Beats | April 30, 2018

KKR’s billion-dollar impact fund, big banks’ transition risks, Amazon backs loans for Indian merchants

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What we know about KKR’s $1 billion Global Impact Fund. KKR is the latest private-equity giant to move into impact investing, with what it expects to be a $1 billion Global Impact Fund. KKR veterans Ken Mehlman and Robert Antablin expect to make 12-15 investments averaging about $50 million each in sustainable business development, next-generation energy, agriculture and food and other sectors aligned with the UN Sustainable Development Goals. KKR has told investors the new fund will invest in businesses that deliver “commercial solutions that solve global challenges in credible and measurable ways,” ImpactAlpha has learned. “We believe that we can generate private equity returns, while driving positive impact to global challenges.” Political junkies will recall that Mehlman, who joined KKR in 2008, is a former head of the RNC and led President George W. Bush’s 2004 re-election campaign.

The size of the new impact fund would position KKR between fellow private-equity giants Bain Capital and TPG, which have raised $390 million and $2 billion, respectively, for the Bain Capital Double Impact Fund and TPG Growth’s Rise Fund. The arrival to impact investing of private equity players means larger raises and bigger deal ticket-sizes, as well as a broader range of possible exits for early-stage investors. Further, it raises the stakes for impact measurement, as private equity firms pledged to deliver market-beating returns above 20% (in gross “internal rate of return”) also strive to show that they can deliver specific, measurable impact.

Keep reading “What we know about KKR’s $1 billion Global Impact Fund,” by David Bank on ImpactAlpha.

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Signals: Ahead of the Curve

Big banks gear up to navigate low-carbon ‘transition risks.’ Big banks took another step toward full carbon accounting, backing new guidance to assess their ‘transition risks’ as the world moves to a low-carbon economy. Assessing risks posed by climate warming scenarios is a key recommendation of the Task Force on Climate-Related Financial Disclosures, the industry group chaired by Michael Bloomberg and Mark Carney, governor of the Bank of England.

  • Adaptable… The new methodology allows banks to apply state-of-the-art climate scenarios across multiple risk factors and timeframes.
  • Global banks… The 16 banks that collaborated to develop the methodology and will help pilot-test it include ANZ, Barclays, BBVA, BNP Paribas, Bradesco, Citi, DNB, Itaú Unibanco, National Australia Bank, Rabobank, Royal Bank of Canada, Santander, Société Générale, Standard Chartered, TD Bank Group and UBS.

Climate accounting is destiny, Carney suggested in a 2015 speech to insurers. “We can build that virtuous circle, of better understanding of tomorrow’s risks, better pricing for investors, better decision making by policy makers and a smoother transition to a low-carbon economy.”

Dealflow: Follow the Money

Amazon backs Capital Float as Indian e-commerce battle heats up. Early funding for the fintech startup came from Indian impact investor Aspada, which backed the company in 2014 with $2 million and also funded the firm’s subsequent Series A and B rounds. Read more.

Spain’s BBVA bank leads $400 million green loan for Mexican wind farms. The loan, to Spanish utility Iberdrola’s Mexican subsidiary, will be used to refinance three wind farm developments in the state of Oaxaca. Get the details.

Macquarie Infrastructure Partners backs Aligned Energy’s “cool” data centers. The company’s technology siphons out and recycles hot air, and can be used in the development of new centers or in retrofitting old ones. Dig in.

Working Capital and Norrsken back global supply-chain training startup. QuizRR uses short movies followed by questions to train managers and workers in workplace rights, responsibilities, wage management and other issues. Learn more.

— April 30, 2018