Greetings, Agents of Impact!
Featured: ImpactAlpha Original
All in the family: KKR’s Global Impact Fund co-invests with KKR’s Asia fund. Private-equity giant KKR has yet to close its planned $1 billion Global Impact Fund, but it has been busy warehousing deals. In August, word came that KKR’s $9 billion Asia Fund III had taken a majority stake in Indian waste management company Ramky Enviro Engineers. This week’s close of the $510 million deal brought an additional detail: KKR’s Global Impact Fund also got a piece. Ramky is trying to tackle the enormous issue of municipal waste in India. Less than 70% of solid waste is collected; less than 20% is treated or processed. “What we’re looking for is direct alignment between commercial outcomes and impact outcomes,” KKR Global Impact’s Ken Mehlman told ImpactAlpha.
The entrance into impact investing of multifarious private-equity firms like KKR, TPG and Bain Capital brings to the surface a long-simmering question: what difference does impact capital make in investments that purely commercial investors would have made anyway? Impact investors have long co-invested with commercial investors, of course. What is new is deals that include impact and conventional funds from the same firm. Some impact investors have cited their ongoing strategic guidance and governance as an added value of having mission-aligned capital. Mehlman said the Global Impact fund, as a minority partner, would instead support the Asia Fund’s ESG (for environmental, social and governance factors) approach. “This is obviously something we do across KKR,” he said.
Keep reading, “All in the family: KKR’s Global Impact Fund co-invests with KKR’s Asia fund,” by Jessica Pothering on ImpactAlpha.
Dealflow: Follow the Money
I&P raises €75 million for African startups targeting the Global Goals. The French impact investor reached the second close for its I&P Afrique Entrepreneurs 2 fund. The fund, launched in late 2017, is one of four from I&P intended to build social entrepreneurship and a sustainable private sector in Africa. The fund for African startups tackling issues related to the Sustainable Development Goals has made investments in agri-processing company Afribon, reproductive health provider PROCRÉA and two other companies. The fund is nearing its goal of €80 to €90 million ($90 to $100 million). Learn more.
Svasti Microfinance raises $4.8 million to extend financial services to low-income Indians. The 10-year-old Mumbai-based microlender serves more than 140,000 customers in four Indian states and has a $36 million loan portfolio. The microlender’s portfolio has “shown great resilience even through black swan events like demonetization as a result of its strong processes,” said Arthur Sletteberg of Nordic Microfinance Initiative, which invested with Serum Institute of India’s Adar Poonawalla and other investors. Part of the new funding will provide exits for early investors, which include Michael & Susan Dell Foundation and Bamboo Capital Partners. Dig in.
Series: Investing in Racial Equity
Building local startup ecosystems that work for entrepreneurs of color. Some hubs of entrepreneurship are trying to attract business founders they’ve historically overlooked: entrepreneurs of color. In other areas, Black and Latino entrepreneurs are building new business support structures for themselves. In the latest post in the Investing in Racial Equity series, Living Cities’ Elizabeth Reynoso, Santiago Carrillo and Brian Nagendra reflect on their investments in local startup ecosystems. Among the lessons: “Trust is an essential asset” (New Orleans); “supporting local stakeholders leads to robust entrepreneurial ecosystems” (Minneapolis-Saint Paul); and “public sector and community anchors “ensure low-income communities benefit from large-scale development projects” (Baltimore).
Living Cities is finding and investing in what works. Its Start Up, Stay Up, Scale Up initiative is helping Albuquerque, New Orleans, and San Francisco attract entrepreneurs of color and help them grow their businesses. The City of New Orleans’ purchases from firms owned by people of color and women spurred the private sector to follow suit. In San Francisco, crowdfunding is becoming a way for people of color to invest in diverse owners. Albuquerque boosted the visibility of Black and Latino founders at the Entrepreneurial Ecosystem Expo last year. Many entrepreneurs still face challenges getting the right balance of debt, working capital and equity. The question: “Are there enough capital providers” for entrepreneurs of color?
Read, “Building local startup ecosystems that work for entrepreneurs of color” by Living Cities’ Elizabeth Reynoso, Santiago Carrillo and Brian Nagendra, on ImpactAlpha.
- Catch up with the Investing in Racial Equity series.
Agents of Impact: Follow the Talent
Former U.S. ambassador to South Africa Donald Gips takes the helm at the Skoll Foundation… SolarCity (now Tesla Energy) co-founders Lyndon and Peter Rive join Zola Electric as board chairman and operational advisor, respectively (see, “Zola secures $20 million debt funding for off-grid solar expansion”)… Kim Leslie Shafer is the new board chair of Aeris. Justin Conway and Penelope Douglas also joined the Aeris board… Cambridge Associates is seeking a research investment analyst on its diverse manager research team in Boston.
— February 14, 2019.