The Brief | January 17, 2019

Remembering I-DEV’s Jason Spindler, Prudential invests in Baltimore opportunity zone, fake Larry Fink letter gets real, seeking impact lawyers

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Greetings, Agents of Impact!

Featured: ImpactAlpha Original

Agent of Impact remembered: The legacy of I-DEV’s Jason Spindler. Jason Spindler understood risks. As a climber, he both took and mitigated risks (sometimes even with a rope). On Sept. 11, 2001, as thousands fled, Spindler ran into the rubble of the World Trade Center to help pull people out. As co-founder of frontier markets investments advisory I-DEV International, Spindler took early risks on high-impact companies to demonstrate to other investors that perceptions of risk are often misplaced. Risk is on the minds of the impact investing community as it absorbs the death of Spindler, who was killed in Tuesday’s attack on a business hub in Nairobi, Kenya. At least 20 other people also died, including members of development organizations Gatsby International and Adam Smith International. Staff of the African payments company Cellulant were still missing.

The biggest risk, of course, is that the work stops. Spindler’s work lives on in the positive impact of companies like Runa and Twiga and funds such as Grassroots Business Fund. In total, I-DEV has helped 350 small and medium-size businesses in 45 countries. At least 40 businesses have raised about $80 million in follow-on investments and growth capital. “A lot of the reason he was doing this was because we believed you could invest, could build businesses, that they would be a means to stabilize economies, reducing the need for terrorism, war, hatred,” I-DEV’s Patricia Chin-Sweeney told KPIX 5 in San Francisco. “It’s ironic it ended this way. But when you choose these types of battles, you don’t always win.” Tributes poured in from across the impact investing community. Let us add ours: Behind almost every deal we write up in The Brief is a Jason Spindler or an I-DEV or another unsung intermediary that got it going. That’s not just taking risks. It’s taking leadership.

Read, “Agent of Impact remembered: The legacy of I-DEV’s Jason Spindler,” by Dennis Price on ImpactAlpha.

Dealflow: Follow the Money

Prudential’s first Opportunity Zone investment is a mixed-use project in Baltimore. The Newark-based financial services company is an early mover in Opportunity Zone dealmaking. Prudential is backing Yard 56, a $77 million mixed-use real estate project on a former industrial site in a blighted area in eastern Baltimore. The project includes a grocery store, new office space, and job training via a partnership with local YouthBuild chapter, CivicWorks. Prudential’s Daryl Shore told ImpactAlpha the Opportunity Zone capital-gains tax credits are just a bonus. The project’s community development and impact potential recalled Prudential’s work in Newark. “We have looked to take what we’ve learned and apply that to other cities,” Shore said. “Baltimore is one city where we feel we have a decent blueprint to work from.” Dig in.

LGT Impact leads India fresh food distributor WayCool’s $17 million round. Chennai-based fresh food company WayCool is trying to reduce food waste and improve livelihoods by sourcing produce directly from small farmers and distributing it to restaurants, local shops and other retailers. The company, which launched in 2015, serves 4,000 clients in 13 locations across India, sourcing 70% of its food directly from small farmers. Waycool’s 1.2 billion rupee ($16.9 million) funding round was led by Zurich-based impact investor LGT Impact, with backing from Northern Arc Capital and Hyderabad-based Caspian. Here’s more.

Signals: Ahead of the Curve

How real is the fake letter from Blackrock’s Larry Fink? Publications, including the Financial Times, were pranked by a letter that appeared to come from BlackRock CEO Larry Fink. One reason for their credulity: the fake letter made cogent points that could plausibly have come from Fink himself. Fink’s annual message to corporate leaders has come to rival in influence Warren Buffett’s letters to shareholders. Last year, Fink urged CEOs to define their companies’ social purpose, or risk losing their “license to operate.” In 2017, he admonished them to invest more in their employees. In the fake letter from still-unknown hoaxsters, the faux Fink ticked off a roster of global risks but concluded, “We find that the biggest contributor to uncertainty is also the greatest threat to the long-term stability of our economy and our investors’ assets: climate change. Companies must address climate risk factors or fail in their fiduciary duty.”

The tip-off may have been in the section of the letter headed “Purpose in Action, or Purposeful Inaction?” That reflects the pressure that climate activists and some investor groups have been putting on BlackRock to flex the muscle that comes from $6.4 trillion in assets under management. The fake letter purported BlackRock would divest from coal in its actively management funds and screen out fossil fuels “which we see as declining and endangered.” It said BlackRock would vote in favor of management “only when we find them to be working toward net zero carbon emissions by 2050.”

  • The Swiss investor group Ethos, along with asset managers and other organizations, this week sent Fink a letter urging BlackRock to support climate-related shareholder proposals, citing research that BlackRock backed less than one-quarter of such resolutions last year. The Sierra Club’s petition calling on BlackRock to “stop funding the climate crisis” has nearly 25,000 signatures.
  • The pranksters apparently also paid for the letter to appear as an ad at the top of Google searches. “A brilliantly executed fake,” tweeted ShareAction UK. “Now the world will be watching even more closely for ambitious #ClimateAction from #BlackRock.”
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Agents of Impact: Follow the Talent

Mastercard exec Walt Macnee joins payments provider Paysafe Group as a board director… New ‘future of work’ impact fund Network is recruiting a managing director or partner… Blue Dot Law is looking for attorneys to represent mission‐driven businesses, impact investors, and nonprofits… Capria is hiring an investment intern/fellow in Seattle.

January 17, 2019.