The Brief: Gender alpha in emerging markets, debt-free home refinancing, democratizing geospace, Bloomberg’s climate-finance primer



Greetings, Agents of Impact!

Growing team, growing impact. Journalists Amy Cortese and Imogen Rose-Smith join ImpactAlpha. Keep reading, “Our growing team and growing impact,” a letter from ImpactAlpha’s David Bank.

Featured: ImpactAlpha Original

New U.S. development finance agency expands toolkit for female fund managers. When the U.S. Development Finance Corp. opens its doors on Oct. 1, it will be equipped with new investment tools to support female fund managers in emerging markets. The replacement for the Overseas Private Investment Corp., or OPIC, will have expanded authority to catalyze private sector investment, including the ability to make equity, as well as debt, investments. The agency’s $60 billion investment cap more than doubles OPIC’s $29.5 billion limit. The new structure is better integrated with the State Department and the U.S. Agency for International Development. The expanded mandate is raising expectations for one of OPIC’s signature initiatives: the 2X Challenge, a collaboration with other development finance institutions that expands investments in women-led businesses and funds around the world. Even without equity authority and little technical assistance capability, OPIC has already catalyzed at least $1 billion for women’s financial inclusion.

“Now they will not only have more capital, but more of those kinds of tools,” gender-smart investing expert Suzanne Biegel told ImpactAlpha. OPIC has actively sought to mitigate risk for women-led funds as it prepares for the October transition. The agency provided $10 million in senior debt to anchor Deetken Impact and Pro Mujer’s Ilu Women’s Empowerment Fund, a debt fund for Latin America financial institutions that serve low-income women. In June, it committed $25 million in financing to the Women’s World Banking Asset Management blended finance fund for women’s financial inclusion, alongside $500,000 in grants and $100,000 in technical assistance from USAID. “I’m not sure we would have been investing like that back in 2010,” OPIC’s Kathryn Kaufman told ImpactAlpha. “We sought to find impactful female-focused fund managers.”

Keep reading, “New U.S. development finance agency expands toolkit for female fund managers,” by Meg Massey on ImpactAlpha.

Sponsored Event: GIIN Investor Forum in Amsterdam, Oct. 2 and 3

Faith and investing. Faith-based investing is on the agenda at the Global Impact Investing Network’s annual investor forum in Amsterdam, Oct. 2-3. Join Candice Dial of The Church Pension Fund, John O’Shaughnessy of Franciscan Sisters of Mary and Séamus Finn of the Interfaith Center on Corporate Responsibility and others. Register now with code ImpactAlpha10 for a 10% discount.

Dealflow: Follow the Money 

Patch Homes raises $5 million for debt-free home refinancing. A decade in finance exposed Sahil Gupta to average Americans’ financial woes. “Everyone wants to invest for retirement and have a nest egg, but the average person is struggling to make their mortgage payments and pay down debt,” Gupta told ImpactAlpha. Patch Homes helps people access cash by tapping into their home equity without increasing their debt with home equity lines of credit or second mortgages. Instead, Patch takes an equity stake in customers’ homes and recoups its investment (plus its cut of the home value appreciation) either through a payout or when the home is sold. Patch’s equity model caps out at 10 years and $250,000. The company raised a $5 million equity round from Union Square VenturesTribe Capital, Techstars VenturesBreega Capital and an angel investor. Here’s more.

Omidyar Network backs Picterra to democratize geospatial mapping. Swiss startup Picterra is helping city planners, farmers and humanitarian aid organizations take advantage of satellite and drone imagery. Picterra makes artificial intelligence-based software that can be trained to identify and map trees, homes or crops and other object. Omidyar Network joined the company’s $3.3 million seed round for the software’s potential impact in aid delivery, crop and soil health tracking, and forest and wildlife monitoring. “For geospatial technology to reach its full potential in promoting social good and impact, it cannot stay in the hands of a few,” Omidyar’s Peter Rabley said. Space Capital, Berlin-based Atlantic Labs and an unnamed investor also invested. Check it out.

Raises for edtech startups Studytracks and Kickup. Paris-based Studytracks secured €1 million for rap songs and dance videos that help students in France, the U.S. and U.K. learn about science and Shakespeare… Philadelphia-based KickUp raised $1.8 million to help school districts implement and track the impact of teacher training and professional development.

Aura raises $145 million in social bonds for loans to working families. M&G Investments and Community Capital Management invested in the community development financial institution’s bond to extend affordable finance in the U.S.

Signals: Ahead of the Curve

Challenges for climate action – and how to overcome them. A shortage of capital is not what’s holding back a faster transition to a low-carbon economy. Rather, it’s an underdeveloped pipeline of investable projects, persistent risks in emerging markets and the pesky problem of how to retire all of those carbon-intensive plants well before their natural lifespans. Michael Bloomberg’s Climate Finance Leadership Initiative has provided a primer on the challenges – and possible solutions – in time for next week’s Climate Week alongside the U.N. General Assembly. The initiative enlisted leaders of Allianz Global InvestorsAXAEnelGoldman SachsHSBC and Macquarie, along with Japan’s Government Pension Investment Fund to sort out “an inclusive and orderly transition from high- to low-carbon assets 
on a global scale — and quickly.”

  • Falling costs, flat investment. Project developers in most markets can now deliver electricity generated by renewables 
at lower cost than coal-fired power. But total clean-energy investment of $354 billion in 2018 actually fell from 2017, and is lower even than the 2015 level. Expert estimate a six-fold increase is required to meet the goals of the Paris climate agreement.
  • Development pipeline. “The biggest challenge to mobilizing climate finance is not the availability of capital but the lack of a sufficiently strong pipeline of investable projects,” said Macquarie’s Shemara Wikramanayake. Investing directly in developers, rather than projects can offer higher returns
 and early access to growth markets, the report says (see, “Macquarie Group fills its coffers for ‘pragmatic’ green infrastructure).
  • Stranding assets. U.S. power providers shut down coal plants at a record rate last year, but “the market-driven reduction in coal generation alone is unlikely to achieve the pace of phase-out needed,” the report says. Carbon-intensive steel, cement and aluminum facilities also need to be retired early. “Breaking carbon lock-in will require some carbon-intensive assets to be retired early while transforming the corporations, utilities, and enterprises whose business models are based
 on their operation.”
  • Subsidized carbon. Global subsidies for fossil fuel production totaled $296 billion in 2017, according to the IMF. Including “untaxed negative externalities,” that figure soars to $5.3 trillion in public support for fossil fuels. “These subsidies can exacerbate climate-related transition risks and undermine the competitiveness of low-carbon investment opportunities.”
  • Bright spots. Sales of electric passenger vehicles increased from 38,000 in 2011 to nearly 2 million last year – still a small share of the 87 million
 new vehicles sold globally… Sustainability-linked loans grew to nearly $35 billion last year from close to none in 2016 (see, “An incentive for companies that deliver on sustainability: lower-cost capital)… Japan’s GPIF built a $1 billion green bonds portfolio in just three months with an intensive effort last year (see “Hiro’s Journey: Japan’s pension fund chief rallies ‘universal owners’ around sustainable finance).
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Climate Watch. The events, commitments and reports are coming in fast and thick even before Climate Week begins. Today’s sampling:

  • Amazon advocacy. More than 200 institutional investors representing $16.2 trillion in assets called on companies to combat deforestation and the devastating fires in the Amazon by disclosing, monitoring and reporting on their deforestation risk exposure and management. Call for corporate action.
  • Climate wins. Nine states representing 16% of U.S. energy demand have legislated transitions to 100% clean energy. Cheat sheet.

Agents of Impact: Follow the Talent

Saida Eggerstedt, ex-of Standard Life Investments, joins Schroders as head of sustainable credit… NYC gives students permission to skip school – and join tomorrow’s global climate strike… Emerson Collective is hiring a portfolio director of environmental justice in Palo Alto… Echoing Green is accepting applications for its 2020 fellowship program.

Thank you for reading.

– Sept. 18, 2019

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