Greetings Agents of Impact!
In today’s Brief:
- Private equity + quality jobs
- HCAP’s Hope Mago on ‘gainful jobs’ (podcast)
- High-energy laser fusion
- Serving Africa’s lower-income consumers
Featured: Good Jobs
In private equity, pairing employee ownership with good jobs can unlock wealth for all. Employee ownership is great. Employee ownership plus quality jobs is even better. Private equity giant KKR is taking its much-discussed US employee ownership program to Europe and the Asia-Pacific, the firm’s Pete Stavros told Buyouts. The news comes on the heels of Blackstone’s announcement that it will include broad-based employee ownership at firms in which it takes a controlling interest. Private equity behemoths “see the returns-generating power of making jobs better all the way down the org chart,” Ellen Frank-Miller of the Workforce and Organizational Research Center, or WORC, writes in a guest post on ImpactAlpha. “Awarding ownership shares alone won’t automatically generate returns for investors or upside for employees,” she says. To ignite the full benefit and unlock wealth, “broad-based ownership must be tied to a quality jobs strategy.”
- Quality jobs. Already, firms are activating the full power of broad-based ownership by working to raise the quality of jobs at their portfolio companies (for context see, “The next frontier of private equity value creation: Better jobs for frontline workers). Apis & Heritage, for example, requires a board seat for employees at their portfolio companies to ensure worker voice is part of company decision-making. Nonprofit Ownership Works is creating tools for members to help portfolio companies upskill supervisors. Southeast Acquisition Capital focuses on the day-to-day experience of employees and fostering autonomy to create a sense of mastery and purpose for workers.
- Value creation. An environment that helps every employee be their best “can drive multiples of enterprise value,” Hope Mago of HCAP Partners says in the latest ImpactAlpha Agents of Impact podcast. The San Diego-based private equity firm, which has raised $670 million across five funds, helps its portfolio companies implement “gainful jobs” strategies that include opportunities for career advancement, wealth creation and health and well-being. “We have to move away from this extractive mentality private equity had in the past where you come in, you strip assets and lease them back, you offshore jobs,” Mago said. “This approach where we’re creating value, where we’re partnering with the workers, where we’re partnering with stakeholders for the benefit for everyone in the community, I think that’s the best pathway for us to realize better returns.” HCAP Partners last month assessed its entire portfolio using WORC’s “Worthwhile Jobs Survey.” Listen to Hope Mago’s conversation with David Bank.
- Ownership behaviors. Labor economists have found that incentivizing employees through ownership alone doesn’t drive financial results. More important is fostering ownership behaviors, Frank-Miller says. Top practices include giving employees control over decisions that affect their work, empowering employees with the autonomy to do their jobs in the best way they know how, and teaching frontline supervisors how to be collaborative managers. “Pairing broad-based ownership strategies with a quality jobs strategy unlocks wealth for all,” she writes.
- Keep reading, “In private equity, pairing employee ownership with good jobs can unlock wealth for all,” by WORC’s Ellen Frank-Miller on ImpactAlpha.
Dealflow: Energy Transition
Xcimer Energy’s rakes in $100 million for commercial inertial fusion. The nuclear fusion breakthrough two years ago at Lawrence Livermore National Laboratory was a milestone in the race to commercialize fusion energy. Scientists have since replicated net energy gain in fusion reactions, but sustained energy generation is still years away. Denver-based Xcimer uses laser inertial confinement, which fuses atoms with high-powered lasers (rather than magnets) to replicate the power of the sun – the same approach Lawrence Livermore National Laboratory used to generate net energy. Xcimer says the world’s “highest-energy laser system” is capable of producing up to 10 times the laser energy, at 10 times higher efficiency, and over 30 times lower cost per joule, than the lab. Xcimer is also drawing on laser research conducted by the Strategic Defense Initiative’s 1980s-era “Star Wars” program.
- Fusion race. The $100 million Series A funding will finance a Denver facility where Xcimer is building a prototype laser system for generating greater net energy gain in a fusion reaction. “Xcimer has developed a game-changing approach to inertial fusion and assembled a team of the brightest minds in the industry to execute on it,” said Mark Cupta of Prelude Ventures, which backed the round alongside Hedosophia. Also in the round: Emerson Collective, Breakthrough Energy Ventures and Lowercarbon Capital. Nearly three dozen companies have raised more than $6.2 billion from private investors and governments to pursue a variety of approaches to fusion power.
- More.
Amethis raises $27 million for African companies serving low and middle-income consumers. Paris-based Amethis is keying in on the opportunity to serve Africa’s growing low- to middle-income population (see, “Billions of low and middle-income consumers represent trillions in impact investment opportunities”). The European Investment Bank invested $27 million in Amethis’ third fund, which will back mid-sized companies that cater to such customers. The funding follows a $152 million first close for the fund last year. “African enterprises still don’t have the patient equity capital they need for them to grow, which is what our partnership with funds like Amethis seeks to address,” said EIB’s Thomas Östros. To wit: African ecommerce startup Copia recently went into receivership after struggling to raise funding.
- Pan-African impact. With more than $1 billion under management, Amethis has funded 30 African companies over a dozen years and notched 15 exits. The private equity firm also invests in European small and mid-sized companies doing business in Africa. It targets companies operating in sectors where there are exit track records and liquidity such as retail, health, education and financial services. Amethis’ third fund, an Article 9 sustainable fund under European regulations, will tie 20% of its carried interest to impact targets that include carbon-efficiency, gender goals and employee health coverage. The firm also implemented a value-sharing strategy for portfolio company employees to boost retention, reduce inequalities and enhance productivity.
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Dealflow overflow. Investment news crossing our desks:
- France’s Gireve raised €20 million ($21.8 million) from San Francisco-based Partech’s impact fund to expand its network of EV charging stations, while Decade Energy, also in France, closed €3.6 million ($3.9 million) to electrify commercial fleets. (EU-Startups)
- In other EV news, the Los Angeles Cleantech Incubator’s Cleantech Debt Fund invested in Stak Mobility, which offers EV charging in its urban parking “carousels” that save space by stacking cars. (Mission Driven Finance)
- Indian agtech startup Fyllo secured $4 million to provide the country’s farmers with predictive analytics and productivity data. (The Economic Times)
- Luxembourg-based Alcazar Energy Partners raised $490 million for its second fund, which will invest in utility-scale renewable energy projects in emerging markets. (Africa Private Equity News)
Podcast: Impact(ed)
Eric Horvath and Lucas Turner-Owens are out with the fifth episode of their Impact(ed) podcast. Westfuller Advisors’ Ellen Chiu joins Horvath to explore how investment advisors are adding social impact goals alongside financial ones. New York-based Westfuller, which advises on $1.8 billion in assets, is a woman, LGBTQ+ and Black-owned boutique advisory firm. “We are pairing up and matchmaking the needs of asset owners with what’s being offered by investment managers in the ecosystem,” Chiu says.
- Listen to the latest Impact(ed) podcast on the ImpactAlpha Podcast Network.
Agents of Impact: Follow the Talent
Sorenson Impact Institute names chief operating officer Katie Macc as its acting CEO, as Geoff Davis moves to a senior advisory role. The institute is hosting the Sorenson Impact Summit in Park City, Utah, beginning today… Lois DeBacker will step down as Kresge Foundation’s environment program managing director in September… Sightline Climate is hiring for several open roles… Nia Impact Capital seeks a public equities analyst in Oakland, Calif… Robert Wood Johnson Foundation is recruiting an impact investment officer in New Jersey… Conservation International is looking for a blue carbon director in Colombia.
Village Capital seeks a remote senior partnerships associate… KPMG has an opening for a social impact manager in Singapore… AVPN is on the hunt for an impact investing director in Mumbai… Allianz is recruiting an impact private credit intern in Paris… Opportunity Finance Network is accepting nominations for this year’s Ned Gramlich Lifetime Achievement Award for Responsible Finance, created in memory of the former Federal Reserve Board governor and OFN board member.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– June 5, 2024
