#Dealflow: Follow the Money
Danone to create a public benefit corporation to hold WhiteWave. The French multinational food company signaled it wants to preserve WhiteWave’s healthy vibe after completing its $10 billion acquisition of the U.S. dairy company. Danone Dairy and WhiteWave’s health-focused brands (including Horizon Organic, Silk and Earthbound Farm) will combine under the name DanoneWave, which will become one of the largest “public benefit corporations” to date. Benefit corporations, now enabled by legislation in 31 states and the District of Columbia, specify their intentions to pursue social objectives beyond only shareholder value. “#DanoneWave will treat people, purpose, and profit as coexisting priorities, all of which are vital to our success,” the new company said in one of its first tweets. Such statements bear scrutiny. Benefit corporations with a single shareholder, such as Danone, “can decide whether benefit reports are public and also whether its benefit assessment is subject to a third-party audit,” social enterprise lawyer Bruce Campbell of Blue Dot Law told ImpactAlpha. Please share your thoughts on how to anchor a venture’s mission through an acquisition and beyond via [email protected] or on Twitter @impactalpha.
Buffets launch a seven-year, $90 million plan to support girls of color in the U.S. The NoVo Foundation, established by Peter and Jennifer Buffett, will target groups and organizations working with girls of color in the southeastern U.S., home to 40 percent of minority girls in the U.S. Warren Buffett’s youngest son and daughter-in-law have spent the year since announcing the commitment talking to minority girls and advocates like Brooklyn-based Girls for Gender Equity. Over the next seven years, the foundation will support policy and research on issues facing girls of color and community organizations that work with them directly. “Our organizing work looks very different from organizing in New York,” Kameisha Smith, who works with girls in the Mississippi Delta through the Nollie Jenkins Family Center, told Bloomberg. “Our success looks different than success in New York.”
IntelleGrow to raise $100 million to meet capital demand from Indian social ventures. CEO Akbar Khan, the former GE executive who joined IntelleGrow in November, is charting an aggressive growth strategy for the company. The venture debt arm of India’s Intellecap Group plans to raise $100 million in debt and equity this year to finance young, high-risk and under-banked companies in social sectors in India. “As our customers grow, their demand for more capital also increased,” says Khan. Separately, IntelleGrow is raising a $20 million debt fund to extend longer-term loans to its clients. Last year, the firm raised $28 million from Triodos, Developing World Markets, Omidyar Network, Calvert Foundation and OPIC.
See all of ImpactAlpha’s recent #dealflow.
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#Signals: Ahead of the Curve
Housing startups test new approaches to increase supply and affordability. Urban.Us, a U.S. venture capital firm targeting the challenges of cities, opened its playbook for investing in housing startups. “The top 10 home builders made a combined $43 billion in 2015,” Urban.Us co-founder Stonly Baptiste notes in a post on Medium. A few takeaways: Better housing requires better designs and manufacturing processes. See Manufacton, which helps prefabricated home builders track building components. Financing remains the biggest barrier to new approaches, as traditional banks haven’t met the demand for mobile and non-constructed and prefab homes. Tumbleweed, a builder of tiny homes, keeps the wheels on so buyers can qualify for alternative loans. Its hotel platform allows owners to tap rental income, increasing their units’ long-term value. Cities have incentives to boost their affordable housing stock, which helps local businesses attract and retain talent. The fragmented market, along with tech and financial innovation, Baptiste says, is “encouraging founders to start companies that solve very old problems.”
S-Ray aims machine learning and big data at the sustainability of big businesses. The new tool will “capture vast amounts of sustainability information that now exists on companies,” and make it relevant to investors, says Georg Kell, a vice chair at Arabesque. The asset management firm’s S-Ray service, with free and paid versions, tracks data on over 4,000 corporations, combining 200 environmental, social and governance (ESG) metrics with “news signals” from 50,000 sources in 15 languages. Big data can shift “global markets towards greater environmental stewardship, better social impact, and increased respect for universal human rights,” says Kell, the founder and former head of the United Nations Global Compact. Corporate transparency on sustainability is growing: More than 80 percent of companies in the S&P 500 report on human rights, greenhouse gas emissions, anti-corruption practices and other ESG indicators through the Global Reporting Initiative, up from 20 percent in 2011.
SerenityShares says its exchange-traded IMPACT fund goes “beyond ESG.” Exchange-traded funds became popular as a low-cost way for investors to track standard indexes and gain exposure to entire sectors or geographies. A new batch of ETFs are tracking positive environmental, social and governance, or ESG, factors as signals for long-term outperformance. Now, SerenityShares, launched last year, has listed its IMPACT ETF (ticker: ICAN) to give investors access to U.S.-listed companies that actively “seek to improve societal, social, and environmental concerns.” The fund’s 20 themes include environmental stewardship, access to local healthcare, renewable energy, clean water, eldercare, education, community building and access to libraries. “A growing class of investors wants to have an impact fund among their suite of investment options,” said SerenityShares’ Kathleen Neumann. Caveat: the impact of individual investments in publicly-traded companies is limited; ownership is spread across many investors.
Three keys to progress toward 2030 goal of sustainable energy for all. The good news: More than 90 percent of Afghans have electricity, up from 40 percent in 2010 — and solar accounts for most of the growth. More than 50 million more people in Indonesia now cook with cleaner fuel. And tens of millions across sub-Saharan Africa and Asia now have access to electricity through off-grid solar solutions. The 2017 Global Tracking Framework from the World Bank and the International Energy Agency demonstrates progress toward Sustainable Development Goal №7, “Ensure access to affordable, reliable, sustainable and modern energy for all.”
The bad news: we’re not moving fast enough. “More than a billion people are still living in the dark without electricity — an appalling one of every seven people on the planet,” says Peyton Fleming, senior director of Ceres, a national coalition of investors, environmentalists and public-interest groups. The global goals for 2030 of universal access and the doubling of energy efficiency and the share of renewable energy in the global energy mix are all at risk. “At the rate we’re going, it’s unlikely we’ll hit these goals by 2040,” Fleming writes.
Fleming shared his prescriptions for progress, taken from the Sustainable Energy for All Forum earlier this month: dramatically cheaper renewable energy, supportive policy — and mobile phones. The era of cheaper energy is well underway, with costs for renewables falling 80 percent in the last five years. “They’re not just competitive. They’re producing the cheapest power at any time in history,” Michael Liebreich, founder of Bloomberg New Energy Finance, said at the forum. China and Mexico’s progress on energy efficiency and renewable energy, for example, reflects forward-looking government policies. Mobile phones support the advance of mobile money, which enables customers “to finance their off-grid solar systems with an up-front deposit and daily payments.”
Success breeds success, Fleming notes. “As more financing becomes available, as more companies succeed, as more governments bring affordable sustainable energy to their constituencies, more investors, especially large institutional investors, will have no choice but to join a sustainable energy future that touches everyone.”
Onward! Please send any news and comments to [email protected].