Greetings, ImpactAlpha readers!
#Featured: ImpactAlpha Original
Annie Chen’s path to a 100% sustainable and mission-aligned portfolio. ImpactAlpha caught up with the Hong Kong impact investor at this week’s Asian Venture Philanthropy Network conference in Bangkok. Among the nuggets: Chen’s RS Group will be doing more direct deals in key impact themes. She’s creating a Sustainable Finance Initiative to build impact investing in Hong Kong. And she has fired fund managers who fail to deliver impact.
Read more of Michael Standaert’s lively Q & A with Annie Chen on ImpactAlpha:
See #Signals below for Part 2 of ImpactAlpha’s “Fellow Travelers” series on growing impact investment in emerging markets:
We’re looking for leaders driving impact investing around the world. The Global Steering Group for Impact Investment will honor investors, managers, entrepreneurs and market-builders. Deadline: June 16. Submit an Entry
#Dealflow: Follow the Money
Grab to expand from ride-hailing to financial services. Singapore-based ride hailing service Grab is gearing up for a new round of fundraising to back a move into the financial services market, Reuters reports. Just over a quarter of Southeast Asian adults have bank accounts. Grab, which operates in seven Southeast Asian countries, already offers its drivers micro-loans and support in opening bank accounts. It wants to expand those services to include money transfer services and a money-market fund. In Grab’s last round, in September, it raised $750 million. Grab’s move is part of a trend among emerging market companies to look at underserved markets for business opportunities, as telecom provider Safaricom did in launching M-Pesa for mobile payments in Kenya. India-based Ola, for example, is looking beyond ride-hailing to electric car manufacturing. It’s no coincidence: Both Ola and Grab are portfolio companies of Japan’s SoftBank.
Trilogy raises $30 million for bootcamps for adult learners. Trilogy delivers practical skills, such as web development and data analytics, in bootcamps for older students looking to accelerate or change their careers. Rather than disrupting traditional universities, however, Trilogy partners with them to develop short on-campus (versus online) courses. Trilogy targets students that have “responsibilities in life and don’t have the luxury of leaving a full-time job to attend a bootcamp,” says CEO Dan Sommer. Its average student age is 32 and average program cost is $10,000. Trilogy has built 21 university partnerships since 2015. The Series A round was led by Highland Capital Partners, with backing from Rethink Education and City Light Capital.
Lumina Foundation ramps up impact investing with stake in Cevitas Learning. The $1.2 billion foundation invested an undisclosed sum in the edtech venture’s $60 million Series D round. Cevitas Learning has an analytics platform to help universities track student progress and help retain and graduate students. It works with 300 colleges and universities serving seven million students. Lumina wants to see 60 percent of U.S. adults earn postsecondary credentials by 2025 — up from 46 percent today. “If we want outcomes for today’s students to change, we must change the way we approach student success and deliver support,” says Lumina’s Jamie Merisotis. The foundation launched Lumina Impact Ventures last March and plans to invest $5 million per year for the next 10 years. Lumina joined Valhalla Charitable Foundation more than 18 months after Warburg Pincus kickstarted Cevitas’ latest round of funding. It was just in time: Cevitas recently laid off 10% of its staff.
NOAH in the Twin Cities gets financing boost from Freddie Mac. Here’s an acronym to get behind: NOAH, for naturally occurring affordable housing. Freddie Mac, the federal mortgage agency, is offering $100 million to finance first-time mortgages as part of a larger effort to preserve affordable housing in and around Minneapolis. The NOAH Impact Fund, an equity fund launched last year by the non-profit Greater Minnesota Housing Fund, has raised $32.5 million to acquire 1,000 affordable units vulnerable to market-rate and high-end housing conversion. Of that, $25 million will be invested and $7.5 million will enhance credit for the fund’s private investors. Among the investors: Bremer Bank, Sunrise Banks, Western Bank, the Minnesota Housing Finance Agency, the McKnight Foundation, and Otto Bremer Trust. The NOAH Impact Fund is anchored by Hennepin County, where Minneapolis is based.
#Signals: Ahead of the Curve
Fellow Travelers, Part 2: Impact investments in emerging markets are not growing fast enough. Developed markets still attract the bulk of impact capital. About half of the capital that does go to emerging markets goes to mature or publicly traded companies, which don’t create many jobs. Equity, which makes up just over a quarter of emerging market impact investments, requires more mature capital markets and is less conducive to small business growth. Debt capital mostly goes toward microfinance. That doesn’t leave much for the small and growing businesses that are key to job creation and economic development in emerging markets. The first part of ImpactAlpha’s “Fellow Travelers” series tracked the divergent paths of impact investing and emerging markets. In Part 2, we dig into the data on impact capital flows and investment returns in less-established markets. Read Part 2 of Fellow Travelers by Andrew Haimes and Steve Zausner:
The Economist takes its impact investing show to London. The Economist’s February impact investing pow wow in New York signaled the industry’s penetration into mainstream finance. At the sequel in London next week, the magazine will ask whether it’s possible to build ‘impact’ into the fabric of traditional investment firms. Those gathering to discuss “purpose-driven finance” include Sir Ronald Cohen, chair of the Global Steering Group for Impact Investment, Maya Chorengel of TPG’s Rise Fund, Danone CEO Emmanuel Faber and more than 200 financiers, institutional investors, policymakers, academics, impact investors and philanthropists. ImpactAlpha is a media partner for the European edition of the Economist’s Impact Investing Summit on June 15. Use the code IMPACTALPHA/DC for a 20% discount. Register.
Life below water. This week’s Ocean Conference at the U.N. is focused on meeting Sustainable Development Goal №14 — “conserve and sustainably use the oceans, seas and marine resources for sustainable development” — by 2030. The Sustainable Fisheries Partnership can’t wait that long. It is aiming to ensure 75% percent of the world’s seafood is produced sustainably by 2020. Demand for seafood is growing fast, reaching 20-kilograms per person globally in 2014, and is expected to soar with the world population’s increasing demand for protein.
The non-profit partnership, launched in 2006, works with seafood companies to identify and take corrective action on fishing and aquaculture practices in their supply chains. Its public database of fisheries, FishSource, tracks issues and areas for improvement. Over half of global whitefish supply sources, like cod and hake, are “improving” sustainable practices, for example. (Talapia and pangasius, which are mostly farmed, have a ways to go.) Other sectors which are making solid progress: pre-cooked tuna (the kind that comes in a can), and shrimp, owing to the demands of U.S. and European buyers. By contrast, 90% of the world’s squid, octopus, and fresh and frozen tuna have yet to undertake significant sustainability steps. “We want to see many examples of improvement efforts, even if the quality of those efforts varies, rather than merely a few examples of exceptionally good practice,” its Target 75 report says.
Onward! Please send any news and comments to TheBrief@impactalpha.com.