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Next-gen leaders of finance step up to the Sustainable Investing Challenge. Impact investing is no longer just a passion at business schools around the world. It’s a smart career move for the next generation of grads that want to become leaders of the finance industry. “They will see market opportunities, where others would see concerns about public policy issues,” Morgan Stanley’s Audrey Choi told ImpactAlpha. Choi is fresh from last week’s Kellogg-Morgan Stanley Sustainable Investing Challenge in London. The winner (from Singapore Management University) and runner-up (from the University of Virginia) both developed practical financial vehicles for financing infrastructure and disaster resilience, as did several others among the dozen finalists. Financing climate adaptation and resilience is certain to be a major theme in coming decades, Choi said.
Such impact investing competitions are stocking the impact talent pipeline. At last weekend’s MBA Impact Investing Network & Training, or MIINT, competition at the University of Pennsylvania’s Wharton School in Philadelphia, the winning team from Yale’s School of Management successfully pitched investors on a stormwater smart-sensor company on which the team conducted due diligence. “We’re seeing an empowered and boldly ambitious, idealistic generation that is combining that idealism with a high degree of financial sophistication,” Choi said. “These are the young people we are looking to to take over in the next generation.”
Read, “Next-gen leaders of finance step up to the Sustainable Investing Challenge,” by Dennis Price and David Bank on ImpactAlpha.
Agents of Impact: Follow the Talent
Transform Finance is hosting a webinar on the impact-return tradeoffs of lending to the poor in the global south, with Global Partnerships and One Acre Fund… Bridges Fund Management is hiring a project development officer for its social impact bond fund… Bernard Uyttendaele is stepping down as CEO of the European Venture Philanthropy Association. Steven Serneels is stepping in as the firm conducts a CEO search. Agora Partnerships welcomed 29 companies from Latin America to its new accelerator cohort…The Obama Foundation introduced 20 Obama Fellows using community organizing, healthcare, technology, and the arts to improve their communities.
Signals: Ahead of the Curve
Impact investing through private debt: low but stable returns. Private equity and venture capital often get the glory, but private debt and fixed-income instruments do the heavy lifting in impact investing. Such debt funds account for one-third of impact investor assets under management, making them the largest asset class in impact investing. A new analysis from Symbiotic and the Global Impact Investing Network looks at the performance of 50 private debt impact funds and 102 community development loan funds. The takeaway: impact investing through private debt offers relatively low but stable returns.
- Top line numbers… The 90th percentile of private debt impact funds returned an average 10% in 2016. Returns across the private debt impact funds averaged 2.6% per year since 2012.
- Risk-adjusted… The private debt impact funds have a “Sharpe ratio” of risk-adjusted performance of 0.77, which “compares favorably to other traditionally stable asset classes,” according to the researchers.
- Debt funds outperformed… the three-month US dollar LIBOR interest rate by more than five-fold, with almost equal volatility.
Investors most often use private debt to drive financial inclusion, employment generation, entrepreneurship, affordable housing and food security. Dig deeper with the pocket guide to impact investing financial performance.
Dealflow: Follow the Money
Redaptive raises $20 million for energy-efficiency-as-a-service in buildings. The startup fronts the capital for efficiency upgrades and recoups costs from the energy savings of large commercial real estate owners. CBRE Group led the funding round with corporate venture funds ENGIE New Ventures and GXP Investments, and Linse Capital. Read more.
InspiraFarms raises €2.5 million to help preserve harvested crops. The UK-based firm makes refrigeration units to reduce crop losses from pests, heat and other factors. Dig deeper.
BallotReady secures $1.5 million for information on candidates in US elections. BallotReady helps US voters learn more about thousands of candidates in local and state elections. Learn more.
Local Crate raises $1.4 million for its locally sourced mealkits. The company offers a Blue Apron-like subscription meal delivery service focused on locally-sourced ingredients. Read on.