Dealflow | May 20, 2019

Catalyst launches $150 million impact-focused Opportunity Fund

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, May 21 – Catalyst, an impact private equity firm founded by Utah entrepreneur Jim Sorenson, is looking to raise $150 million to invest in U.S. Opportunity Zones. Sorenson, an early proponent of Opportunity Zones, is seeding the fund with $10 million of his own capital, according to Bloomberg.

The 2017 Tax Cuts and Jobs Act made it possible for investors to benefit from tax breaks for backing real estate projects and businesses in designated as “Opportunity Zones.” A number of funds, impact and traditional, have since been initiated to invest in the federally designated economically disadvantaged areas. The impact-investing community is homing in on Opportunity Zones as a chance to both deploy impact capital at scale and to encourage broader adoption of impact measurement, reporting and accountability. 

Catalyst’s first Opportunity Zone fund will focus on real estate projects that boost local residents’ access to quality jobs, healthcare, education and housing. It is targeting projects in “smaller, out-of-the-way markets that are undervalued and have great potential, but are off the radar of institutional capital,” according to Catalyst’s Patrick McKenna. Examples include affordable workforce housing, entrepreneurial co-working spaces and incubators, community health centers, skills training centers and grocery stores.

Catalyst claims it has already identified 50 potential investments in 18 states valued at nearly $2.2 billion.

The company is building out an impact measurement framework based on principles developed by U.S. Impact Investing Alliance and Georgetown’s Beeck Center.

Opportunity Zone investors want impact. Let’s help them get it.

Catalyst plans to follow with a second fund that will invest in businesses in the same communities.