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#Dealflow: Follow the Money
Leapfrog, Accion back AllLife to expand insurance coverage in South Africa. South African insurer AllLife raised an undisclosed amount of funding from Accion’s Frontier Inclusion Fund and Leapfrog Investments (AllLife was Leapfrog’s very first investment, back in 2009). AllLife launched in 2004 to provide life insurance for the nearly 20 percent of South Africans living with HIV and AIDS, who without such policies have difficulty getting mortgages or business loans. It sets prices with a robo-underwriting process and agreements with patients to follow specific treatment plans. Last month, AllLife expanded into life insurance products for diabetes patients in the U.K., adapting its underwriting platform for mutual life company Royal London, which expects to be able to cut premiums by up to 40 percent. It is the first “insurance tech” investment for Accion’s Frontier fund, which is managed by Quona Capital.
KKR invests $31 million in affordable housing projects in India… U.S. private equity firm KKR & Co. committed to development projects by Signature Global, a developer based in Gurgaon. High volume is the key to the huge opportunity in India’s affordable housing market, says Signature Global’s Pradeep Aggarwal. Also boosting the market: an interest-rate subsidy for low-income homebuyers offered by the Indian government as part of a push to ensure that all Indians can secure affordable housing by 2022. Signature Global has plans to build 7,400 affordable homes around the city, each about 600 square feet and costing $20,000 to $30,000. The Haryana state government is trying to encourage private development of low-cost housing by granting licenses on 300 acres of land reserved for affordable housing. ICICI Prudential is also backing Signature Global.
…while the IFC puts up $40 million to expand lending to India’s low- and middle-income home buyers. The International Finance Corp., part of the World Bank Group, is investing in Aavas Financiers to increase loans to low- and middle-income homebuyers in six Indian states, including Haryana. Aavas Financiers is a division of Au Financiers, which is backed by private equity giant Warburg Pincus. 65 percent of Aavas Financiers’ customers are small-business owners. The IFC has previously invested in other affordable housing lenders in India, including Aspire Home Finance Corporation, Micro Housing Finance Corporation and Aptus Value Housing Finance India. It also backed low-cost housing development via a $25 million commitment to Tata Housing Development Company in 2015.
Yoma Micro Power to build microgrids to electrify rural Myanmar. Singapore-based Yoma Strategic Holdings and the Norwegian Investment Fund (Norfund) are building microgrids in Myanmar’s off-grid rural areas. Yoma and Norfund’s $2 million joint venture, Yoma Micro Power, will target rural communities and telecommunications companies’ that are expanding their presence in rural areas. Each organization will own 47.5 percent of the joint venture; the remaining five percent will be held by the venture’s manager, Alakesh Chetia, formerly SunEdison’s director of rural electrification. Yoma Micro Power will kick off with a pilot project in the northwest region of Sagaing. Only 16 percent of Myanmar’s 38 million rural citizens (out of 54 million total) have access to electricity. Myanmar is targeting 50 percent electrification by 2020 and 100 percent by 2030.
Follow the people. Katherine Collins has been named head of sustainable investing at Putnam Investments, the San Francisco-based money manager with $160 billion in assets. Collins, who was previously CEO of her own sustainable investment research firm, Honeybee Capital, will lead Putnam’s approach to environmental, social and governance investing, including strategies for institutional and retail mutual fund clients. Amy Bell has joined impact investing advisor Tideline as a senior director. Bell, who managed a $100 million impact investing portfolio as head of investments at JPMorgan Chase’s sustainable finance group, joins fellow JPMorgan Chase alumna Christina Leijonhufvud at Tideline. Tideline has advised clients including KKR, Al Gore’s Generation Investment Management, the Bill & Melinda Gates Foundation, Ford Foundation and Omidyar Network.
See all of ImpactAlpha’s recent #dealflow.
#Sponsored: Content from Cornerstone Capital Group
Shareholder engagement is a corporate benefit, not a burden. In an op-ed in American Banker, Cornerstone Capital’s John Wilson argues that the proposed Financial CHOICE Act will hurt governance and sustainability advocacy. Sustainable value-creation requires that companies, from the board down, understand how their behavior affects and is affected by environmental and social risks and opportunities. Such companies are accountable to their shareholders and stakeholders and value input from those with a long-term mindset. In a recent webinar, “Proxy Voting for Impact: A Conversation about Corporate Governance in 2017,” Cornerstone Capital gave voice to experts on fostering corporate accountability with proxy voting and shareholder engagement. One takeaway: “Boards need precision in how they apply these qualitative, visionary ideas into hard decisions,” according to Karina Litvack, a global governance expert. The scandal at Wells Fargo made for a timely case study. You can catch John Wilson in person; he’s the keynote speaker for an expert course on corporate social responsibility on May 16 at Rutgers University.
#Signals: Ahead of the Curve
Short fuse, big bang for digital financial services in Africa. The key to reaching hundreds of millions of financial services customers across Africa? Affordability, reach, access and trust — enabled by digital technologies and smart partnerships — according to Leveraging digital to unlock the base of the pyramid market in Africa, a new report from Deloitte. New financial products and services are beginning to meet the needs of customers with low and unsteady incomes. BIMA, for example, provides life and hospital insurance via mobile technology for 18 million customers, with coverage up to $1,100 for as little as 30 cents per month (see, BIMA raises $38.4 million for mobile microinsurance). Cape Town-based JUMO uses behavioral and digital data to build credit scores and provide savings, credit and working capital products to five million low-wage and small-business users. (Both BIMA and JUMO are backed by Leapfrog Investments, see #Dealflow, above.) Such ventures are bringing hundreds of millions of small merchants and smallholder farmers, women and other Africans into modern financial services. “Global banking and insurance are facing disruption by technology players,” the authors write. “We expect this disruption to be imminent and to be sizeable in impact: short fuse and big bang.”
‘Full and productive employment for all,’ by working together for the 2030 global goals. Experts are wondering how to fulfill the full employment target of Sustainable Development Goal №8 when job growth isn’t keeping pace with global population growth. “Between 600 million and 1 billion people are entering the labour market between now and 2030,” according to Mattias Lundberg, an economist and director of the World Bank’s youth employment global partnership. “The pace of job creation isn’t nearly as fast.” The International Labor Organization estimates the world economy needs to add 40 million jobs per year to employ everyone of working age.
The most successful plan for job growth could be the Sustainable Development Goals themselves. The investments in meeting the global goals for health care, education, water, sustainable energy, urban infrastructure could be massive job-creators. In Tanzania, for example, agtech company Esoko is working with Restless Development to fill a talent gap by skilling up youth. Increasing the employability of Tanzania’s youth will help alleviate poverty among Tanzania’s low-income rural farmers, by enabling Esoko to expand its reach and connect them to more customers.
The win-win-win of job-creation, entrepreneurship and social problem-solving is particularly important in Africa, where youth unemployment is the world’s highest and meeting SDGs will require the steepest gains. Many of the top ranked entrepreneurs on the continent are starting businesses aimed at tackling problems like agricultural productivity, energy access, and financial services expansion. Micro-franchising is helping create jobs for self-motivated young people. Kenya is helping to connect youth to online freelancing sites and prepare them for the gig economy. Already, 40,000 youths have secured work through freelancing sites like Amazon’s MTurk and Kenyan startup KuHustle.The Aspen Network of Development Entrepreneurs and other organizations are working to spur social enterprise growth by matching ventures with skills. ANDE is expanding its career series for graduates at four Kenyan universities last year with talent and job readiness workshops.
The African digital fintech disruption (see #Signals, above) is also helping. M-PESA and BIMA both employ large workforces of agents to educate customers about new services and convert digital money to cash. That’s SDG №9.3: “Increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit, and their integration into value chains and markets.”
Onward! Please send any news and comments to TheBrief@impactalpha.com.