The Brief | July 19, 2021

The Brief: Private equity pitches ESG, alt-fertilizer, impact real estate, South African health tech, Generate’s $2 billion for infrastructure

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Greetings, Agents of Impact! 

Featured: Institutional Impact

The education of Jim Coulter, or: How private equity learned to stop worrying and love ESG. To know what big private equity funds are up to, look – and listen – to what they tell pension funds and other large clients. Like the $112 billion Oregon Investment Council. For those willing to dig, the minutes of meetings of public pension funds offer a wealth of insight into what asset managers and owners are thinking, ImpactAlpha contributing editor Imogen Rose-Smith writes in her latest Institutional Impact column. Lately, the asset managers are pitching the asset owners on climate investing and ESG. One of the biggest pitchers: James Coulter, the co-founder of TPG Capital. In “the next 30 years, the climate revolution is going to look like the digital revolution of the last 30 years,” Coulter told Oregon’s six-person board at their January board meeting. ESG has found its true sales reps in big private equity, Rose-Smith writes. “Because if there is one thing these men of finance know how to do, it’s sell.”

Coulter is singing a new tune. In May, he stepped away from TPG Capital, which manages more than $80 billion. He’s now focused on Rise, TPG’s two impact investing funds, and on the new TPG Rise Climate Fund, which is reported to be raising $5 billion with the help of former Treasury Secretary and Goldman Sachs CEO Hank Paulson. Where private equity leads, other firms and, more importantly, asset owners will follow. “To be clear, I’m not saying that the major private equity players are good at ESG,” Rose-Smith says. Nonetheless, the arrival of new champions like Coulter represents an important shift. Private equity goes where they think the money is. “That’s now ESG and sustainable investing. And that’s a game changer.” Investors are into ESG for the money, finally.

Keep reading, “The education of Jim Coulter, or: How private equity learned to stop worrying and love ESG,” by Imogen Rose-Smith on ImpactAlpha. Catch up on all of Imogen’s Institutional Impact columns.

Sponsored by BlueMark: Impact Management

Why impact investors should pay attention to practices, not just performance. Just as an athlete or musician can only master their craft through disciplined practice, an impact investor will be better-positioned to achieve impact results with high-quality and rigorous impact management practices. “The good news is that the impact investing industry is advancing standards for both practices and performance, with recent progress particularly on practice standards,” writes Christina Leijonhufvud of impact assurance company BlueMark, a Tideline company. Still, most investors and companies lack the information needed to effectively compare one firm’s impact practices to another’s. Independent verification lets allocators ‘look under the hood’ of managers’ investment practices, says Leijonhufvud, “to understand how effectively impact considerations are integrated throughout the lifecycle of the investment.” Go deeper.

Dealflow: Agrifood Tech

Pivot Bio rakes in $430 million to replace synthetic nitrogen in agriculture. Berkeley, Calif.-based biotech company Pivot Bio wants to make corn, wheat and rice – the world’s three biggest cereal crops – less reliant on synthetic nitrogen fertilizer, a major expense for farmers and a contributor to climate change. “We knew that our farmers and our planet were at a critical point where a new nitrogen solution was needed to drive agricultural productivity, but just using more synthetic was clearly not the answer given its negative impacts on the environment,” Pivot Bio’s Karsten Temme told ImpactAlpha. Along with seeds, Pivot Bio plants microbes into the ground to capture nitrogen from the atmosphere and convert it into nutrients for crops. Temme believes the firm’s products can displace half the fertilizer used on cereal crops and provide over 40 million tons of nitrogen directly to crop roots.

  • Climate capital. Pivot Bio’s round was co-led by San Francisco-based venture capital firm DCVC and Temasek, Singapore’s state-backed investment arm. Participating investors include Generation Investment Management, G2 Venture Partners, Breakthrough Energy Ventures, Rockefeller Capital Management, Pavilion Capital and others. Pivot Bio’s “proven alternative is both more sustainable and profitable” for farmers, said Generation’s Lila Preston.
  • Agrifood tech. Boston’s Ginkgo Bioworks, which also deploys microbes to help plants grow, is aiming to go public via a merger with Soaring Eagle Acquisition Corp., a special purpose acquisition company led by former MGM Studios CEO Harry Sloan. The deal will value Ginkgo at $15 billion.
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Dealflow overflow. Other investment news crossing our desks:

  • American South Fund Management, a partnership between SDS Capital and Vintage Realty, raises $28 million for its second real estate impact fund to invest in underserved communities of color in the U.S. South.
  • South Africa-based iNNOHEALTH secures seed funds to launch  mobile-based digital health services to counter South Africans’ rising healthcare costs.
  • Morgan Stanley awards $21.7 million to Opportunity Finance Network to make grants to CDFIs with less than $25 million in assets.

Signals: Climate Funds

Generate raises $2 billion to finance sustainable infrastructure. Project financing is in hot demand as corporations and governments scramble to green their operations. Generate Capital has raised a fresh $2 billion to develop microgrids, carbon-free fleets, waste-to-fuel systems and other green infrastructure projects – following its $1 billion fundraising haul just a year and a half ago. The San Francisco-based firm completed the fundraise in two months, without bankers, advisors or airplanes, Generate’s Scott Jacobs told ImpactAlpha. Generate develops, owns and operates projects on behalf of corporations and public sector customers. The balance-sheet funding will help it expand into agriculture, water and smart cities, as well as regions beyond North America. The fundraise comes as green infrastructure tops the agenda of the Biden administration and global governments. Even with $10 billion of balance-sheet capital to deploy, added Jacobs, the sustainable infrastructure opportunity “is way bigger than we can address.” 

Agents of Impact: Follow the Talent

PCI Media Impact’s Meesha Brown, Catalyze Global Impact’s Jennifer Isern, NYU Law School professor Deborah Burand, and Fern Thomas, ex- of Cornerstone Capital Group, join the board of Calvert Impact Capital. Calvert Impact Capital is also hiring a client service associate in Bethesda, Md… Y Analytics seeks an impact associate and a climate associate in Washington, D.C. or San Francisco. 

Common Future seeks a manager of capital strategies in Oakland… Aligned Climate Capital is recruiting an associate in Los Angeles… BSR has a New York-based opening for a director of sustainability consulting for the EMEA region… Moody’s is hiring an ESG product specialist in San Francisco.

Thank you for your impact.

– July 19, 2021