The Brief | September 14, 2021

The Brief: Capitalism Reimagined call, natural asset companies, forest conservation, African fintech, solar finance in Kenya, lab-grown cheese

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Greetings, Agents of Impact! 

Hop on today’s Agents of Impact Call: Capitalism Reimagined. We’re all universal owners now. Today’s call will take up investor strategies for active, long-term ‘beta stewardship’ to tackle negative externalities and systemic risks. “We need to make sure we are collectively responsible for what’s happening to the whole economy,” says Hiro Mizuno, former chief investment officer of Japan’s $1.75 trillion Government Pension Investment Fund. Mizuno will join Engine No. 1’s Michael O’Leary, The Shareholder Commons’ Sara Murphy, Illinois State Treasurer Michael Frerichs, Zevin Asset Management’s Marcela Pinilla and Omidyar Network’s Chris Jurgens in conversation with ImpactAlpha’s David Bank, today at 10am PT / 1pm ET / 6pm London. Zoom right in.

Featured: Natural Capital 

Move over SPACs. Here come NACs to turn ecosystem services into tradeable assets. The New York Stock Exchange is seeking approval for a new kind of publicly traded asset based on the valuable services provided by nature. “Nature has value and we want to give investors the ability to directly invest in it,” says Douglas Eger of Intrinsic Exchange Group, which is working with the NYSE to win approval from the U.S. Securities and Exchange Commission to bring natural asset companies, or NACs, to market. NACs will manage ecosystem services, such as forests that provide clean air, wildlife habitat, carbon sequestration and timber. The notion is that a natural ecosystem need not be a cost to manage, but rather a productive asset that attracts financial capital and provides wealth for governments and citizens. “Countries are looking for a way to finance and have a value for their conservation efforts,” Eger tells ImpactAlpha

Costa Rica is developing a NAC to protect 400,000 hectares of forest and marine lands and plans to seek approval by the end of the year. How it would work: a NAC would be granted rights to a set of natural assets and associated ecosystem services, similar to concessions granted to companies for mining or timber. A study would identify the value of the ecosystem services and the assets’ revenue-generating potential. The NAC would go public through a traditional IPO process and appreciate in value based on the production of timber, food or other products, the underlying value of the asset and the provision of ecosystem services. Carbon offsets, for example, have risen dramatically in price this year. “We’re trying to get access to the biggest range of investors, which public ownership can facilitate, and the biggest pool of capital,” says Adam Connaker of the Rockefeller Foundation, which is backing Intrinsic to develop the market. “This is a big idea.” 

Keep reading, “Move over SPACs. Here come NACs to turn ecosystem services into tradeable assets,” by Amy Cortese on ImpactAlpha.

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Dealflow: Conservation Finance

The Nature Conservancy and Timberland Investment Group team up to scale forest conservation. The partners seek to bridge the gap between demand from institutional investors for climate-smart forestry investments and the supply of institutional-scale opportunities, said Gerrity Lansing of Timberland, a unit of BTG Pactual Asset Management. The partnership with TNC aims to unlock conservation and climate action on $850 million of Timberland’s $4.3 billion global timberland portfolio. The goal: to help Timberland improve the sustainability of its forests by attracting institutional capital. Timberland manages around three million acres of timberland. TNC will serve as conservation advisor on nearly 530,000 acres in 11 states in the South and Pacific Northwest. TNC also advises Timberland on an $864 million vehicle investing in other U.S. timberland assets.

  • Low-carbon transition. Forests and forest-based products, such as timber and wood, capture and store nearly 15% of the U.S.’ carbon emissions from burning fossil fuels, according to American forests. Planting more trees and using climate-smart strategies to manage forests could capture nearly twice as much carbon.
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Two African fintechs raise early rounds to connect informal businesses to capital. Small businesses in emerging markets are often shut out of traditional financial services because they’re deemed too risky to lend to or too expensive to underwrite. Kenya’s Pezesha operates an online marketplace for matching small businesses in need of working capital loans to banks, microfinance organizations and other financial services firms. The five-year-old, woman-led company serves as a “tech bridge” between businesses and lenders, vetting potential borrowers and assigning them alt-credit scores based on data it receives from partners, like Twiga Foods and enterprise tech venture MarketForce.

  • Seed round. Pezesha secured an undisclosed amount of seed funding from GreenHouse Capital and Venture Garden Group. It operates in Kenya, Nigeria and Ghana and plans to expand to Uganda.
  • Nigerian fintech. Nigeria-based Prospa, a two-year-old neobank for micro-enterprises, provides digital bank accounts to informal and small businesses, helps informal businesses get registered, and provides invoice and inventory software. It raised a $3.8 million pre-seed round from Y Combinator, Global Founders Capital, Liquid 2 Ventures and executives from Square, Facebook and Nubank. Nigerian fintech ventures have raised more than $1.5 billion since 2019.
  • Senegal’s unicorn. Last week, Senegal-based mobile money provider Wave closed $200 million from Sequoia Heritage, Founders Fund, Stripe and Ribbit Capital that valued the company at $1.7 billion, TechCrunch reports. Wave spun out of Sendwave, a fintech company owned by London-based money transfer service WorldRemit.
  • Read on

Solarise Africa secures $5.9 million in debt financing from Trine. Commercial and industrial solar accounts for 75% of power demand in sub-Saharan Africa, despite its unreliability and high cost. Nairobi-based Solarise provides financing for clean energy partners in Africa to design, build and maintain solar systems. Targeted customers are small and mid-sized businesses without affordable and reliable electricity.

  • Solar finance. The investment from the Swedish impact investment firm Trine, which provides debt funding for solar businesses in emerging markets, will help Solarise finance five projects in South Africa and Kenya. It will also back projects to provide solar energy to commercial and industrial customers in Rwanda and Ghana.
  • Check it out

Dealflow overflow. Other investment news crossing our desks:

  • Luxembourg-based Quintet Private bank commits €200 million to Amundi Funds Emerging Markets Green Bond.
  • New Energy Equity secures $50 million to build community solar projects and provide electricity to commercial, industrial, municipal and utility customers in New York.
  • Berlin-based Formo raises $50 million to expand its menu of lab-grown cheeses, in a round led by EQT Ventures, Elevat3 Capital and Lowercarbon Capital.
  • The Rise Fund acquires a majority stake in Teachers of Tomorrow, an alternative certification program for teachers.
  • Carbon-capture project Sustainable Thinking Scotland secures a £190,000 ($263,000) loan from Scotland’s Catalyst Fund.

Agents of Impact: Follow the Talent

Lauren Cochran, ex- of Blue Haven Group, is named vice president of equity and investment funds at U.S. International Development Finance Corp.… Selen Ucak, ex- of Building Markets, joins Refugee Investment Network as refugee entrepreneurship lead. RIN also seeks an Africa director in Nairobi… Camelback Ventures is looking for a chief operating officer… Arabesque is recruiting a climate research director in Boston… Black Farmer Fund seeks an investment director… Vancity Community Investment Bank is hiring an account manager of banking and investments in Toronto… There’s still time to complete TIIP’s survey on managing systemic risks. 

Global Energy Policy at Columbia University’s School of International ad Public Affairs is hosting “Africa and Global Climate Diplomacy: Priorities, Lessons Learned, Pathways Forward,” with Kamissa Camara of The Tony Blair Institute for Global Change, Green Climate Fund’s Pa Ousman Jarju, Emily Ojoo-Massawa of African Group of Negotiators on Climate Change, and SIPA’s Harry Verhoeven, today at 12pm ET… Clean Energy for America is hosting “Clean Energy & the Build Back Better Agenda,” with Rewiring America’s Ari Matusiak, Leah Stokes of the Evergreen Advisory Board, and CE4A’s Audrey Lee, today at 8pm ET… The Network for Developing Conscious Communities is hosting a “National Conference on the Black Cooperative Agenda,” Sept. 27-29

Thank you for your impact.

– Sept. 14, 2021