects.

By increasing access to capital for small and medium-size firms, Israel can meet the needs of capital-constrained companies and strengthen the country's position as a global incubator.

Toward this end, the Milken Institute convened a Financial Innovations Lab in May that brought together institutional investors, asset managers, finance experts and decision-makers from the Israeli government. Participants discussed a wide range of options and interventions that would encourage capital productivity among both Israeli and non-Israeli firms and expand related export industries.

The Lab began with presentations and discussion about the current investing landscape in Israel. Eugene Kandel, head of Israel's National Economic Council; Shmuel Hauser, chairman of the Israel Securities Authority; and Oded Sarig, head of the Capital Markets Division in the Ministry of Finance, gave an overview of the current challenges in jumpstarting new investment, especially in high-growth industries.

Participants then shared best practices for developing middle-market companies, lessons learned from Israel's ongoing transition from a startup economy to a global market-driven economy, and strategies for increasing market size and liquidity, direct private equity and portfolio investment flows.

At the conclusion of the Lab, participants outlined financial and regulatory models - business development corporations (BDCs), venture trusts, project development bonds and other innovative trading platforms, and fund structures -that the government could enact to create more liquidity.

Results from the Lab, including recommended next steps for implementation, will be published soon. For information, contact Caitlin MacLean, associate director of Financial Innovations Labs, at cmaclean@milkeninstitute.org.

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2012

11

October 2012

Next Steps and New Models: Innovative Finance for Global Health R&D

London

Financing research and development into diseases that affect primarily the globe's poorest people is a significant challenge. It was the topic of a successful Financial Innovations Lab in June 2012 - and a discussion we continued in October 2012 at a follow-up Lab in London.

"Next Steps and New Models: Innovative Finance for Global Health R&D" builds on the results of the first discussion. With a goal of promoting wider implementation among industry stakeholders, participants analyzed the models outlined in the Institute's report from the June Lab, from a new advance market commitment and international finance facility to new equity funds and debt products.

They also reviewed the current financial mechanisms to make aid more efficient and effective, as well as addressed new models to engage the capital markets through various impact investing platforms. The Lab, held with support from the Bill & Melinda Gates Foundation, provided an opportunity to map out next steps toward increased adoption of the relevant models.

Results from the Lab, including recommended next steps for implementation, can be found here. For more information, contact Caitlin MacLean, senior manager of Financial Innovations Labs, at cmaclean@milkeninstitute.org

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21

June 2012

Implementing Innovative Financing for Global Health R&D

New York

Lab participants David Ferreira of GAVI, Amie Batson of USAID, and Tara Hayward of the Sabin Vaccine Institute discuss the most efficient uses of capital to support new treatments for neglected diseases.

The global health community has made great strides in eradicating deadly diseases, but there is significant work yet to be done. There is an urgent need for vaccines and treatments to combat diseases like tuberculosis and malaria that disproportionately affect developing nations, but there is not enough investment to speed their development.

How can we channel capital to fund this discovery and innovation? What are the most effective models for financing and partnership? Over the past decade, there have been many promising developments in terms of collaboration and market-based incentives, but a huge funding gap remains. How can we expand innovations like product development partnerships and advance market commitments to attract capital from investors not typically engaged in the sector? Can we engage sovereign wealth funds and other institutional investors as well as a broader network of philanthropies and aid organizations?

To answer these questions and advance solutions, the Milken Institute convened a Financial Innovations Lab, held with support from the Bill & Melinda Gates Foundation, to bring together a diverse group of stakeholders in the global health space to map out implementation strategies for scaling up innovative financing mechanisms to fund R&D.

The Lab discussions seemed to revolve around a common theme: The enormity of the challenges facing the global health field has necessitated a variety of financial models and solutions that could benefit from more efficient coordination across the entire R&D value chain. While this can make for a very broad conversation, it also demonstrates the great depth of the innovation in this space. For example, the conversation moved from traditional aid models, to innovations that can make philanthropic funding more effective, to pure capital market mechanisms. These include:

 

  • Identifying which areas of global health R&D are appropriate only for straight grant funding and which areas are ripe for innovative financing.
  • Making government aid and foundation capital more effective through (a) new applications for the Advance Market Commitment and the International Finance Facility for Immunization models and (b) more innovative financing in the form of program and mission-related investments to provide credit enhancements and equity positions for global health R&D.
  • Utilizing public and private capital through financial models, from the newly established JP Morgan Global Health Investment Fund to a blended capital public-private partnership to a fixed-income security that could attract large institutional investors.

    Because of the multi-faceted nature of the discussion, the Institute looks forward to continuing the conversation to promote clarity and support implementation of existing and proposed models.

    Results from the Lab, including recommended next steps for implementation, can be found here. For more information, contact Caitlin MacLean, Senior Manager of Financial Innovations Labs, at cmaclean@milkeninstitute.org.

 

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