Does sustainability drive alpha? More investors seem to buy the argument that a more efficient supply chain, better governance and mitigation against growing risks such as climate change (or, more accurately, climate policy) drives better performance over time. A corollary thesis might be that companies with exposure to sectors such as sustainable agriculture and renewable energy can ride the trends to grow. We didn't plan it, but this week's #Dealflow is all about agtech and renewable energy.
Green Africa Power is backing a 20-megawatt solar project in Senegal with a €20 million ($22.4 million) construction loan. Green Africa Power is a U.K. DfID-financed fund that supports renewable energy development in Africa. The project—Senergy 2—marks GAP’s first investment. It is also the project’s first debt investment. Senergy 2 is expected to provide power for 160,000 people and cut carbon emissions by 22,320 tons per year, while creating 25 permanent local jobs.
Sustainability ETF. The Australian superannuation fund Future Super is committing AU $35 million (about US$26.8 million) to a new Global Sustainability Leadership Index from Etho Capital that is expected to begin trading at the end of October. The fund is composed of 100 sustainable and efficient companies that are leaders in their sectors, and excludes companies that are “closely linked to the extraction, processing and distribution of fossil fuels.” Future Super, which launched in 2014 as the first of Australia's retirement savings funds to offer a fossil-free portfolio, claims to have diverted AU $185 million from fossil-exposed funds. Etho, based in New York, last November created the ETHO ETF, which it says is the first index ETF to exclude all fossil fuel companies.
Biocarbon engineering venture Cool Planet has raised $9 million to commercialize its Cool Terra product to boost soil health and sequester carbon.It is the first investment committed specifically to advance Cool Planet’s agriculture technology North Bridge Venture Partners, a longstanding Cool Planet investor, and Agustín Coppel co-invested in the round. Cool Planet recently signed development and distribution agreements with two commercial partners: J.R. Simplot and Triangle Chemical Company. Cool Planet closed an earlier $9 million raise in January.
Soil health is part of the appeal of the Arkansas-based Grass Roots Farmers’ Cooperative, which raised $600,000 in debt financing from RSF Finance.The investment will support the 13-farm cooperative in boosting production by purchasing new animals and feed and buying and processing the farmers’ reared animals. A third of the funds came from RSF’s Soil Health Capital Collaborative, a mixed-investment philanthropic fund that invests in small and early-stage organizations. Counter to most agriculture and food system investment, RSF’s goal with the investment is to improve productivity of small-scale agriculture, particularly in poor areas that also need livelihood development.
Green bonds. Yes Bank is issuing 3.3 billion rupees ($49.6 million) in green infrastructure bonds to the Dutch development bank FMO to finance new solar and wind energy projects in India. It is the third green bond in 18 months from Yes Bank—India’s fifth largest private bank. after a $160 million first raise in February 2015. Yes Bank’s green bond program is part of India's boom in green bonds to nearly $2 billion in issuances across India.
Sustainable agriculture. Sustainable Development Technology Canada has invested C$6.1 million ($4.7 million) in Farmers Edge, a precision agriculture and data venture, to help it boost environmental sustainability capabilities. The funds will be used to develop data tools that track issues affecting crop performance, like weather, pests, and soil processes. Farmers Edge hopes the data will help farmers manage water usage ant cut nitrous oxide emissions and chemical contamination in water and soil. SDTC’s capital comes on top of an additional $12.2 million that Farmers Edge’s raised from internal sources and partners.
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Image: Cool Planet