The Brief | March 31, 2020

The Brief: Small and growing business liquidity and stabilization, Seychelles’ debt-for-conservation swap, development-finance relief, tools for impact investors

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Greetings, Agents of Impacts!

Featured: ImpactAlpha Original

Emerging market fund managers scramble to keep enterprises and entrepreneurs afloat. As the global economic slowdown and local lockdowns that come with the COVID pandemic shut down capital flows, thousands of otherwise viable and growing businesses around the world are being forced to pivot, pause, furlough or fire – and shutter. A generation of entrepreneurs is worrying they will run out of cash; the ecosystem of emerging market capital providers that has financed their growth is scrambling to help them survive. “The advice everyone is getting is ‘shorten your cash-conversion cycle’ or ‘delay payments to your suppliers.’ Well, that’s easier said than done,” says Brendan Mullen of Secha Capital in South Africa. “The real risk is that companies here will not get the funding they need in time,” says Amanda Cotterman of EquaLife Capital in Nairobi. Adds Laurie Spengler, who is working with the Collaborative for Frontier Finance to identify ways to meet needs for revenue substitution, employment retention, supply-chain transactions and other financing, “There is growing recognition that small businesses urgently need cash to continue operations.”

A rush of liquidity may be crucial to mitigating a broad-based domino effect. “Many of these fund managers are investing in exactly the solutions that we need right now and in the future: health, climate, water and sanitation,” says Catalyst at Large’s Suzanne Biegel. “Our main goal is keeping companies’ teams intact, and helping them position themselves for the bounce-back when this is all over,” adds Blue Haven Initiative’s Lauren Cochran. Even cash flow-positive, pro-social companies positioned to do well in the pandemic have been caught in the global downdraft. In Nigeria, personal-hygiene products company Wemy is struggling to manufacture enough diapers, feminine products and sanitary wipes, which have been selling out as customers prepared for two-week shutdown. “Our supply chain has been disrupted massively,” says Aruwa Capital Management’s Adesuwa Okunbo Rhodes, an investor in Wemy. “It’s definitely a challenging time.”

Keep reading, “Emerging market fund managers scramble to keep enterprises and entrepreneurs afloat” by Jessica Pothering on ImpactAlpha.

  • Stabilization and liquidity. Join ImpactAlpha, the Collaborative for Frontier Finance and local fund managers to explore ways to expand financing for small and growing businesses, or SGBs, in Africa and Latin America. Please note a timing changeAgents of Impact Call No. 14 is now set for Thursday, April 2 at 11am PT / 2pm ET / 7pm London / 9pm NairobiRSVP today.

Dealflow: Follow the Money

Seychelles’ ‘debt-for-conservation’ deal paves the way for more blue bonds. Four years ago, the Seychelles government signed a deal with The Nature Conservancy to refinance sovereign debt at a discount in return for protecting 30% of its oceans. TNC raised grants and loans to pull off the $21.6 million deal. Last week, the Indian Ocean archipelago made good on its promise, announcing Marine Protection Areas that will protect 158,000 square miles of water and habitat while allowing for low-impact economic activities like tourism (see, Rising Tides: Debt-for-Nature Swaps Let Impact Investors Finance Climate Resilience).

  • Credit enhancement. NatureVest, TNC’s impact capital arm, is working with 20 island nations to refinance debt and use savings for marine protection. Credit enhancement from the U.S. International Development Finance Corp. could help NatureVest raise money on the capital markets to scale up blue bonds, NatureVest’s Rob Weary told Responsible InvestorShare this.

Vickers Venture Partners raises $200 million for sixth fund. The Singapore-based early stage venture firm is targeting $500 million to invest in global “deep tech” ventures, including existing portfolio companies. In January, Vickers led an $11 million Series A round for U.K.-based Emergex, which is working on a COVID-19 vaccine. Other portfolio companies include bio-plastics maker RWDC Industries, regenerative medicine firm Samumed, and geothermal energy producer Eavor.

Singapore’s OB Asset Management debuts SDG fund for retail investors. The United Sustainable Credit Income Fund lets individuals invest in the RobecoSAM SDG Credit Income Fund alongside high-net worth and institutional investors. The fund invests in green bonds and companies making progress towards the U.N. Sustainable Development Goals.

Abu Dhabi plans Gulf region’s first social impact bond. Abu Dhabi’s Ma’an Authority for Social Contribution and local real estate developer Aldar Properties will develop the bond, which will be the first pay-for-success bond among the six-nation Gulf Cooperation Council. Aldar will also invest AED 2 million ($545,000). “Social impact bonds are a game-changer for how we think about the delivery of social programmes,” said Salama Al Ameemi, the director general of Ma’an. The backers didn’t specify which social challenges the bond will target.

Signals: Ahead of the Curve

How development finance leaders can help emerging market economies survive the COVID-19 crisis. As the pandemic unfolds in emerging markets, governments facing liquidity challenges and limited abilities to borrow will struggle to respond to the pending economic crisis. Development finance institutions already are taking action. The International Finance Corp. has announced $8 billion in lending to help clients cover banks’ payment risks, replenish capital to pay bills and wages, and share banks’ risks in serving small and medium-sized enterprises (see, African Development Bank issues a record $3 billion social bond). More capital will be needed, write Dalberg’s Edwin Macharia, Jesse Baver, Kusi Hornberger and Rachna Saxena in a guest post on ImpactAlpha. To ensure financial relief reaches small businesses, workers and the self-employed, the Dalberg team calls on development finance leaders to coordinate liquidity facilities, focus financing on the most vulnerable, and expedite deals.

New tools to help investors assess and share impact. The Positive Impact Initiative of the U.N. Environment Programme Finance Initiative released the Corporate Impact Analysis Tool to help banks and investors understand the impact performance and potential of their clients and investee companies. The initiative also released the Portfolio Impact Analysis Tool for Banks to guide banks through an analysis of their portfolios. Investor network Toniic, in partnership with IMP+ACT Alliance, a sister initiative to the Impact Management Project, launched Tracer, a platform to help Toniic members share and compare information on impact investment goals, performance and outcomes. Share this post.

Agents of Impact: Follow the Talent

The World Economic Forum is looking for a head of impact measurement and management… Blackstone seeks a vice president of measurement and reporting for its Strategic Partners – Blackstone Impact Asset Management group in New York… Beeck Center’s Lisa Hall is hosting the first of a two-part virtual workshop on impact management tools and frameworks on Thursday, April 9… We Care Solar’s Laura Stachel is leading a virtual Skoll World Forum panel on “Scaling Clean Energy Solutions” for frontline health clinics, with representatives from Sierra Leone, Liberia and Zimbabwe, on Tuesday, March 31 at 12pm ET / 5pm London via Zoom (see, Cost-effective response to COVID-19: Light every health clinic in Africa and south Asia).

Thank you for reading. 

–Mar. 31, 2020