Greetings, Agents of Impact!
⚡ TODAY: Get Plugged In. VertueLab’s Aina Abiodun joins host Sherrell Dorsey on LinkedIn Live to discuss centering local communities in climate innovation at 10am PT / 1pm ET / 6pm London. Join directly.
Featured: Climate + Gender
How Heading for Change invests in climate solutions with a gender lens. Investing at the intersection of climate and gender issues is a good way to address nearly all of the world’s persistent sustainable development challenges. Yet, only a few investors explicitly put their capital to work at the nexus of climate solutions and the empowerment of women as customers, entrepreneurs and asset managers. The philanthropic investment fund Heading for Change is on a mission to, well, change that by sharing its investment processes with other climate and impact investors. In a guest post on ImpactAlpha, the team carrying on the legacy of gender-smart investing pioneer Suzanne Biegel announces the donor-advised fund’s first five investments. “We focus on climate funds with a gender lens, rather than gender funds with a climate lens, to prioritize the urgency of catalyzing capital to climate solutions,” the team writes. Seeing women as agents of change, Heading for Change homes in on “the power of women’s insights and innovations in developing and scaling climate solutions.” (Disclosure: Heading for Change is a sponsor of ImpactAlpha’s Climate + Gender coverage.)
- Building a portfolio. Woman of color-led AiiM invests in overlooked climate tech sectors. Diverse and women-led Supply Change Capital backs startups supporting sustainable and resilient food systems in climate-affected communities. Just Capital backs companies decarbonizing high-emitting industries. WaterEquity finances home water and sanitation solutions in low-income communities. MCE Social Capital’s MESA Fund leverages blended finance to boost economic and climate resilience for smallholder farmers (to go deeper, see, “MCE is unlocking capital for climate and gender investing“).
- Across the spectrum. Heading for Change screens funds for two baselines: they must invest at least three-quarters of their assets in climate and nature-related investments and at least 30% of their leadership and portfolio must meet the 2X criteria for gender lens funds. The Heading for Change team is trying to encourage more climate fund managers to adopt a gender lens. “If we invest only in climate funds that already have strong gender criteria, we will be restricted to a very small number of funds, mostly in the Global North,” they write.
- Keep reading, “How Heading for Change invests in climate solutions with a gender lens,” by Heading for Change on ImpactAlpha.
- Join next week’s Call: “Women as agents of change for climate resilience,” with Camilla Nestor of MCE Social Capital, Shally Shanker of AiiM Partners, Noramay Cadena of Supply Change Capital, and Samantha Anderson and Rose Maizner from Heading for Change, Wednesday, Nov. 15, at 10am PT / 1pm ET / 6pm London. RSVP today.
Sponsored by BlueMark
Impact management for asset allocators (report now available). Over the past year, BlueMark and CASE at Duke University interviewed more than 50 limited and general partners worldwide. The goal? To drive more rigor and consistency in how asset allocators evaluate and manage private market funds investing for positive impact. “A field guide: Impact due diligence and management for asset allocators,” available today, showcases how leading asset allocators and asset managers are measuring and managing impact throughout an investment’s life cycle.
- Join today’s conversation. BlueMark and CASE will launch the report on a webinar with Luyen Tran of the International Finance Corp., Leslie Kapin of Astanor Ventures, Emily Schiller of Jordan Park, and Kenza Himmi of the UN Joint Staff Pension Fund, in conversation with CASE’s Cathy Clark and BlueMark’s Sarah Gelfand, 12pm ET / 9am PT. You can still RSVP.
- Download the field guide.
Dealflow: Just Transition
Candide’s Afterglow Climate Justice Fund secures $36 million to lend in frontline communities. Low-income communities that bear the brunt of climate change also hold the key to many climate solutions. Candide Group, an Oakland-based advisor to families, foundations and other investors, has raised an initial $36 million for its Afterglow Climate Justice Fund, a “catalytic debt” vehicle to develop and expand climate solutions alongside communities. Investors include Schmidt Family Foundation, Builders Vision, Ceniarth, ImpactAssets, MacArthur Foundation and Social Finance (see, “Social Finance taps donor-advised funds for impact-first investments”). “To achieve climate justice, clean energy and energy efficiency, solutions must be developed in partnership with communities most affected and deployed in such a way that everyone has full and equitable access,” MacArthur’s John Balbach said in a statement. Candide aims to raise up to $100 million for the fund.
- Equitable future. Candide named the climate justice debt fund after “Afterglow,” a collection of short stories by diverse writers envisioning an equitable climate future. The fund aims to plug persistent capital gaps for climate justice projects, including for smaller diverse-led developers and for non-profits or low-income households considered higher risk by traditional lenders. Loan sizes will range from $1 million to $7 million. The fund will prioritize low-income communities that lack access to affordable energy and clean transportation.
- Community participation. Afterglow will build community participation into decision-making. Klean Energy Kulture’s Michael Hawthorne and VertueLab’s Aina Abiodum will join Afterglow’s community advisory board to bring a racial justice-lens to potential investments (see, “Klean Energy Kulture aims to bring swagger to climate to activate Black communities”). The board will be “deeply integrated into every step of our process,” Candide’s Aner Ben-Ami told ImpactAlpha. Advisors will “screen every opportunity before we go into due diligence, they join our due diligence calls, and are voting members of our credit committee.”
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Dealflow overflow. Funds, funds of funds, and more funds!
- New York-based BBG Ventures raised $57.2 million for its fourth venture fund, with backing from Japan’s Mizuho Financial Group, to invest in women-led startups. (Venture Capital Journal)
- Asset manager Gresham House raised £300 million ($369 million) for its Forest Growth and Sustainability fund. The firm, now owned by private equity firm Searchlight Capital, will invest in forest development projects and garner returns from timber and carbon credit sales. (New Private Markets)
- Zeal Capital Partners is managing Barclays Black Formation Investments, a planned $50 million investment fund from Barclays Principal Investments that will invest in Black-led companies helping narrow racial wealth and skills gaps. Stefanie Thomas, ex- of Impact America Fund, joined Zeal to oversee the fund. (Barclays)
- Milestone: ImpactAssets crossed $3 billion in assets under management and reported that it directed $458 million in investments and $224 million in grants to funds, companies and nonprofits last year. (ImpactAssets)
Signals: Private Equity Impact
Despite headwinds, private equity firms see robust demand for impact funds. Private equity firms are battling high interest rates and a sluggish IPO market, but their impact and climate funds are still attracting hefty commitments. The latest: TPG secured $2.7 billion for its third TPG Rise fund. That’s up 25% from TPG Rise Fund II, but short of the firm’s $3 billion hard cap. “The awareness among our limited partner base of the investment opportunity, the capital needed in these areas, has expanded significantly,” notes TPG’s Jon Winkelried. This week, KKR sealed its $2.8 billion Global Impact Fund II at more than twice the size of its $1.3 billion predecessor. And Brookfield Asset Management last week bagged $6 billion for an infrastructure debt fund focused on renewable energy. The megafund is already half deployed, and the firm “could be in a position to launch the next vintage as soon as next year,” Brookfield’s Connor Teskey said on the firm’s earnings call Monday.
- Growth drivers. “Decarbonization, deglobalization and digitalization” are fueling Brookfield’s growth, said CEO Bruce Flatt. Climate solutions, in particular, are a bright spot for PE firms. TPG has invested or committed about two-thirds of its $7 billion Rise Climate Fund, raised late last year, and is “actively working toward launching the next vintage.” KKR is building a climate-focused fund in its infrastructure group. “We think the opportunity to invest behind the energy transition is a very big thing,” KKR’s Ken Mehlman tells ImpactAlpha.
- Headwinds. Market constraints were a recurring theme at this week’s private equity-focused SuperReturn North America conference in New York. “The traditional private equity model has really been impacted by everything happening both on the public and private side,” BlackRock’s Lisa Sun said in a packed session on secondary markets, which enable investors to sell their fund stakes and free up capital. “There hasn’t been a better time to be a secondaries investor.”
Agents of Impact: Follow the Talent
Benedict Partners’ Billy Gridley joins The Investment Integration Project as a senior advisor… Opportunity Finance Network reelects Nonprofit Finance Fund’s Aisha Benson to its board of directors… Enterprise Community Partners seeks an investor relations analyst for Low-Income Housing Tax Credits in Washington, DC… Spring Lane Capital is looking for a vice president and senior associate in Boston or Montreal.
The Nature Conservancy has an opening for a finance specialist… Urban Institute and Public Finance Initiative will host a virtual event for issuers and other stakeholders on its new “Municipal Bond Racial and Social Equity Scorecard,” Thursday, Nov. 9… Impact Frontiers is seeking public consultation on its draft of shared norms for impact performance reporting in a series of webinars on Nov. 9, Nov. 15, Dec. 6 and Dec. 14, and via its online forum.
Thank you for your impact!
– Nov. 8, 2023