Greetings, Agents of Impact!
Featured: Inclusive Economy
Ownership economy gets a payday as factory workers share in KKR’s exit. How to get rich in America? Own. Equity, not salaries, accounts for the majority of income among the country’s wealthiest people, finds a new study. Turning more workers into owners represents a distinctly capitalist way to share the wealth. That’s been the strategy of private equity giant KKR’s U.S. Industrials private equity portfolio, which has awarded billions in equity value to more than 45,000 employees at two dozen companies. This week, about 800 of those employees got to cash out when KKR sold C.H.I. Overhead Doors to the steel company Nucor Corp. for $3 billion. Each of the employees of C.H.I., based in Arthur, Ill., received on average $175,000 as a payout on equity they received as part of KKR’s investment in 2015. “Creating a culture of ownership works,” said KKR’s Pete Stavros, who laid out the employee-ownership strategy for ImpactAlpha in a 2020 podcast (see, “This private-equity giant has distributed more than $500 million – to hourly employees“).
- New narrative. The employee payout represents a small percentage of KKR’s 10x return on its investment in C.H.I., one of the largest returns in the firm’s recent history. But employee ownership represents an appealing storyline for KKR which, like other private-equity giants, has made headlines for leveraged buyouts and other deals that have not worked out as well for employees. KKR, along with TPG, Apollo and other investors, launched the nonprofit Ownership Works to help public and private companies transition to shared ownership. Bethesda, Md.-based Apis & Heritage last year raised an initial $30 million fund for employee-led buyouts of small and mid-sized businesses with large workforces of color.
- Ownership alpha. KKR said it aims to expand the employee-owner model to all majority investments in its private equity platform in the Americas. If just 30% of U.S. businesses were owned by its workers, median household worth could double to more than $200,000. “Capital is the missing agent,” write Marjorie Kelly of The Democracy Collaborative and Karen Kahn of Employee Ownership News. “As impact investors come to recognize employee ownership as a low-risk, high-impact asset class, they could catalyze conversions at scale, creating a movement that would be transformative for millions of low-income workers.”
- Keep reading, “Ownership economy gets a payday as factory workers share in KKR’s exit,” by Dennis Price on ImpactAlpha.
Dealflow: Climate Finance
Sustain.Life secures $16 million to help small businesses take climate action. Sustain.Life’s software platform helps small and mid-sized companies track and report emissions from their operations and supply chains. “Many major corporations have the resources to invest in sustainability initiatives, but most companies lack the resources to launch successful sustainability programs,” said Sustain.Life’s Mike Hanrahan, who formerly headed Walmart’s Intelligent Retail Lab.
- Climate finance. New York-based Sustain.Life aims to help companies with auditable tracking of carbon, a key part of climate disclosure regulations proposed in the U.S. and already in place in Europe. “To solve climate change, we need tools that enable more people and organizations to take meaningful climate action — and we need them quickly,” said Hanrahan, who co-led the seed round with Tapestry VC. Active Impact Investments, Kompas, Agya Ventures and Seyen Capital participated.
Sencrop secures $18 million to help farmers manage ‘ultra-local’ weather risks. The French agtech startup provides micro-climate information to 20,000 farmers in Europe from its network of ultra-local weather stations. The data helps farmers monitor extreme weather conditions and manage water stress, diseases, pests and other risks “as the prices of agricultural inputs increase and the weather becomes more unstable and critical,” said Sencrop’s Michael Bruniaux.
- Precision agriculture. Sencrop’s data helps farmers spray and irrigate only when conditions are right. Sencrop will use the Series B financing to expand in North America and globally. Jerusalem Venture Partners led the round, alongside EIT Food, Stellar Impact, BPIfrance, Demeter and other investors.
- Check it out.
Dealflow overflow. Other investment news crossing our desks:
- Mahmee, a woman-led maternal health startup for new mothers, raised $9.2 million in Series A funding from Revolution’s Rise of the Rest Seed Fund, Backstage Capital and others.
- Pharos Capital Group invested in Sanderling Renal Services to provide telemedicine services for kidney patients in underserved communities.
- Global Infrastructure Partners acquired the clean energy business Atlas Renewable Energy from Actis in a deal valued at nearly $2 billion.
- The OPEC Fund for International Development, the investment arm of the organization of oil-producing nations, extended a $25 million loan to CIFI, the Inter-American Corporation for Infrastructure Financing, to finance energy, water and sanitation, transportation and other projects in Latin America and the Caribbean.
Agents of Impact: Follow the Talent
Nuveen’s Nadir Settles is appointed to lead Nuveen Real Estate’s new impact investing strategy. Pamela West, managing director of Nuveen’s affordable housing portfolio, becomes impact investing senior portfolio manager… Candide Group is hiring a principal and a senior associate for its climate justice fund in Oakland… Carbon Tracker is hiring a head of stewardship and a company research analyst of oil, gas and mining in North America.
Toucan Protocol seeks a policy and impact lead… Quantified Ventures seeks a client senior associate and an associate director and senior associate of health and human services… LeapFrog Investments is recruiting a strategy manager in Sydney… On Purpose has opened applications for its October associates program… Ben Franklin Technology Partners of Southeastern Pennsylvania seeks an impact analyst.
World Wildlife Fund U.S. is hiring a finance director for its nature-based solutions origination platform in Washington, D.C… Palladium Impact Capital is looking for a director in New York or London… Reinvestment Fund has multiple openings in Atlanta and Philadelphia… Village Capital has an opening for an investment analyst in the U.S… Village Capital and Moody’s are creating an accelerator program for startups improving economic mobility in Latin America.
Thank you for your impact!
– May 17, 2022