Greetings, Agents of Impact!
👋 Join The Call: Indigenizing catalytic capital. Patient, flexible and long-term capital can enable Native enterprises to evolve and thrive as sustainable businesses. Go inside efforts to catalyze capital in Indian Country on next week’s call, with Kate Finn of First Peoples Worldwide, Navajo Power’s Brett Isaac, Siċaŋġu Co’s Clay Colombe and other Agents of Impact, Wednesday, Aug. 23 at 10am PT / 1pm ET / 6pm London. RSVP today. A sampling of ImpactAlpha’s coverage:
- “Native-led Navajo Power leans into the just transition with community benefits and local jobs“
- “Change Labs’ entrepreneurship hub opens doors for Navajo businesses”
- “A Native food company’s commitment to social mission attracts investors at last”
Featured: Climate Finance
Clean energy investors are not waiting for the Inflation Reduction Act’s billions to flow. For Caelux Corp., investing in building a new solar factory outside Los Angeles was a no-brainer. Tax credits from the Inflation Reduction Act, which turns one year old this week, will effectively refund a big chunk of the company’s operating expenses. “If the Inflation Reduction Act had not been passed, I don’t think we would have a factory today,” Caelux’s Leslie Chang tells ImpactAlpha. The Pasadena-based company spun out of CalTech to commercialize ways to use minerals called perovskites to boost the performance of silicon-based solar panels. In all, more than $270 billion in private investment has poured into more than 80 domestic clean energy projects and manufacturing facilities in the past 12 months – more than all such investments from the previous eight years, according to the American Clean Power Association. This week, Singapore-based Maxeon Solar said it would pump $1 billion into a three-gigawatt solar factory in Albuquerque, NM.
- Tax incentives. The bulk of the consumer-facing tax credits – for electric vehicles, solar systems, heat pumps and other technologies – have yet to be claimed. For producers, a new production tax credit is accelerating domestic clean energy production, while an extended investment tax credit is spurring advanced energy projects. Bonus incentives are awarded for projects that pay prevailing wages, use union labor, or are located in low-income communities. Some manufacturers are expecting to recoup as much as half of their operating costs via the incentives. Renewable energy manufacturers that qualify for IRA subsidies could double their profitability by 2025, according to JPMorgan Chase.
- Deployment challenges. The building boom is creating its own challenges and bottlenecks. State permitting rules have slowed some solar and wind projects, while others have been delayed by local opposition, sometimes funded by oil and gas interests. “We’re not getting the money because our rules are getting in the way,” California Gov. Gavin Newsom told The New York Times’ Ezra Klein. Project operators can wait five years or more to be able to connect their generating capacity to the electrical grid. The IRA could create nine million jobs over the next decade, more than half in renewable energy, according to the Blue Green Alliance. That presents its own challenges, such as ensuring a supply of skilled workers to fill the positions.
- Community readiness. Invest in Our Future, a $180 million fund created by a handful of foundations, is making grants to local groups to help them apply for funds, identify project sites, obtain permits, train workers and engage communities. The Milken Institute’s Community Infrastructure Center is connecting communities with public and private financing for local, green infrastructure projects.
- Keep reading, “Clean energy investors are not waiting for Inflation Reduction Act’s billions to flow,” by Amy Cortese on ImpactAlpha.
Dealflow: Returns on Inclusion
The De-Carceration Fund raises $8.5 million to invest in ‘justice tech.’ Extractive products and services that have emerged from the US criminal justice system cost families billions of dollars a year. “Justice tech” entrepreneurs remain underserved, but impact investors are slowly moving in, The De-Carceration Fund’s Chris Bentley told ImpactAlpha (see, “Justice tech entrepreneurs look to disrupt the cycle of recidivism”). “As far as I know, we’re the only ones that are 100% focused on this space. What that means is when we get involved in deals, we have the ability to pull dollars from those other folks that are interested but might not know the ins and outs,” Bentley said. The De-Carceration Fund is looking to raise up to $25 million to back a dozen or more justice tech ventures with checks of up to $500,000, as well as follow-on investments.
- Breaking the cycle. “We’re looking for tech startups that are focused on preventing people from going into the criminal justice system, reducing suffering for people while they’re in the system, and creating better outcomes for people when they come home,” said Lawrence Williams, who co-leads The De-Carceration Fund. The fund has backed four companies, including Black-led Uptrust, which helps defendants keep in contact with public defenders, probation officers and family members. Untapped Solutions (formerly ConConnect), also Black-led, provides reentry services to formerly-incarcerated people. Half of De-Carceration Fund’s investment committee is made up of formerly-incarcerated professionals; the other half are impact investors.
- Dive in.
IFC provides $236 million to Absa to finance green real estate in South Africa. By 2050, seven in 10 people will live in urban centers around the world; Asia and Africa are urbanizing the fastest. “Once a city is built, its physical form and land use patterns can be locked in for generations, leading to unsustainable sprawl,” warns the World Bank. The International Finance Corp., the bank’s private-sector arm, estimates there’s a $25 trillion opportunity to support emerging markets’ green building transition by 2030. The IFC issued a loan of 4.5 billion rand ($236 million) to South African bank Absa to expand its mortgage lending activities for individuals and businesses that are developing green homes and commercial properties. The IFC estimates that its loan will reduce carbon emissions by 12,000 tons annually.
- Green standards. Financing to Absa will support developments using the IFC’s Excellence in Design for Greater Efficiencies, or EDGE, standards and other recognized green building standards. Just four countries in Africa have updated national building standards in the past decade, much less developed green or climate-resilient building codes. South Africa needs $7 billion in investment by 2030 to support green building demand. The IFC anchored a green bond from Nedbank, another South African bank, in 2021 to invest in buildings developed using EDGE criteria. Last year, the IFC loaned $38 million to Business Partners to provide loans to South African small businesses building or making green upgrades to commercial properties.
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Dealflow overflow. Other news crossing our desks:
- Mastercard Foundation and J&J Impact Ventures invested $114 million in Founders Factory Africa to invest in Africa’s early-stage tech startups. (J&J Impact Ventures sponsors ImpactAlpha’s Investing in Health coverage.)
- UK-based Clean Food Group raised £2.3 million ($2.9 million) to develop sustainable alternatives to palm oil, a widely-used food and cosmetic ingredient that is linked to deforestation. (Clean Food Group)
- Oikocredit provided a $1.5 million loan to Ed Partners Africa to finance school facilities in Kenya. (Technext)
- Renewa scored $450 million to invest in renewable energy developments in the US. (Renewa)
Six Short Signals: What We’re Reading
💚 Youthful climate plaintiffs. A Montana judge’s landmark ruling found that young people have a constitutional right to a healthy environment and that the state must consider potential climate damage when approving projects. (The New York Times)
🏞️ Indigenous stewardship. How Indigenous peoples care for land plays an outsize role in biodiversity protection, climate-change mitigation and other ecosystem services. Access to capital is key to their ability to protect their land from industrial development. (The Nature Conservancy)
👩🏽🦱🧑🏼🦱👨🏾🦲👩🏻 Diversity in private equity. Chief investment officers of institutional investors told researchers they would allocate twice as much capital to more gender diverse (and otherwise equal) private equity firms. They would allocate 2.6x more capital to more racially diverse teams. (McKinsey)
💰 Employee ownership edge. When Simon & Schuster’s chief executive explained to staff why KKR had won the $1.6 billion auction for the publisher, he touted the private equity firm’s pledge to let employees “participate in the benefits of ownership.” (Financial Times)
📈 Simpler impact metrics. Novata’s data platform has integrated GIIN’s IRIS+ impact metrics to help fund managers select metrics, understand their impact, and communicate it to investors. (GIIN)
👑 First-time, women of color fund managers. “We strongly believe in the transformative leadership of women of color,” writes Leticia Corona of Candide Group’s Olamina Fund in the first part of an interview with NDN Fund’s Kim Pate and Olamina’s Leslie Lindo. (Candide Group)
Agents of Impact: Follow the Talent
The US International Development Finance Corp. names Nisha Desal Biswal, ex- of the US Chamber of Commerce, as its deputy chief executive officer… Ted Maa, a former partner at Pine Brook, joins Nuveen as managing director of private equity impact investing… Karla Magana Figueroa, ex- of JPMorgan, joins Candide Group as a senior investment manager, and Mel Rusinek, ex- of NYC Fair Trade Coalition, joins as a client services associate.
Oona Poropudas, ex- of Auxxo Female Catalyst Fund, joins Aurum Impact’s investment team… Zubi Wealth Management is hiring a multi-asset investment analyst or manager in Madrid… Macquarie Group is looking for an ESG and climate associate director or vice president in Singapore… Palladium is recruiting a deputy lead for its capital advisory services team in London… WaterEquity seeks a chief investment officer… Tides has several openings, including a remote impact investing vice president.
KKR Global Impact has an opening for a senior manager in New York… Third Sphere is accepting applications through today for its fall fellowship program… Applications are open for New Majority Capital’s 10-week program to support diverse and female entrepreneurs in acquiring and leading businesses… Common Future will host a webinar on how philanthropic institutions are shifting investment decision-making power, Thursday, Aug. 17.
Thank you for your impact.
– Aug. 15, 2023
