Greetings, Agents of Impact!
Featured: Catalytic Capital
Acre Impact Capital bridges a financing gap to catalyze capital for infrastructure in Africa. Financing for emerging markets infrastructure projects that have become more critical because of the pandemic – think hospitals – has become harder to secure, also because of the pandemic. Acre Impact Capital, based in London, has found a low-risk, high-impact opportunity for impact investors, development finance institutions and others to help African governments close funding gaps for hospitals, schools, housing, transportation, energy, water and sanitation projects serving high-need populations in Africa. Government-owned export credits agencies, or ECAs, facilitate such projects with credit-risk guarantees that cover up to 85% of a project’s costs. But banks won’t always fund the remaining 15% commercial tranche, especially during the pandemic. “There’s more demand for capital than there is available supply,” Acre’s Hussein Sefian tells ImpactAlpha. Acre aims to provide that 15% to unlock the guarantees and enable projects to move forward. Each dollar invested by Acre catalyzes nearly six additional investment dollars.
ECAs back roughly $150 billion in project financing every year. “The involvement of an export credit agency in a transaction really helps derisk all of the risks typically associated with emerging markets,” says Sefian. Rockefeller Foundation and GuarantCo, a unit of Private Infrastructure Development Group, backed Acre to build out and launch its first fund (disclosure: Rockefeller Foundation is a partner in the Catalytic Capital Consortium, a sponsor of ImpactAlpha). Acre “brings more infrastructure to emerging markets in a way that is much more unique than just investing in the next infrastructure fund,” says Thomas Belazis of Rockefeller’s innovative finance team. Such infrastructure financing can fit easily into investors’ portfolios, adds Rockefeller’s Adam Connaker. “This is a space they already have allocations for. The risk-return profile looks solid. They get to co-invest with big names that they would feel comfortable co-investing with. We see this as having enormous potential.”
Keep reading, “Acre Impact Capital bridges a financing gap to catalyze capital for infrastructure in Africa,” by Jessica Pothering on ImpactAlpha.
Dealflow: Follow the Money
CDC Group provides $100 million to help ETG connect smallholder farmers in Africa. The debt capital will help the agricultural commodities supplier expand its logistics networks and boost yields of grains, rice, cocoa and other staples. ETG connects more than 550,000 smallholder farmers in 49 countries to global markets and provides warehouses and distribution centers, as well as agricultural inputs and training. ETG has linked one-third of its loan book with ESG and sustainability standards, said ETG’s Anish Jain. The new debt infusion is one of the largest corporate debt investments ever by CDC, which is funded by the U.K. government. “Improving access to markets for Africa’s farmers is critical to food security, across the continent and the world,” said Emma Wade Smith of the U.K. Department for International Trade, as well as to “sustain and improve the livelihoods of Africa’s farmers and their families.”
- Risk appetite. CDC Group last year promised to spur global development by taking a more catalytic approach from its often risk-averse DFI peers (see, “How CDC Group is innovating with catalytic capital”). CDC committed $275 million to African banks to expand financing for the continent’s small businesses, as well as $100 million in a risk-sharing facility with Société Générale to boost African trade.
- Check it out.
Dealflow overflow. Other investment news crossing our desks:
- Dolma Fund Management raises $40 million from FMO, CDC Group, Swedfund and the International Finance Corp. for its second impact fund to invest in renewable energy, healthcare and technology ventures in Nepal. Its first vehicle raised $36.6 million in 2018.
- An American Heart Association impact fund is committing $2.1 million to a dozen businesses and nonprofits addressing food insecurity in Chicago and Atlanta. The fund in December backed L.A.-based ConsejoSano.
- IFC is making a $10 million equity investment in South Africa’s Eris Property Group to develop affordable student housing for up to 15,000 low-income students over five years.
- Amazon issues a $1 billion sustainability bond to invest in renewable energy, clean transportation, sustainable buildings, affordable housing and worker training.
Signals: Ahead of the Curve
Building a network of young professionals to support global impact startups. Shaper Impact Capital connects young professionals with the passion and skills to help impact-driven startups succeed with early-stage companies around the globe that can use all the help they can get. The firm’s newsletter has put hundreds of impact startups sourced from volunteers in North America and the Caribbean, Europe, Africa and Asia-Pacific in front of more than 500 investors, leading to more than 100 introductions in 20 countries. “We are trying to build a future where there is no difference between companies with an impact and investable companies,” says founder Chia Jeng Yang, a principal at Saison Capital. Volunteers come from the Global Shaper Community, an initiative of the World Economic Forum that has recruited young professionals in over 150 countries.
- Impact startups. ImpactAlpha is syndicating Shaper Impact Capital’s bimonthly newsletter. Among the profiles in the current edition: Nigerian startup Beacon Power Services, which helps utilities optimize the grid to expand access to energy; Wateroam, in Singapore, which designs and manufactures portable water filtration systems for disaster-hit and rural communities; and Chattanooga, Tenn.-based Plain Sight, a networking and community app combating unconscious bias. Collect all eight.
- Read a Q&A with Yang, “Building a network of young professionals to support global impact startups.”
Agents of Impact: Follow the Talent
Jim Coulter steps down as co-CEO of TPG to focus on The Rise Fund and TPG Rise Climate, a new fund being raised with former Goldman Sachs CEO and Treasury Secretary Hank Paulson. Jon Winkelrie becomes the sole CEO of TPG; Coulter takes on the executive chairman role.. Julie Moret, ex- of Franklin Templeton, joins Northern Trust Asset Management as global head of sustainable investing and stewardship.
UBS promotes Michael Baldinger to chief sustainability officer and Phyllis Costanza to head of social impact. The executives will lead a new sustainability and impact unit… Lori Scott is named managing director of impact credit for Lafayette Square… Impact Capital Managers is hiring an analyst in New York… Village Capital seeks a community associate in Washington, D.C… The Climate Policy Initiative has launched the Framework for Sustainable Finance Integrity.
Thank you for your impact.
– May 12, 2021