February 12, 2020 | The Brief

The Brief: Putting cash to work, alt-dairy growth, off-grid solar in Colombia, agtech in Nigeria and India

The team at

ImpactAlpha

Greetings, Agent of Impact!

Signals: Ahead of the Curve

Cash is hot: Investors find new options to put deposits to work for community development. Denver-based and Native-owned Native American National Bank serves Native communities, governments and enterprises across the U.S. To boost the bank’s lending power, RSF Social Finance, Candide Group’s Olamina fund and other impact investors have created deposit accounts and CDs at the bank. “The best way to support our bank is through deposits,” the bank’s Tom Ogaard said on a webinar hosted by Transform Finance. Such community banks, along with credit unions and community development financial institutions, are increasingly attracting foundations, impact funds and other investors looking for a way to drive impact, even with their idle cash. The capital allows bankers serving low-income and underserved areas, which bigger financial institutions often pass over, to expand their community lending.

Financial intermediaries are innovating on plain-vanilla savings and checking accounts to overcome barriers such lenders have faced in attracting customers, including limits on federal deposit insurance. Oakland-based CNote’s new Promise Account lets accredited investors divvy up to $3 million into insured deposit accounts across multiple CDFIs and low-income credit unions, while managing their cash through a single interface on CNote’s platform. “The culture of impact investing has mostly lent itself to private deals,” CNote’s Catherine Berman tells ImpactAlpha. “But cash is the low hanging fruit.” Tiedemann Advisors and StoneCastle Cash Management launched a similar cash management solution that allocates cash balances across insured deposit accounts at high-need community banks. “It’s funny that there hasn’t been as much conversation over the years about cash,” says Tiedemann’s Brad Harrison. “It’s been overlooked” (see, “An impact option for directing idle cash to community banks”).

  • Indian Country. Native American National Bank operates in the 3% of U.S. land, mostly rural and overwhelmingly low-income, that is populated by tribal and Alaskan natives. The bank has lent $128 million to support $250 million in projects in the last five years, including for affordable housing, grocery stores and native-owned enterprises. Financing for such projects often requires more complex capital stacks and longer timeframes than conventional banks are willing to underwrite. For Olamina, which was created last year to address a historic lack of capital in Black and Native American communities, keeping its cash with the bank “is a way for us to say, we see you and want to be able to support the work you are doing,” said the fund’s Lynne Hoey.
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Dominion Energy commits to net-zero greenhouse gas emissions by 2050. The Richmond, Va.-based utility will cut carbon dioxide and methane emissions across its electricity and gas operations by boosting wind, solar and nuclear power, as well as renewable natural gas. Many utilities include only electricity generation in their net-zero targets. “Dominion is acknowledging that the significant climate impacts of its natural gas operations must also reduce to zero,” said As You Sow’s Lila Holzman. The utility is still moving ahead with the Atlantic Coast Pipeline and other carbon-intensive projects that Holzman says have “high potential for stranding.”

Dealflow: Follow the Money

Report: Alt-dairy maker Oatly considering IPO, sale and additional funding. The MalmÜ, Sweden-based company, growing at triple-digit annual rates, is looking for growth capital, according to a report from Mergermarket. The options: raising more than $100 million in growth capital, selling to a large consumer packaged goods company, or pursuing an IPO to ride on the coattails of the successful public offering of plant-based meat producer Beyond Meat.

SEAF Colombia Agribusiness Fund invests in off-grid solar firm Kingo. The undisclosed amount invested in the Bogotá-based company, which provides prepaid energy-as-a-service to more than 60,000 users, will be used to train Kingo’s network of local shopkeepers who sell solar credit to customers.

Nigeria’s farmer-focused Farmcrowdy acquires livestock business. Farmcrowdy, a digital marketplace for small farmers to buy goods and sell their products, has paid an undisclosed amount for a majority stake in Best Foods to build out its meat processing and production capacity. It will first focus on meat sales in the Lagos market, Disrupt Africa reports.

Leap India raises $23 million to improve grain storage efficiency. The Tamil Nadu-based agri-logistics firm was backed by Denmark’s SDG Investment Fund and Neev Fund. Neev is a sustainable development-focused private equity firm backed by the State Bank of India and U.K.’s Department for International Development (DFID).

Agents of Impact: Follow the Talent

Sacha Romanovitch, CEO of U.K.-based Fair4All Finance, joins LeapFrog Investments’ board… Michael Nagy was named managing director at Catholic Investment Services… Calvert Impact Capital is looking for a director of faith-based investing in Bethesda, Md… CDC Group is recruiting a gender equality and women’s economic empowerment executive in London… The Community Outcomes Fund at Maycomb Capital is hiring an analyst in Brooklyn… LISC seeks a community development underwriter in Oakland… The Miller Center for Social Entrepreneurship’s online accelerator is recruiting women-led social enterprises.

Thank you for reading.

–Feb. 12, 2020