Greetings, Agents of Impact!
Signals: Ahead of the Curve
For private equity giants, $1 billion is table stakes for entry into impact investing. When Apollo Global Management decided to join the rush among private-equity firms to raise impact investing funds, it set a 10-figure target, Bloomberg reported last week. The $300 billion asset manager prepares to launch its first social impact fund just as KKR is said to have reached its own $1 billion target for its Global Impact Fund. Al Gore’s Generation Investment Managementhas closed its $1 billion Sustainable Solutions Fund and TPG Growth is in the market with a second, $3 billion Rise Fund, revised downward from its initial $3.5 billion target (but still 50% greater than Rise I). Partners Group, the Swiss private equity manager, launched its Sustainable Development Goal-aligned fund last year; Blackstone Group has announced an impact infrastructure, real estate and private equity initiative; and $130 billion asset manager Ares is said to be raising a “climate infrastructure” investment strategy to back projects tackling climate change.
Not all private equity funds are created equal, of course. Buyout and growth capital funds target higher returns than safer infrastructure and “social infrastructure” funds (see, “What we know about Blackstone’s impact infrastructure, real estate and private-equity initiative”). But the move into impact of the private equity giants suggests at least demand from pension funds, endowments and sovereign wealth funds that need to write large checks (the median impact investor’s assets under management is $29 million, according to the GIIN). It may also reflect growing awareness of the powerful secular trends around environmental and social issues. Less clear is the extent impact-awareness will influence investment approaches across the rest of the firms (see, “Infect the host”). “It’s cynical and hollow,” tweetedGraham Sinclair, a principal at sustainable investment advisory, SinCo. “It is the edifice in front of ugly capitalism that will release more extreme investment decisions in the ‘rest of house’ that completely smash ESG,” or environmental, social and governance concerns. To be sure, the impact of Apollo, KKR and TPG should be judged on their total portfolio, not just on their impact funds.
- Post-scandal. The new fundraising efforts also may signal that investors are shaking off scandals at Dubai-based Abraaj Group, which is being liquidated after allegations of accounting fraud, and at TPG Growth, where CEO and Rise Fund co-founder Bill McGlashan was forced out after his indictment in the Varsity Blues college admission scandal. (At least one key investor, pension fund Washington State Investment Board, made public that it would fulfill its $250 million commitment to Rise Fund II.) “I’m so damn torn about this trend,” tweeted Caprock’s Matthew-Weatherly White. “More impact $ = good. Dubious motive/commitment = ?”
- Measure better. The onus will be on the firms to measure and report their impact. The market may also be self-correcting. As we’ve written before, fund managers can’t capture that good ol’ impact alpha without delivering real impact. “All investing is impactful, positively or negatively,” tweeted Amy Clarke of Tribe Capital. “So if you believe being positively impactful is the way forward then surely you’re all in.”
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Dealflow: Follow the Money
Ladenburg Thalmann backs Newday to support financial advisor-focused pivot. Newday joined the “impact investing for the masses” movement last year, with a mobile-only platform that lets individuals commit as little as $5 to thematic impact impact portfolios. Newday is broadening its client strategy to include advisors as well. Financial services firm Ladenburg Thalmann will extend Newday’s platform to Ladenberg’s independent advisory and brokerage firms. Already serving advisors are Ethic and OpenInvest, which also pivoted from a retail strategy (see, “Shakeout highlights an elusive factor in impact investing platforms: the impact”). Working through advisors lets upstart sustainable investing platforms tap into the trillions of dollars that financial advisors already manage, rather than building their customer bases from scratch. Newday also is building out a conscious banking platform, as are other investor-backed impact neo-banks, including Aspiration and GoodMoney. Check it out.
AgDevCo backs DekelOil, its first investment in Ivory Coast. The U.K. impact investor, which focuses on African agribusinesses, invested €8.7 million ($9.8 million) in debt and equity to support the company’s production of sustainable palm oil and cashews.
Emergy Foods raises $4.8 million for its plant-based meat strategy. The Boulder, Colo.-based company is new to the market dominated by Impossible Foods and Beyond Meat. The company will use $4.8 million in funding to roll out a line of soy-, wheat- and pea-free alt-meat products next year.
SomaDetech secures $2.6 million to help farmers screen milk quality. The capital was committed by New Brunswick Innovation Foundation, Western New York Impact Investment Fund, and New York Ventures and will support the company’s software and sensor tech development.
Agents of Impact: Follow the Talent
Bamboo Capital Partners is hiring an investment manager of energy access in Haiti to be based in Haiti or at Bamboo’s office in Bogota, Colombia… Hedge + Impact headhunting is looking to fill an impact investing role of head of southeast Asia debt origination for a tech-enabled lending client in Singapore… The Enza Capital team in Nairobi, Kenya seeks an investment analyst… The Global Steering Group for Impact Investment is recruiting candidates to fill three positions: NAB service manager, market development manager Asia and market development manager Africa… Join more than 100 institutional investors and asset owners at Phenix Capital’s Impact Summit France, Sept. 9 in Paris and Impact Summit America, Nov. 14 in New York.
– Aug. 19, 2019