Greetings Agents of Impact! We’re taking a Brief break to celebrate Thanksgiving here in the US. This holiday, we’re grateful for all of you, and your impact all over the world. We’ll be back in your inbox Monday, Dec. 2. – David Bank
In today’s Brief:
- In Chile, impact investments are hiding in plain sight
- Climate change is driving up the price of your turkey dinner
- LeapFrog taps Asian investors to close fourth fund
- Podcast: New York Foundation’s Rickke Mananzala on The Market Makers
Featured: Impact in Latin America
Families and fund managers tilt Chile’s startup ecosystem toward impact. The term “impact” doesn’t yet have wide recognition in Chile, but as startup culture takes hold, investors are finding that many of the new investment opportunities include an impact lens. Companies like small business-focused fintech venture Xepelin and vehicle and workforce finance provider Galgo are building products and services for underserved communities. That, in turn, is underpinning a growing ecosystem of impact-minded investors, financial advisors and network builders, reports ImpactAlpha contributor Shefali Anand. “Many entrepreneurs, they do impact, but they are not aware,” observes Andrés Pesce of Kayyak Ventures, one of Chile’s early impact-minded investment firms. Last year, impact investments in Chile reached about $450 million – up 12% from 2022.
- Community curation. Accelerating the growth is an impact matching program for founders and investors organized by Chile’s four-year-old national advisory board for impact investing, or NAB, which is part of the GSG Impact network. “No one invests in what they do not know, so it is crucial to reduce this barrier inherent to a new investment strategy,” says Ximena Vial, who runs impact investments for Quest Capital, a money-management firm in Santiago. Vial and Pesce have been working to advance impact investing in Chile by educating the LPs in their own funds, and through their work with the NAB, via partnerships with crowdfunding platforms, networking events, and efforts to bolster impact management and measurement practices. Proof points from investors’ own portfolios are helping too. “If we don’t have a return, we can’t scale impact and we can’t recycle capital,” says Pesce.
- Family and institutional money. Chile’s early impact ecosystem blossomed around the government-led startup acceleration initiative, Start-up Chile, which has helped more than 3,000 ventures raise more than $1.2 billion since 2010. About 16 impact funds have since emerged in the country. Now wealthy families are joining in. “The new generations of these families are leading the charge, restructuring their ancestors’ investment portfolios towards more sustainable approaches,” says Vial. The president of Chile’s NAB, Horacio Pavez, helms the family office Napali. The NAB is angling to engage Chilean pension funds and other institutional investors, says Pesce. “We need endemic managers and endemic capital because that capital stays here in the region.”
- Keep reading, “Families and fund managers tilt Chile’s startup ecosystem toward impact,” by Shefali Anand on ImpactAlpha. This month’s edition of ImpactAlpha Latin America drops later today. Opt-in to receive the speciality newsletter at no additional cost. ¡Disfruta!
Signals: Fiduciary Future
The cost of this Thanksgiving’s dinner reflects today’s climate reality. We have many reasons to be grateful this year, but the price of Thanksgiving dinner isn’t one. Prices for Thanksgiving mainstays have come down from recent inflation-driven peaks. But the cost of a holiday dinner is still 19% higher than in 2019. As voters made abundantly clear this fall, the current cost of groceries is unacceptable. One growing cause of food inflation is perhaps the most fixable and least talked about: the climate, writes As You Sow’s Andrew Behar in his latest Fiduciary Future column. Take this week’s turkey. Historic heat waves meant fewer turkeys reached markets. Farmers purchased cooling systems, which increased costs. Droughts and floods reduced yields for crops used to feed fowl. Extreme weather damaged farmland. And higher humidity created ideal conditions for the spread of avian influenza that decimated entire turkey farms. It’s not just the bird. Cranberries, mashed potatoes, green beans, pumpkins, and just about every ingredient are more expensive because of a hotter planet.
- Corporate accountability. At this late stage, large-scale solutions must come from the corporations most responsible for planet-warming pollution, starting with fossil fuel companies, says Behar. “From sustainable agriculture, to clean energy, to workers rights, the decisions made in corporate boardrooms today shape not just the future of our planet, but also what shows up on our plates today – and at what cost,” he writes. “This Thanksgiving, as we give thanks for the food on our table, let’s also be grateful and conscious of the fragile systems that make that meal possible. If we want to preserve the foods and traditions we cherish, we must address climate change and hold companies accountable to create a future we can all afford.”
Dealflow: Emerging Consumers
LeapFrog Investments closes fourth fund at $808 million. LeapFrog has been in the market since 2022 with its fourth fund, targeting a cool $1 billion. It closed the fund about $200 million shy, a reflection of what LeapFrog CEO Andy Kuper called “one of the most challenging fundraising cycles for private equity this century.” That’s saying something: LeapFrog launched and raised its first fund at the height of the financial crisis. The fourth fund is LeapFrog’s largest, with more than half of the capital mobilized from investors in Asia, a key investment region. First-time investors came from Japan, Singapore and China, as well as Austria, Norway, Oman and Turkiye. LeapFrog has also secured $210 million in pre-allocated co-investment capital from International Finance Corp. and others. It is also teaming up with Prudential Financial on an investment in South African insurance and pension provider Alexander Forbes, bringing Fund IV’s total of committed and mobilized capital to just under $1.2 billion.
- Temasek stake. LeapFrog’s fourth fund invests in financial services and healthcare companies serving the rising consumer class in Asia and Africa’s growth markets. Investors in Asia responded to the opportunity, starting with a landmark $500 million partnership with Singaporean sovereign wealth fund Temasek in 2021. Temasek took an equity stake in LeapFrog and pledged capital for the firm’s future funds as part of Temasek’s impact strategy under director Eliza Foo. Among the other Asia-based institutional investors in Fund IV are Chinese insurance group AIA and Japan’s Sumitomo Mitsui Trust Bank.
- First investments. LeapFrog has made five investments from Fund IV, including Kenyan off-grid solar provider SunKing and Singaporean insurance provider Bolttech. In India, it has invested in diagnostic services company Redcliffe Labs, small business lender Electronica Finance and higher-education lender Auxilo Finserve. Other investors in LeapFrog’s fourth fund include Dutch bank Van Lanschot Kempen, the European Investment Bank, the US International Development Finance Corp., and the Ford and IMAS foundations.
- Climate strategy. LeapFrog is also raising a climate fund (see, “LeapFrog pledges $500 million for climate solutions in emerging markets”). It notched its first climate deal earlier this year: an investment in India-based Battery Swap, which operates a network of battery swapping stations for two- and three-wheel EVs. “The emerging consumers that we have been serving for over 18 years in financial services [and] healthcare are also the same consumers that are going to be impacted significantly and disproportionately by the climate transition,” LeapFrog’s Nakul Zaveri told ImpactAlpha (watch his video interview). The firm estimates that in some markets, low-carbon technologies like small EVs, rooftop solar and even climate-smart farming tech have “now hit a price inflection point where they offer a ‘green discount’ of up to 30-40% less than incumbent carbon intensive alternatives.”
- Share this post.
South Africa’s Ninety One closes $260 million fund for emerging markets infrastructure. Asset management firm Ninety One has raised $260 million in a first close of its third Africa-focused credit fund. Commitments came from International Finance Corp., British International Investment and the Swiss Investment Fund for Emerging Markets, managed by Swiss impact investor responsAbility. The deal includes a $45 million sustainability-linked loan from South Africa’s Standard Bank.
- Capital shifts. Private infrastructure capital has quadrupled in the last decade, hitting $129 billion in 2021. Most of the capital goes to North America and Europe. Africa Credit Opportunities, or ACO Fund 3, is looking to capitalize on infrastructure demand on the continent. ACO Fund 3 will provide senior debt for the water, energy, transport, telecommunications and housing sectors. Ninety One also launched a South Africa-focused infrastructure credit fund in March this year to fund both public and private sector infrastructure.
- Share this post.
Dealflow overflow: LatAm edition. Investment news crossing our desks:
- BBVA Colombia secured $100 million from IDB Invest and the International Finance Corp. through a sustainable bond issuance. It will use the proceeds to finance green and social projects in the country. (IDB Invest)
- IDB Invest also provided a $50 million loan to Banco Davivienda Salvadoreño to on-lend to small businesses and renewable energy projects in El Salvador. (IDB Invest)
- Mexico-based Solvento raised $12.5 million from Cometa, Quona Capital and others to help independent truckers with financial management, including invoicing and payments. (LatamList)
- Colombia-based Bia Energy raised $8.5 million to provide companies with smart energy meters that enable them to monitor and manage their energy consumption, and track clean energy usage and carbon emissions. (Forbes)
Podcast: The Market Makers
Driving bottom-up change in New York with impact investments and grants (video podcast). In the early 2000s, Rickke Mananzala was a young community organizer working on racial, economic and gender justice and LGBTQ issues in New York City. He didn’t know much about philanthropy but was struck by a positive meeting with a grantmaker from the New York Foundation. “I felt like they really believed in us, really trusted us as young people of color, that they trusted our vision for change,” he recounts on the Market Makers, part of the ImpactAlpha Podcast Network. Twenty years later, Mananzala is president of the New York Foundation and is working to shift the 125-year old institution’s $100 million endowment toward impact investing, he tells podcast hosts Lenore Champagne Beirne of Bright Ventures and Troy Duffie of the Milken Institute. “I want to make our investments feel like our grant making.”
- Listen to, or watch, this episode of the Market Makers on ImpactAlpha. The Market Makers is part of the ImpactAlpha Podcast Network, smart conversations by and for impact investing professionals.
Agents of Impact: Follow the Talent
Acre Impact Capital welcomes Tighisti Amare of the Chatham House Africa Programme to its advisory board… IMPACT Community Capital adds Francis Molina, previously with RMS US, as a financial analyst… Perry Clarkson, who joined SJF Ventures as a healthcare investments-focused senior associate in 2019, is the firm’s newest partner… Royal Bank of Canada is hiring a sustainability strategy research associate in New York.
NY Green Bank seeks a vice president of investment and portfolio management… Vimeo is looking for a manager of global belonging and social impact… responsAbility has an opening for a portfolio and restructuring credit analyst… Waverly Street Foundation is recruiting an impact investing director in San Francisco… ECMC Foundation’s Education Innovation Ventures is on the hunt for a senior associate in Washington, DC.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– Nov. 27, 2024
