Bloomberg’s global initiative, school-in-a-box, epidemic insurance, SIINC’ing portfolios…



Good Wednesday evening,

The people of Mexico and the Caribbean are hurting after an epic series of disasters. Our friends at IGNIA, an investment firm in Mexico City, have identified Topos de Tlatelolco, a search and rescue team, and the Mexican Red Cross as reliable organizations working on the earthquake relief effort in Mexico. Vox has a good list organizations supporting hurricane relief and recovery in the Caribbean.

#Featured: ImpactAlpha Original

Nature abhors a vacuum and so do global challenges. Business and political leaders are mobilizing around issues ranging from climate change to immigration and inequality. Case in point: California Governor Jerry Brown and former New York City Mayor Michael Bloomberg will convene a Global Climate Summit in San Francisco next summer to showcase action by corporations, states and cities, in the absence of federal leadership in addressing the climate challenge.

The U.S. retreat from leadership on many international issues has in some ways created an equal but opposite reaction. Since President Trump announced the U.S. would leave the Paris agreement, BlackRock, the world’s largest asset manager, reports it has experienced the largest ever demand for sustainable investments. Said BlackRock CEO Larry Fink at the Bloomberg Global Business Forum in New York, “It’s just physics.”

The U.S. stepping back isn’t a good thing, said Anand Mahindra, chairman of Indian multinational, the Mahindra Group. But the void has his competitive juices flowing. “I’m delighted,” he said, calling sustainable development “the single biggest business opportunity of the next couple decades.”

Read “Business leaders on global development challenges: We’ve got this,” by Dennis Price on ImpactAlpha:

Business leaders on global development challenges: We’ve got this

#Dealflow: Follow the Money

The Rise Fund, Elevar Equity back LEAD’s “school in a box” for low-income students in India. To stock its deal pipeline, TPG Growth’s The Rise Fund, the $2 billion impact fund from the private-equity giant, early on struck a partnership with Elevar to co-invest in some of the smaller firm’s deals. One of the first examples is a joint investment in LEAD, based in Mumbai, a provider of school-management services to schools serving low-income students in India. LEAD’s ‘school-in-a-box’ helps affordable private schools in underprivileged communities with curriculum development, teacher training, administration and parent engagement. Founded in 2012, LEAD first partnered with schools in rural Maharashtra and Gujarat; it recently launched a partnership with public schools in Delhi. A recent study revealed that Indian student’s performance in math and English comprehension has declined significantly in recent years. LEAD reports that across its network of schools, students’ English literacy showed 1.6 years of progress in a year, and class averages in math improved from 51% to 63%. LEAD marks Rise Fund’s fifth investment, after last week’s investment in data management platform Dharma. The amount of the LEAD School investment was not disclosed.

Impax acquires Pax World to create $14 billion asset manager. Impax Asset Management, based in the U.K., with $9.4 million in assets under management, is absorbing U.S.-based Pax World Management, with $4.5 billion in assets. Pax, founded in 1971, will be rebranded as Impax Investment Management and continue to manage Pax World funds. The two managers already worked together to design and manage a $500 million environmental equities fund that focuses primarily on energy efficiency and water infrastructure and technology. Impax’s impact portfolio consists of an equity portfolio comprised of wind and solar farms in western Europe; a green building portfolio based in the U.K.; and stock portfolios in water, food and agriculture, and environmental strategies. At least 20% of the listed companies’ revenues must come from “environmental products or services in the energy efficiency, renewable energy, water, waste and sustainable food and agriculture markets.” At an event announcing the deal, Pax’s CEO Joe Keefe said, “Investors have an opportunity to profit and an obligation to hasten a more sustainable economy.”

Innovative insurance for responding to disease epidemics, wildfires. Yesterday we tuned you into the Rockefeller Foundation’s quest for 10 “SDG-finance unicorns,” that each can mobilize at least $1 billion for sectors key to meeting the U.N. Sustainable Development Goals. A climate insurance product from African Risk Capacity, or ARC, already has provided $370 million to African nations following extreme weather events. Now, ARC has launched Outbreak & Epidemic insurance to help countries respond to disease outbreaks that can quickly reach epidemic levels. Starting with Guinea and Uganda, countries that purchase the insurance will get rapid and targeted funds for detected outbreaks of Ebola, meningitis, yellow fever, dengue fever, SARS, MERS, Marburg virus, and smallpox — diseases that have “the most severe impacts and with which local or national authorities are least familiar due to the infrequency of the occurrence of outbreaks.” Separately, a new report, Fighting Fire with Finance, explains Forest Resilience Bonds, another innovation in Rockefeller’s Zero Gap portfolio.

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

Root Capital and Acumen to test social-impact incentives. Social Impact Incentives, or more succinctly, SIINC, are financial payouts to organizations and social ventures that meet proven social performance targets. The SIINC model has been tested, with the Swiss development agency putting up the cash, with high-impact businesses in Latin America (see, “‘Social impact incentives’ introduced in Mexico and Honduras”). Now, Root Capital, the smallholder agribusiness lender, and Acumen, one of the first impact investment funds, could be in line for social-impact incentives themselves. Root Capital is working with Roots of Impact, the German consulting firm behind SIINC, on a mechanism in which the lender would get financial payouts for hitting targets for livelihoods improvements and other impact milestones through its loans. The idea is that payments to lenders will get more funds interested in delivering social impact. “We’re attempting to capture the value of impact,” Root Capital’s Brian Milder told ImpactAlpha. “If we can, more capital can flow to early-stage agribusiness.” With Acumen, Roots of Impact is designing a model to boost affordable energy access in developing countries. Both investors will look to development agencies, wealthy individuals or philanthropies to pool capital to make the SIINC payments. “We are in the design phase of both funds,” says Roots of Impact’s Bjoern Struewer.

#2030: Long-termism

Closing the gender-equality knowledge gap. You can’t manage what you don’t measure, or at least pay attention to. The results of a survey on knowledge of gender equality among national policymakers, released at the United Nations General Assembly, showed a shaky grasp on key gender-equality facts. Only about one-quarter of the policymakers knew the maternal mortality rates in their own countries. One in eight believed that they knew how many girls got married before the age of 18. When asked to estimate the percentage of women in parliament, for example, answers from Kenyan policymakers ranged from 6 to 90% (correct answer: 21%). In India, policymakers estimates of women in the workforce varied from 20% to 70% of the labor force (it’s 27%).

Because strengthening the rights of girls and women is critical in the pursuit of meeting global SDGs, the survey sought to find out what policymakers knew about the goals. The survey, conducted by Equal Measures 2030 — a partnership of nine organizations, including the Bill & Melinda Gates Foundation, FEMNET, and Women Deliver — asked 109 policymakers in Colombia, India, Indonesia, Kenya, and Senegal, about gender equality in their countries. (Roughly half of the interviewees were women and half were men.) Awareness of the Sustainable Development Goals was high, indicating that messaging about the goals is reaching a wide range of audiences.

Not surprisingly, women and men hold different views when it comes to progress on gender equality over the last five years. More than twice as many women as men said gender equity had stalled or gotten worse. Overall, the study suggests that the “invisibility” of millions of girls and women is exacerbated by incomplete, missing, or underutilized data. “Even the best-intentioned decision-makers can’t make the best decision if they’re operating in the dark,” said Katja Iversen, CEO of Women Deliver. “Without serious investment in girls and women we will not achieve the Global Goals.”

Onward! Please send any news and comments to TheBrief@impactalpha.com.

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