The Brief | August 21, 2023

The Brief: Gender bonds in Latin America, financing small truckers, renewable heat batteries, last-mile distribution in India, pro-ESG narratives

ImpactAlpha
Photo credit: Pro Mujer
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ImpactAlpha

Greetings, Agents of Impact! 

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Featured: Gender Smart

With gender bonds, Pro Mujer puts Argentina’s capital markets to work for female entrepreneurs. The amounts are small, but the implications could be profound. When micro lender Pro Mujer earlier this year distributed 200 million Argentine pesos, or nearly $1 million, to more than 1,400, mostly women, entrepreneurs in Argentina, it demonstrated a large new source of low-cost capital for small social enterprises. Pro Mujer has long raised direct debt from foreign impact funds or international development banks. In contrast, the nonprofit lender’s rated “gender bond,” issued on Argentina’s public bond market, attracted capital from local banking institutions, funds and insurance companies. The bond was the first social bond issued in Argentina focused 100% on gender, and one of the earliest in Latin America from such a nonconventional issuer. Pro Mujer is set to roll out a second gender bond to raise 500 million Argentine pesos in coming weeks.

  • Local currency. “The issuance is something that changes not only the possibility of Pro Mujer accessing the market, but other social enterprises that now are able to access capital markets,” Pro Mujer’s Carmen Correa tells ImpactAlpha (for context, see, “Carmen Correa, Pro Mujer: Standing by low-income women to lift Latin America”). Alongside a lower cost of capital, says Correa, the Argentine bond markets gives the microlender regular access to debt in local currency, which is vital given the peso’s volatility. “Adapting financial instruments to market conditions is essential for the growth of sustainable finance in emerging markets,” she says. 
  • Gender bonds. Gender-focused bonds are green, social or sustainability bonds that direct proceeds to gender equality-related projects or incentivize behavior change, such as increasing diversity on boards. Issuances have leapt in recent years, according to the Luxembourg Stock Exchange, which identified 169 listed gender bonds. Last year, NMB Bank in Tanzania issued Africa’s first gender-focused social bond to raise capital for women-owned businesses. LuxSE’s Laetitia Hamon says investors are showing “increased interest, questions and awareness about gender-focused bonds.”
  • Keep reading, “With gender bonds, Pro Mujer puts Argentina’s capital markets to work for female entrepreneurs,” by Dennis Price on ImpactAlpha.
  • Face to face. Meet Correa and other gender-lens investors across Latin America at GLI Forum Latam in Medellín, Colombia, Oct. 17-19. ImpactAlpha is a media partner. Grab 40% off tickets today. 

Dealflow: Embedded Finance

Channel19 raises $2.7 million to digitize small trucking companies in the US. The US supply chain depends on small businesses: the more than 95% of trucking companies in the US operate fleets of 10 or fewer trucks. Channel19’s Tony Singh came from a trucking family in India and noticed that small fleet owners in the US faced many of the same challenges. Channel19’s management tool for refrigerated truck operators allows them to manage loads, plan routes, and handle scheduling, tracking, invoicing and payments. Embedded financing helps operators manage cash flows (see, “Why embedded finance is emerging as the future of global financial inclusion”). The Fremont, Calif.-based company secured investments from Augment Ventures, Accion Venture Lab, TMV, Overton Venture Capital and Refashiond Ventures, as well as several angel investors. 

  • Cash flow. This month’s bankruptcy of trucking giant Yellow Corp. further exposed vulnerabilities in US logistics and supply chains. “Channel19 is providing customers with a simple and affordable way to accelerate cash flow. We’ve seen that without a solution like this, truckers instead turn to predatory, long-term contracts with companies that layer on hidden fees,” said Amee Parbhoo of Accion Venture Lab. The fintech investment firm, known for its emerging markets focus, has a half-dozen US investments and a growing focus on embedded finance.
  • Check it out. 

Rondo raises fresh $60 million to electrify industrial processes. Rondo Energy is tackling one of the biggest obstacles to the adoption of renewable power: storing intermittent power so it can be used on demand. Rondo uses renewable inputs to heat specialized bricks that store heat for hours or days, for release when needed for industrial uses, such as melting plastic or curing concrete. The low-cost “heat batteries” can replace boilers in existing facilities. Alameda, Calif.-based Rondo is building a 90 gigawatt-hour battery plant with Thai Siam Cement Group. That’s more than double the capacity of Tesla’s lithium-ion gigafactory in Nevada. 

  • Industrial mix. Rondo Energy raised a fresh $60 million from existing investors including Breakthrough Energy Ventures, Energy Impact Partners, SCG and building materials company TITAN Group, as well as Microsoft’s Climate Innovation Fund, Rio Tinto and Aramco Ventures. The funding follows Rondo’s $22 million Series A round last February.
  • Share. 

Insaan reups in Indian cleantech and agtech distributor Essmart. Livelihood essentials like farming supplies and solar-powered lights are expensive and hard to secure in rural India. Essmart handles ordering and logistics of hundreds of affordable livelihood technologies for rural kiranas, or shops. The company supports 5,500 retailers and 100 farmer groups, which reach more than 1.2 million people. “By transforming last-mile distribution channels and leveraging rural retail shops as agents of change, access to high-impact livelihood products can be increased in rural India,” Insaan Group, which first invested in Essmart in 2021, says on its website (related: “FarMart: Connecting Indian farmers to global markets”). The size of the investment was not disclosed. Essmart is also backed by philanthropic impact investor Elea, Partners Group, German development agency DEG, and Swiss Re Foundation. 

  • Catalytic capital. Insaan leverages philanthropic and other catalytic capital to make early-stage investments in organizations serving India’s and Africa’s vulnerable and low-income populations. It has backed nine companies, including Kenyan ethical fashion brand Soko, sustainable cassava processor Malakass, and GyanShala, which writes curricula for schoolchildren in India’s slums.
  • Dive in. 

Dealflow overflow. Other news crossing our desks:

  • Invenergy Renewables, Blackstone and Canadian pension manager CDPQ acquired 14 wind and solar projects from American Electric Power. They financed the $1.5 billion deal with production tax credits under the Inflation Reduction Act. (Reuters)
  • New Summit Investments secured close to $40 million for its third impact fund, which invests in venture funds focused on climate solutions, healthy communities, and economic opportunity (see, “New Summit Investments teams up with Gratitude Railroad to back diverse-led funds”). The fund has made nine investments. (New Summit Investments)
  • GEF Capital Partners, a spinout of Global Environment Fund, raised $214 million for its third LatAm Climate Solutions Fund to invest in companies in Brazil. (GEF Capital Partners)
  • Goodwell Investments invested in Rwandan fresh foods producer SOUK Farms via its second uMunthu impact fund. (Goodwell)

Impact Voices: ESG Backlash

Developing a pro-ESG narrative around transparency, long-term returns and political freedom. In the face of ESG critics like Ron DeSantis, Vivek Ramaswamy and Elon Musk, “it is more important than ever to course-correct the narrative around the outcomes of ESG risk management frameworks,” The Bliss Group’s Cortney Stapleton argues in a guest post on ImpactAlpha. The marketing and communications firm has developed key statements investors can use to counter the attacks.

  • Talking points. Criticism: Implementing additional ESG regulations will hurt local economies. Counter: ESG investing can insulate national and global economies from risk while generating more sustainable returns in the long term. Criticism: ESG measurement and regulation facilitates greenwashing and therefore is a “scam.” Counter: ESG data empowers investors to make more informed decisions and hold companies accountable for their impact on the world around them. Criticism: ESG funds are “woke capitalism” in action, working to advance the liberal agenda. Counter: ESG funds are growing in popularity because most Americans with money in the stock market want companies to be good corporate citizens.
  • Keep reading, “Developing a pro-ESG narrative around transparency, long-term returns and political freedom,” by The Bliss Group’s Cortney Stapleton. 

Agents of Impact: Follow the Talent

Kevin Knobloch, an Obama administration energy official, will replace Jason Hanna as CEO of climate-tech incubator Greentown Labs… MaC Venture Capital appoints Jennifer Randle, ex- of The Chernin Group, as chief operating officer… SJF Ventures is hiring senior analysts in New York and Durham, NC… CapShift is on the hunt for an impact investing intern and fellow for the fall semester.

S&P Global has an opening for an ESG client engagement specialist in New York… Nia Impact Capital is looking for an equities analyst… The Gates Foundation seeks a women’s economic empowerment senior program officer in Johannesburg… Builders Vision has an opening for a senior investment accountant in Chicago… Kiva is recruiting an impact manager for evidence building and technical assistance… Founders Factory Africa is hiring a head of ESG integration in Lagos.

Thank you for your impact.

– Aug. 21, 2023