Greetings, Agents of Impact!
Agents of Impact Call No. 27: Opportunities at the intersection of gender and climate. Join entrepreneurs, investors and special guests on The Call, Tuesday, Feb. 23, at 9am PT / 12pm ET / 5pm London / 8pm Nairobi. RSVP today.
- Background reading. “Mapping the climate edge for gender investors – and vice versa.”
Dealflow: Follow the Money
Mark Carney and Jeffrey Ubben take aim at net-zero opportunities with multi-billion-dollar funds. Two blockbuster funds are targeting the “greatest commercial opportunity of our age,” as Carney, former Bank of England chief, special climate envoy to the U.N. and vice chair of Brookfield Asset Management, has called the transition to a net-zero economy. Toronto-based Brookfield is looking to raise a $7.5 billion Global Transition Fund to build out renewable energy projects and help companies transition operations to net-zero greenhouse gas emissions. Carney joined the $575 billion Canadian asset manager last summer to lead its impact strategy (see, “Agent of Impact: Mark Carney“). “We’ve got one objective, which is to put assets and companies on a path to net-zero to be part of the climate transition,” Carney told Bloomberg. Activist investor Jeffrey Ubben is aiming for $8 billion for Inclusive Capital’s Spring Fund II fund, Reuters reports. The fund, which is Inclusive’s first, would invest in 15 companies committed to improving their social and environmental impact.
- Change agent. Ubben founded Inclusive Capital last June with Lynn Forester de Rothschild of the Coalition for Inclusive Capitalism. The strategy is to push companies in oil, gas and other sectors to quickly transition to socially-beneficial business models (see, “There’s a new impact sheriff in town: activist hedge funds”). Ubben is said to be angling for a seat on Exxon’s board, as the wounded oil major comes under pressure to reposition itself for a low-carbon future. Last year, he bought up shares of BP after new CEO Bernard Looney pledged to transform the British oil giant into a diversified energy company. At ValueAct, his old firm, Ubben joined the board of power generator AES and pushed it in a greener direction. “We’re trying to change the system,” he says (see, “Agent of Impact: Jeffrey Ubben”).
- Operating expertise. Brookfield is committing more than $2 billion of its own capital to the Global Transition Fund, according to CEO Bruce Flatt. Brookfield operates 20 gigawatts of hydro, wind and solar power across four continents. “There is growing demand for sustainable investing strategies, and in particular to invest alongside established and reputable investors that have operational capabilities,” Flatt told shareholders last November.
- Impact FOMO. Between $1.6 trillion and $3.8 trillion is needed each year in low-carbon energy generation and other climate-smart infrastructure to stay within the global warming goals set by the Paris climate agreement. Financial markets are waking up. In January alone, investors launched $26 billion in SPACs, or special purpose acquisition companies, many aiming to take public companies driving forward clean technologies like solar energy, electric vehicle infrastructure and fleets, and water and agtech. This month’s examples: ‘green hydrogen,’ and impactful consumer products.
- Dig in.
Dealflow overflow. Other investment news crossing our desks:
- Thermo Fisher Scientific invests $25 million in lenders to Black businesses. The Boston-area provisioner of scientific instrumentation invested $20 million in LISC’s Black Economic Development Fund and placed $5 million in Hope Credit Union’s Transformational Deposits program (see, “Agent of Impact: Bill Bynum, Hope Enterprise”).
- SoLo raises $10 million to provide an alternative to payday lending. The Los Angeles-based, Black-owned platform offers peer-to-peer lending. It raised the capital from ACME Capital, with participation from Impact America Fund, Techstars, Endeavor Catalyst and CEAS Investments.
- SunCulture raises $11 million in debt to expand solar irrigation in Africa. The Nairobi-based company’s installations will mitigate over 20,000 tons of CO2 annually. SunFunder led the investor group, which includes Triodos Investment Management, AlphaMundi, Lion’s Head Global Partners and Nordic Development Fund.
- HomeBiogas goes public in Israel. The Israel-based developer of systems that convert organic materials into renewable energy and fertilizer raised approximately $31 million at a valuation of $94 million in its first day of trading. Closed Loop Partners, energy firm Engie and family office JS Capital are major shareholders.
Series: Walking the Talk
Nick Flores: Channeling my passions and purpose into my portfolio. Industry peers often ask Caprock Group’s Nick Flores how he invests his own portfolio for impact. “Like me, none of them had a +$10 million balance sheet,” says Flores, who joined Caprock and moved to Boise, Idaho in 2014. At first he’d share Beth Bafford’s helpful post. Then he decided to write one of his own. “I’ve tried to channel my passions and purpose into my portfolio,” writes Flores, in the latest edition of Walking the Talk, an ImpactAlpha series with Confluence Philanthropy about how impact investors deploy their own money for impact. “It’s not perfect, but I’m proud of it.” Flores segments his portfolio into the same six asset classes used by Caprock, helping him benchmark financial return expectations, performance drivers, liquidity profiles, and potential to drive social and/or environmental benefits. Here’s a look:
- Cash and cash equivalents. Community banks and credit unions have been driving impact by lending money in underserved areas for decades. “Every impact investor should start here,” he says. Flores banks at Idaho First Bank, his local community bank, keeps his cash in a money market account at Self-Help Credit Union, and holds “cash equivalents” with CNote, which lends to community development financial institutions in rural and low-income areas.
- Public equities. Flores holds public equities across various exchange-traded funds, “almost all of which are low-cost and have an ESG overlay,” as well as some select individual securities. Among them: iShares MSCI All Country World Index Low Carbon Target ETF (CRBN) and SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX), which has outperformed the S&P 500 since its inception. Two holdings that he admits are contradictory: Amazon and Alphabet. “I understand Google’s criticisms, but believe the corporation is doing some interesting things with its Moonshot Factory.”
- Alternatives, real assets and private. In search of low volatility, uncorrelated returns and decent liquidity, Flores invests in TriLinc Global Impact Fund, which boasts a $2,000 minimum and helps finance small- and medium-sized enterprises in developing countries. He is invested in Greenbacker Renewable Energy Company, which owns and operates a portfolio of renewable energy assets. Private investments, he says, “deliver the most tangible social and environmental benefits.” Flores is invested in Caprock’s fund-of-funds TCG Private Select Partners III, which includes Reach Capital.
- Keep reading, “Channeling my passions and purpose into my portfolio,” by Nick Flores on ImpactAlpha.
Agents of Impact: Follow the Talent
Preeti Sinha is the new executive secretary of the United National Capital Development Fund, which facilitates financing for the world’s 46 least-developed countries… Kate Byrne, ex- of SOCAP, joins Oslo-based Katapult… Grassroots Business Fund spins off its Latin America team as Andes Impact Partners, headquartered in Lima, Peru. GBF will focus on Africa from Nairobi and Washington, D.C… Mission Investors Exchange is recruiting a chief operating officer in New York… Luminate is hiring an associate of partner support in Nairobi… Food System 6 is recruiting food system entrepreneurs for its business accelerator.
MassChallenge will open applications for accelerators in Austin, Boston, Houston and Rhode Island tomorrow, Tuesday, Feb. 17, at “Idea to IPO” with accelerator alumni Thomas Healy of Hyliion and Armon Sharei of SQZ BioTech, moderated by Whyzze’s Misti Cain… PGIM is hosting a webinar Thursday, Feb. 18, to discuss its report, “Weathering Climate Change”… Shift 2021 will host conversations with Global Impact Investing Network’s Amit Bouri, Echoing Green’s Cheryl Dorsey, Blended Value’s Jed Emerson, the U.S. Impact Investing Alliance’s Fran Seegull, as well as Valerie Red-Horse Mohl of the East Bay Community Foundation, Common Future’s Rodney Foxworth and B Lab’s Kim Coupounas, April 14-16.
Thank you for your impact.
– Feb. 16, 2021