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#Featured: ImpactAlpha Original
Charting a course for increased institutional investor involvement with impact investing. Christian Super is not stopping with its 10% allocation to impact investments, which is already impressive for an institutional investor. To the more than AU$100 million out of its $1.3 billion portfolio, the Australian pension fund has committed another $50 million. Australian “super funds” are, like 401(k) accounts, defined-contribution retirement funds chosen by individuals. The performance of Christian Super’s impact portfolio has exceeded benchmarks at lower risk than other asset classes (except cash). Chief investment officer Tim Macready is seeking to change investing more broadly by dispelling the notion of a conflict between real change and strong financial performance. At the GSG Summit in Chicago this week, Christian Super was honored as the Asset Owner of the Year.
Read, “Christian Super charts a course for institutional impact investing” by Jérôme Tagger:
#Dealflow: Follow the Money
Humanity United backes Provenance’s blockchain-based supply chain-tracking. Provenance, a U.K.-based startup, uses blockchain software to combat “food fraud” and track food supply chains. Products logged on Provenance’s platform are tracked from source to retail outlet with secure “digital passports” that provide information about the people, places, and materials behind that product. The company is tracking tuna supply chains in Asia and produce supply chains with U.K. supermarket Co-Operative Group and has 200 brands signed onto its platform. It is hoping to enroll 1,000 food and beverage business by 2025. Provenance raised $800,000, led by Humanity United, which is backed by Pam and Pierre Omidyar. Blockchain investor Digital Currency Group and several angel investors also invested. Around the world, nearly $500 million worldwide is being invested in blockchain solutions to track everything from development aid to election validation.
New Latin America venture fund invests in Listo. LEAP Partners has made an undisclosed investment in Listo, based in San Jose, Calif. The financial services firm provides affordable financial services and insurance to low-income Latinos in the U.S., half of whom are underbanked. It received funding from Acumen last year. Listo is the first investment from LEAP Partners I, which is not explicitly impact-focused, but seeks to cultivate a Latin American venture capital and startup community. “Only one percent of all venture capital-based companies is Latino-owned,” LEAP’s Roman Leal says. “Our hope is that our investment fund will serve as a catalyst” for connecting Latino entrepreneurs to capital. It will focus on businesses based in the U.S. and Mexico. LEAP also invested in PayStand, a business-to-business payments startup also based in California.
Apple investing $1 billion in renewably-powered data center. The tech giant will build the site in southern Denmark for online services like iTunes and App Store. The facility, which will cost 6 billion Danish crowns ($921 million), will be entirely powered by renewable energy when it opens in 2019. Apple recently launched a $1 billion green bond to green its existing and future facilities. The company’s CEO Tim Cook has been an outspoken advocate of climate change mitigation and sustainability. Cook, with other corporate executives, lobbied the Trump Administration not to pull out of the Paris Agreement.
See all of ImpactAlpha’s recent #dealflow.
#Signals: Ahead of the Curve
Overcoming barriers to small business finance in emerging markets. There are good reasons private capital doesn’t flow to small, private businesses in emerging markets the same way it does to Fortune 500 companies on global stock exchanges. Businesses struggle to mitigate high perceived risk, at the same time their return expectations may be lower because they operate in underdeveloped markets and target low-income customers. Investors may have to accommodate longer time horizons, as enterprises figure out how to provide complex solutions in complicated markets. A summary of a forthcoming report showcases examples of innovative financial structures being deployed in Latin America and taking direct aim at these barriers with a range of new and alternative financing models. The report comes from the Multilateral Investment Fund, an innovation lab within the Inter-American Development Bank, along with Transform Finance, a scrappy advocacy group ensuring capital finds its way to communities, and the Rockefeller Foundation, a long-time financier of financial innovations. The report looks beyond traditional debt, equity and grant-funding mechanisms. For example, open-ended funds give investors flexibility for when to exit (see, Aqua Spark’s open-ended fund). Holding companies can relieve pressure to exit an investment prematurely (see, Encourage Capital’s Pescador Holdings).
Reinvestment Fund CEO busts myths and offers predictions for community development finance. “After decades of effort and many false starts there is now a solid bridge to the capital markets for US community development finance organizations,” or CDFIs, said Don Hinkle-Brown, CEO of the Reinvestment Fund in Philadelphia, as he accepted the GSG Honor for asset manager of the year in Chicago this week. Capital markets are not intelligent, said Hinkle-Brown, “How could they be when we see so many broken markets? But markets are smarter than rating agencies.” When impact investing is mainstream, non-impact financing will seem “risky, antiquated, and questionable as to in its fiscal appropriateness.” Said Hinkle-Brown, “The ‘prudent man’ will be an impactful man.” Hinkle-Brown shared his remarks from the stage with ImpactAlpha. Read them in full here:
Think globally but implement locally to reach 2030 global goals. The “high-level political forum” underway at the U.N. in New York is reviewing progress toward seven of the 17 Sustainable Development Goals. Goal №11, for sustainable urbanization, has been tabled until next year’s forum. But with 60% of the global population expected to live in cities by 2030, more urgency is required to bring local governments into effort to meet the global goals.
The Global Taskforce on Local and Regional Governments, in partnership with the U.N. Development Programme and U.N. Habitat, has published a toolkit to promote local government engagement with the 2030 Agenda. The toolkit starts as the basics of awareness-raising in cities and regions where the SDGs are little known, to monitoring implementation in cities like Cape Town, South Africa, where a strong local government positions the city as an effective enforcer. “Local spaces are ultimately the key site of delivery and development and, as such, local government is central to the success of sustainable development,” the report notes. The toolkit is available here.
Onward! Please send any news and comments to TheBrief@impactalpha.com.