Beyond impact-washing, indexing financial inclusion, Bain’s bet on workforce development



Greetings, ImpactAlpha readers!

Featured: The Impact Alpha

Big new private-equity funds are on the hook to deliver impact outperformance. The era of impact-washing is over. That may sound premature, given the drumbeat of not-always-believable announcements from big banks and investment firms. The concern that new entrants may put an impact wrapper around business-as-usual has come to the fore with the entry into impact investing of big private-equity firms like KKR, TPG and Bain Capital. But if impact and environmental, social and governance factors are indeed pointers to long-term outperformance and/or reduced risks, it follows that you can’t just fake it through marketing. You have to reach those markets, deliver those products and improve those lives to capture the impact alpha. That makes impact-washing not just bad marketing, but bad investing.

The big private-equity players have put themselves on the hook for impact measurement, unlike the managers of some other recently raised funds. KKR has told investors its new $1 billion Global Impact Fund will invest in “commercial solutions that solve global challenges in credible and measurable ways.” Bain will subject itself to the GIIRS rating system. TPG’s Rise Fund underwrites deals for a specific “impact multiple of money.” All that is a reflection that driving impact is increasingly key to driving growth. Marketing may help get a fund launched. Impact outperformance will be what counts in the end.

Read David Bank’s latest column, “The Impact Alpha: Big new private-equity funds are on the hook to deliver impact outperformance.” (And catch up on his weekly columns you might have missed).

Corrections & Amplifications

Breaking the chains of the 10-year fund is harder than it looks. In Wednesday’s Brief and article, we incorrectly reported on the history of Pescador Holdings. Pescador launched its fundraising only after making its first investment in February 2017. ImpactAlpha regrets the error.

Signals: Ahead of the Curve

Closing the remaining gaps in global financial inclusion. Since 2014, half a billion people have obtained a bank account with a financial institution or through a mobile money service, according to the latest Global Findex reportfrom the World Bank. This has pushed the global share of adults with an account up seven percentage points to 69%. In emerging markets, the share rose from 54% to 63%. Gaps persist: Women remain nine percentage points less likely than men to have a bank account in emerging markets.

  • Africa leads in mobile money… One in five Africans now has a mobile money account, making it the only region with greater than 10% penetration (including more than 30% of adults in Côte d’Ivoire and Senegal and more than 40% in Gabon). Bangladesh, Iran, Mongolia and Paraguay have all surpassed 20%.
  • Unbanked but connected… Two-thirds of those without a bank account have a mobile phone, according to the report. In India and Mexico more than half of the unbanked have a mobile phone; in China, that climbs to 80%.
  • Bright spots… India has reduced its gender gap in bank accounts from 20 percentage points to six. Argentina, Indonesia, and South Africa have no significant gender gap. Digital technologies and platforms help bypass traditional branches and serve women, says Zar Wardak of FINCA Impact Finance, a microfinance holding company that runs 20 microfinance institutions and banks on five continents. “We put women at the forefront of product and services development” she told ImpactAlpha.

“Access alone is not inclusion,” warns Michael Schlein, CEO of Accion, a microfinance and fintech impact investor. Customers need “a variety of high-quality, affordable products and services” and must be able to “trust their financial service providers to act responsibly.”

Agents of Impact: Follow the Talent

Jeff Cohen, ex- of Sonen Capital, has joined the Sustainability Accounting Standards Board as an institutional product strategist… The Nathan Cummings Foundation is hiring a director of racial and economic justice… IDB Invest, a member of the Inter-American Development Bank Group, is looking for a portfolio management consultant in São Paulo, Brazil….Florida International University is accepting applications for its new Impact MBA program, developed in partnership the Inter-American Development Bank.

Dealflow: Follow the Money

Bain Capital Double Impact leads acquisition of workforce development firm Penn Foster. Bain’s $390 million impact fund led an investor group in acquiring a controlling stake. Macquarie Capital, PineBridge Structured Capital and Zoma Capital also participated in the deal. Go deeper.

Corporate venture funds (re)invest in Hustle’s advocacy platform. Hustle, a peer-to-peer messaging platform, has raised $30 million in a Series B that included a second investment from the Salesforce Impact Fund. Read more.

Healthtech firm Suki raises $15 million for its AI-powered digital medical assistant. Suki raised $15 million in a funding round led by Venrock and joined by First Round, Social+Capital, Nat Turner of Flatiron Health, Marc Benioff of Salesforce and other individuals. Learn more.

Scottish social enterprise Nortenergy raises expansion funds for indoor farming tech. Scottish development agency Highlands and Islands Enterprise is investing £157,000 ($213,000) to help the company expand. Get the details.

— May 3, 2018

You might also like...