Tudo bem, Agents of Impact? Join this week’s Call for the scoop on Brazil’s growing impact investing ecosystem (see below).
In today’s Brief:
- Contrasting approaches to private equity healthcare investing
- KKR’s $3 billion climate strategy
- Data-driven insights for the energy transition
- Blending finance amid political headwinds
Featured: LP / GP
Patient outcomes, value-creation and headline risk in healthcare private equity. Private equity healthcare investment strategies are facing enormous regulatory, financial and headline risks. Two such private equity investors in healthcare, Apollo Global Management and Leonard Green and Partners, were in the hot seat earlier this month after a bipartisan investigation by the US Senate Budget Committee concluded that they prioritized “profits over patients” in two hospital chains in their portfolios of healthcare companies. The 162-page report concluded that private equity’s financial model poses “a threat to the nation’s healthcare infrastructure” by prioritizing short-term profits over patient care and long-term stability. Another set of healthcare investors are raising and deploying capital on a different model of value creation that could mitigate such headline risks and position investors and portfolios for a regulatory push around such an outcomes-based approach. Earlier this month, Massachusetts became the latest state to enact a law aimed at preventing the kind of PE-fueled acquisitions that have led to hospital bankruptcies. An analysis by OliverWyman said values-based care is “here to stay,” no matter who is in the White House.
- Quality, outcomes and access. Chicago-based Vistria Group this month closed its fifth fund at $3 billion, its largest ever, with a buyout strategy focused on US healthcare, fintech and education companies. Vistria drew commitments from US public pension funds including New York State Common Retirement Fund and the California State Teachers Retirement System, or CalSTRS. Vistria’s investment strategy “ensures we are zeroing in on the biggest drivers of quality, outcomes and access on every deal we do,” Vistria’s Elizabeth Jurinka tells ImpactAlpha. Townhall Ventures, led by Andy Slavitt, President Obama’s head of the Centers for Medicare and Medicaid Services, has raised $183 million toward a $400 million target, according to an SEC filing. Town Hall invests in companies working to improve “the social determinants of health,” along with healthcare services and access for underserved Americans.
- Converging strategies. As a data point about the commercial viability of such strategies, these impact funds are in many cases buying from, co-investing with, and competing for the same investment opportunities as impact-agnostic investors. Vistria, for example, co-invested in Sevita, a healthcare and social care provider, alongside Centerbridge Partners. It co-invested in pharmaceutical manufacturer Alcami alongside GHO Capital, acquiring a stake from Madison Dearborn Partners and Ampersand Capital Partners. Goldman Sachs Asset Management is in the market with its Horizon Inclusive Growth Fund with a $1 billion target; when it made its first healthcare investment in urgent care provider Xpress Wellness, Goldman Sachs’ Greg Shell, emphasized Xpress’s plan to “bring high-quality urgent care and select specialty services to underserved communities.” Bain Capital Double Impact’s third fund, also targeting a $1 billion raise, includes a focus on healthcare. AXA Investment Management has a Global Health Fund under Article 9 of the EU’s Sustainable Finance Disclosure Regulation, a classification for funds with “sustainable objectives.”
- Keep reading, “Patient outcomes, value-creation and headline risk in health care private equity,” by Snehal Shah on ImpactAlpha.
Dealflow: Impact Private Equity
KKR acquires Dawsongroup to decarbonize vehicle fleets and leased assets. The private equity giant KKR has agreed to acquire Dawsongroup, a UK-based asset leasing business, through the investment firm’s global climate strategy. Dawsongroup, a family-owned business founded in 1935, specializes in leasing vehicles, refrigerated boxes and other assets for food, pharmaceuticals and disaster recovery. Its offerings include electric vehicles, solar power, low-emission generators, and battery storage. “We see a significant opportunity to accelerate the electrification of Dawsongroup’s fleet,” said Vincent Policard of KKR’s European infrastructure group.
- Green solutions. The acquisition is the latest investment from KKR’s Global Climate strategy, which launched in 2023. KKR’s climate strategy has announced three other investments: Zenobe, a UK-based provider of transport electrification and battery storage; Avantus, a US-based developer of utility-scale solar projects with energy storage integration; and IGNIS P2X, a joint venture between KKR and Spanish renewable energy project developer IGNIS for green hydrogen and ammonia production.
- Shared ownership. KKR plans to implement an employee ownership program at Dawsongroup upon completion of the acquisition. KKR is a founding member of Ownership Works, a non-profit promoting employee ownership structures in private equity-backed companies, (for context see “As private equity firms start to share the wealth, low-income workers get just a little bit”). Pete Stavros, KKR’s co-head of global private equity, founded Expanding ESOPs to educate policymakers and investors about employee stock ownership plans.
- More.
Decarbonization Partners backs Orennia for energy transition data. Alberta, Canada-based Orennia provides predictive analytics for cleantech investors and project developers in wind, solar, energy storage, hydrogen, data centers and other power sectors. “Developers and investors across the energy transition space require trustworthy data, analytics and insights,” said Meghan Sharp of Decarbonization Partners, a joint venture of BlackRock and Temasek, which led Orennia’s Series C round. Orennia had previously raised from Wellington Management, Quantum Energy Partners and other energy transition backers.
- Insight to value. Orennia says most of its customers have seen improvement in their workflows and capital allocations. FlexGen, a Durham, NC-based developer of grid energy storage systems, partnered with Orennia in 2022 to expand in the US storage market. FlexGen secured a $75 million line of credit from JP Morgan last week to expand energy storage to help maintain grid stability as AI and cloud computing drive data center power demand.
- Share.
Dealflow overflow. Investment news crossing our desks:
- The European Investment Bank and Allianz raised €450 million toward a €500 million goal for their Emerging Markets Climate Action Fund. The blended finance fund, launched in 2021, invests in climate adaptation and mitigation funds working in Asia, Africa and Latin America (see related, “How commercial investors are streamlining blended fund structures”). (EIB)
- Namdev Finvest, a small business lender based in Jaipur, India, secured $38 million in debt from Developing World Markets, BlueOrchard and Mirova. (VCCircle)
- Arya, based in Noida, India, raised $30 million in debt from GuarantCo and HSBC India to offer credit and crop storage to smallholder farmers. (Economic Times)
- Munich-based Ecoplanet closed €16 million in a Series A equity round for its energy management software for businesses. (ESG Today)
- Sightline, which publishes climate tech newsletter CTVC, raised a $5.5 million seed round to ramp up its climate data services. (Sightline)
- Patience Marime-Ball’s Women of the World Endowment has transferred its assets to Women’s World Banking, run by Mary Ellen Iskenderian (listen to the podcast, “Accelerating financial inclusion by bringing women’s financial habits online”) (Women’s World Banking)
Impact Voices: Catalytic Capital
If foreign aid and climate action is out, blended finance must step in. In his first few days in office, US President Donald Trump began to withdraw from the Paris climate accord and instituted a 90-day pause on foreign aid that is hitting everything from the removal of landmines to treatment for people with HIV in Africa. “If history is any guide, we can expect further rollback in climate action and a retreat from the multilateralism critical to advancing the Sustainable Development Goals,” warns Nnamdi Igbokwe of the blended finance network Convergence. “Amid this uncertainty, one tool stands out as uniquely resilient: blended finance,” Igbokwe writes in a guest post on ImpactAlpha. “As development aid constricts, the need for blended finance will only grow.” Aid restrictions are not just happening in the US. The Dutch and German governments have also slashed support for development and humanitarian aid.
- Catalytic investors. Development finance institutions are mainstays of blended finance, which leverages public and philanthropic funds to reduce risks and incentivize private sector participation. But new actors such as insurance companies and pension funds are rounding out the ecosystem. Carbon finance company Respira offers a voluntary carbon credit insurance product, developed with the insurer Howden Group, to mitigate risks like fraud and regulatory non-compliance to scale reforestation projects and secure investments. PensionDanmark, with over €40 billion in assets under management, has invested in blended finance funds in agriculture, energy and financial services to support sustainable development.
- Innovative financing. Blended finance, Igbokwe says, is specifically designed to counteract prohibitive conditions. And the uptick in billion-dollar-plus deals shows its ability to operate with the scale and sophistication necessary to meet today’s global challenges (for context, see “Blending billions: Lessons in catalyzing capital at scale for climate and development”). “While political uncertainty may test the resilience of global development efforts, it also highlights the enduring value of innovative financing models,” Igbokwe writes. “By embracing blended finance as a cornerstone of climate finance and sustainable development, we can ensure that progress continues, regardless of the political landscape.”
- Read the whole post.
Agents of Impact: Follow the Talent
🗣️ Tune into The Call: Unlocking impact and climate alpha in Brazil. Brazil’s new National Impact Economy Strategy, or Enimpacto, aims to address inequalities and environmental challenges, and boost impact investing in the country from $11 billion to $120 billion over 10 years with blended finance, investment incentives and more inclusive procurement. On Wednesday’s Call, Enimpacto coordinator Giselle Vianna will highlight early progress and 2025 plans, including a national database of impact companies.
- Tune in. Join Vianna, along with Feira Preta’s Adriana Barbosa, Wright Capital’s Fernanda Camargo, Fama Re.Capital’s Fabio Alperowitch, to discuss opportunities for impact and climate alpha in Brazil, tomorrow, Jan. 29 at 10am PT / 1pm ET / 3pm São Paulo. RSVP today.
Ownership Works welcomes Riikka Davidkin, previously at Social Finance, as a principal on its client advisory services team… Aboriginal Investment NT appoints Nigel Browne, previously with Larrakia Development Corp., as CEO… Economic Architecture and Brookings Institution select Doug Ryan of Grounded Solutions Network, Homium’s Marcus Martin and other housing and real estate innovators for the Valuing Homes in Black Communities Challenge.
Roc USA is looking for a portfolio and asset management senior director (see, “Putting an ownership lens on the preservation of affordable housing”)… The Small Business Anti-Displacement Network at the University of Maryland seeks an operations and events coordinator… Better Society Capital is hiring a portfolio investment manager in London… Sunwealth has an opening for an investor development associate in the Boston area.
Trellis Climate, Mati Carbon and OpenAir Collective are among the winners of the Bezos Earth Fund’s Greenhouse Gas Removal Ideation Prize… Rebeca Rangel of Asset Funders will moderate, “The promise of worker cooperatives to build economic security for immigrant communities,” with Democracy at Work Institute’s Vanessa Bransburg, Yungsuhn Park of the James Irvine Foundation, and Aquilina Soriano of Pilipino Workers Center, Thursday, Feb. 13.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– Jan. 28, 2025
