#Dealflow 10.5.16: SIBs, DIBs and HIBs for Connecticut Addicts, Mideast Youths and Conflict Refugees

dealflowProponents of pay-for-success financing structures are laying the groundwork to pioneer the tool in as-yet untested social issues, like drug addiction recovery and the refugee crisis. Social impact bonds (SIBs) have now been joined by development impact bonds (DIBs) and even humanitarian impact bonds (HIBs). Commercial investors, such as French bank BNP Paribas, are starting to rally behind such deals. But is the juice worth the squeezing? It remains time- and resource-intensive to get these transactions off the ground.

Addiction. An $11.2 million social impact bond focusing on addiction recovery has launched in Connecticut, with BNP Paribas as the lead investor. The Connecticut Family Stability Pay for Success Project will support 500 Connecticut families struggling with in-home drug addiction recovery over the next five years. The project is backed by the state’s Department of Children and Families and led by the Family Based Recovery Services at the Yale Child Study Center. Social Finance structured the program. Other investors include QBE Insurance Group, Reinvestment Fund, Doris Duke Charitable Foundation, Laura and John Arnold Foundation, Nonprofit Finance Fund and several unnamed family foundations.

DIBs and HIBs. Blended finance platform Convergence has extended a feasibility grant to Kois Invest to explore a development impact bond focused on employment in countries like Jordan, Lebanon and Turkey that are coping with a high influx of Syrian refugees. The Belgium-based impact investing firm is exploring professional training, work placements and entrepreneurship support networks in these countries to determine measurable outcomes and impacts. 

Kois also is applying the public-private financing tool to mitigate the social repercussions of the refugee crisis. It is partnering with the International Committee of the Red Cross to develop a $30 million humanitarian impact bond to set up rehabilitation centers in conflict-affected countries. 

Lat-Am social impact. Pomona Impact was approved for a $1 million loan and $200,000 technical assistance grant from the Inter-American Development Bank invest in growth-stage Latin American-based social enterprises. Pomona, which is raising a $20 million impact fund, makes three to seven-year investments of $50,000 to $250,000—primarily in the form mezzanine and subordinated debt. The firm has recently focused on agricultural technologies and has launched its own agtech accelerator.

Micro-mortgages. Chennai-based Swarna Pragati Housing Microfinance has raised a Series B round to expand its offerings of mortgage financing for rural Indians, who currently face a 40 million-unit housing shortage. Investors included Zephyr Peacock, Omidyar Network, Aavishkar and the founders of Asha Impact. The amount of financing was not disclosed, however the Asha team reportedly jointly invested 3.5 crore rupees ($526,000) in the round. Many Indians lack legal land titles and so face barriers in securing mortgages from traditional lenders to build or finance a home. Swarna Pragati reviews other guarantees, like tax receipts and a legal protection from eviction, and accepts other collateral for its loans.

Sweet ag-deal. U.K.-based agricultural impact investor AgDevCo has re-upped an investment in Phata cooperative, a sugarcane cooperative that is expanding its operations in Malawi. The new injection of $1.6 million in debt will provide fixed and working capital as the farming collective expands from 436 smallholder farms and 302 hectares of land to 1,316 farms and 602 hectares of land in the Chikwawa district in Southern Malawi. The growth plan is backed by a production off-take agreement for the cooperative’s crop yield. Last year, the Cooperative paid $800 in dividends per hectare of land.

Disclosure

DealFlow is ImpactAlpha’s weekly roundup of what, where, how and why impact capital flowed each week… See more impact deals in ImpactAlpha’s DealFlow section. And send your deal news to info@impactalpha.com.

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