Greetings, Agents of Impact! Mark your calendars for this ImpactAlpha partner event:
- Truth in Impact. The impact consultancy Tideline will launch its “Guide to Using the Impact Investment Label” to help investors distinguish between ESG and impact approaches. Caprock’s Mark Berryman, Jordan Park’s Lauren Booker Allen, the GIIN’s Kelly McCarthy, and Morgan Stanley’s Jamie Martin join Tideline’s Ben Thornley, Wednesday, Aug. 4, at 11am ET. Register today.
Featured: Year of the Climate Fund
TPG Rise ($5.4 billion) and Brookfield ($7 billion) raise the stakes for climate funds. The funds represent a step-change for climate funds in both size and scale of institutional backing and are the latest in a banner fundraising year for climate-focused funds. The private equity giants relied on big names to pull in some of the world’s largest pension, sovereign and corporate investors. Former U.S. Treasury Secretary Hank Paulson helped raise $5.4 billion in the first close of the TPG Rise Climate Fund, which could cap out at $7 billion. “Climate change is a societal risk but also a generational investment opportunity,” said TPG Rise’s Jim Coulter (see, “How private equity learned to stop worrying and love ESG”). Mark Carney, the former Bank of England governor, helped Brookfield raise the initial $7 billion for the Brookfield Global Transition Fund, which is aiming to raise as much as $12.5 billion. “The decarbonization opportunities are bigger and are coming sooner than we might have expected a few months ago,” Carney told Bloomberg (see, “Agent of Impact: Mark Carney”). Firms have already closed more climate funds in 2021 than in the previous five years combined, according to Pitchbook.
- Institutional shift. The $221 billion Ontario Teachers’ Pension Plan Board, Canada’s largest pension plan, anchored both funds. TPG Rise’s first climate fund secured investments from other institutions, including Allstate, AXA and the School Employees Retirement System of Ohio. TPG Rise also attracted more than 20 major corporations as limited partners, including Apple, Alphabet, GE and General Motors, reflecting growing pressure on multinationals to accelerate the low-carbon transition. The Ontario pension fund, along with Temasek, the Singapore sovereign fund with $282 billion in assets, are the founding investment partners of Brookfield’s climate fund.
- Impact theses. TPG Rise Climate will provide equity for growth-stage ventures in clean energy, decarbonized transport, agriculture and natural solutions. Brookfield partnered with Tideline to design the fund’s approach to impact management and measurement. The fund will target “decarbonization-driven investment opportunities” to scale clean energy and transform carbon-intensive businesses.
- Climate fund cascade. The big new funds “really are minuscule, drops in the bucket, in terms of the amount of capital that will be allocated toward decarbonization initiatives over the next few decades,” Brookfield’s Connor Teskey told Bloomberg. BlackRock raised a $4.8 billion global renewable energy fund (see, “Cascade of climate-tech funds take aim at $10 trillion energy transition opportunity”). Last week, Generate Capital raised $2 billion to develop green projects and General Atlantic announced BeyondNetZero, which is raising $4 billion. Carlyle launched Copia Power, a solar and storage infrastructure investment unit, with $700 million.
- Reality check. “What’s remarkable is not that there is some momentum of announcements like these, but that we are not seeing more action to close the trillion-dollar climate investment gap,” Climate Policy Initiative’s Barbara Buchner told ImpactAlpha. She welcomed the commitments from institutional investors but called for transparency and accountability. “All of us will be watching closely to monitor progress on the pace and integrity of investments from these and other new funds.”
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Dealflow: Climate-Resilient Agriculture
India’s Samunnati to list green bond to back climate-resilient farming. Chennai-based Samunnati is a rare source of financing for India’s 130 million smallholder farmers, coupling capital with agricultural support services. The financial services firm has previously raised debt financing the way most impact enterprises do: from development finance institutions and impact funds. Its new approach: a certified green bond with Symbiotics listed on the Luxembourg stock exchange. Proceeds from the $4.6 million bond will be used to encourage India’s collective farmer producer organizations to adopt climate-resilient farming practices.
- Climate finance. Samunnati is one of the first non-banks in India to issue a green bond for agriculture and agroforestry. “India being a tropical country remains at highest risk of climate change, and the agri-sector is likely to face a big set of challenges, like volatility and disruptions in production, farm productivity, farmer income levels and agri value-chain operations,” Samunnati’s Anil Kumar SG told ImpactAlpha.
- Financing growth. In six years, Samunnati has provided more than 60 billion rupees ($807 million) to 1,000 farmer producer organizations in 21 states in India. In April, Samunnati acquired agricultural support services firm Kamatan to expand its reach to an additional 50 FPOs in northern and central India. It has raised more than $30 million in debt financing in the past year, mostly from the International Finance Corp. Sammunati raised $55 million in equity in 2019.
- Check it out.
South African fintech Yoco raises $83 million for small business lending. The Cape Town-based platform provides digital payments and other financial services to more than 150,000 small business owners in South Africa. The financing will help Yoco expand internationally to reach its goal of one million small business customers within four years. “There are still millions of small businesses in South Africa and well over 100 million across the Middle East and Africa that still transact only in cash,” the company wrote on LinkedIn.
- Inclusive fintech. Yoco’s new investors include Dragoneer Investment Group, 4DX Ventures and global tech executives from Spotify and Coinbase. Existing investors, such as FMO and Quona Capital, also participated. Quona, a spinoff from Accion, was an early backer (see, “Quona focuses on customers for inclusive fintech in emerging markets”).
- Access to capital. Johannesburg-based and women-led fintech Akiba Digital, which facilitates loans for small businesses and individual borrowers, raised $1.1 million in pre-seed financing.
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Dealflow overflow. Other investment news crossing our desks:
- Huruma Fund raises €120 million ($141.7 million) to invest in microfinance institutions, banks and agricultural cooperatives in Asia, Africa, Latin America and the Caribbean.
- Acumen raises $58 million to invest in African agri-businesses that are helping smallholder farmers build climate resilience.
- Voltron Capital launches to cut early checks of $20,000 to $100,000 to Africa’s homegrown tech startups.
- Singapore’s sovereign wealth fund GIC commits $240 million to Arctic Green Energy to decarbonize the buildings sector.
- International Finance Corp. lends $250 million to HDFC to finance green, affordable housing for low- and middle-income Indians.
Impact Voices: The Reconstruction
Q&A with Goldman Sachs’ Asahi Pompey: Meeting the calls for racial and gender equity. When she realized her 11-year son had seen George Floyd’s death on video, Pompey says she made a choice: “I need to step into this as a mom and to step into this as a leader.” Pompey had cut an uncommon path as an immigrant from Guyana to become the global head of corporate engagement at Goldman Sachs and the president of the investment bank’s foundation. At a company-wide town hall, she told Goldman bankers that privilege and wealth do not protect their Black colleagues from prejudice and racism. She helped Goldman stand up its $10 million Fund for Racial Equity. In March, Pompey led the launch of Goldman’s $10 billion One Million Black Women initiative, which aims to impact one million Black women by 2030.
- Behind the scenes. “We wanted to do something that was big,” Pompey told ImpactAlpha contributing editor Monique Aiken, host of The Reconstruction podcast, at the Stern Women in Business Conference (watch the video). “We wanted to do something that was not episodic, that was going to be consistent and persistent over time, not a flash in the pan.” In a wide-ranging interview, Pompey shares how Goldman Sachs is responding to calls for racial and gender equity. The bank announced it would not take public any company without at least one diverse board member (soon to be two); Goldman has been helping companies recruit women candidates. “This feels like we’re in an historic moment,” Pompey told Aiken. “We’re trying to be part of the solution.”
- Read Monique Aiken’s full Q&A with Asahi Pompey.
Agents of Impact: Follow the Talent
Pembrook Capital Management brings on municipal finance attorney David Baker Lewis and affordable housing advisor Ghebre Selassie Mehreteab as advisors on racial and economic equity in affordable housing lending… Amber Kuchar-Bell, ex- of CDFI Fund, joins Opportunity Finance Network as chief strategy and operations officer… Emma Sissman is promoted to director of portfolio acceleration at SJF Ventures.
Village Capital seeks an economic opportunity practice lead in Washington, D.C… The Open Society Foundations has an opening for a special advisor, based in New York… Reunity and the Women’s Philanthropy Institute at Indiana University are hosting the Black Philanthropy Month 2021 Global Summit Series, Aug. 3-31 (see, “How philanthropy unbound can put humanity back into investing in all its forms“).
Thank you for your impact.
– July 28, 2021