The Brief | May 2, 2023

The Brief: The Liist of inclusive community funds, Calvert’s billion-dollar notes, green hydrogen in India, neighborhood economics in Mississippi

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Greetings, Agents of Impact!

Featured: The Liist

Inclusive community funds finance local businesses, affordable housing and pathways to wealth creation (The Liist, May 2023). The past year’s market volatility amplified America’s crisis of affordable housing, “hitting low- and moderate-income individuals and families the hardest,” observed Nina Tschinkel of Salt Lake City-based Catalyst Opportunity Funds. This month’s Liist of funds currently raising capital includes three funds looking to meet the moment with new vehicles for investing in more inclusive, resilient U.S. communities. Catalyst’s focus: real estate development of healthy and affordable homes from the Midwest to the West Coast, along with local economic activity and job creation. Habitat for Humanity International’s Mortgage Solutions lending group is raising a $100 million flexible lending fund to encourage Black homeownership. Half of the capital will support first-time homebuyers. Santa Fe-based New Mexico Vintage Fund is raising a flexible finance fund for diverse entrepreneurs and green businesses in one of the poorest states in the U.S. In South Africa, Secha Capital is in the market with its second fund to support “boring” but essential and job-creating businesses in a country ranked the highest in the world for unemployment and wealth inequality. 

  • Second acts. After raising a first fund, many impact fund managers find raising a second is often… just as hard. Four of the six fund managers on this month’s Liist are raising their second funds, including Netherlands-based Wire Group, which is raising its second impact fund of funds. Capria Ventures’ second fund is backing early-stage generative AI, climate and other tech startups in the Global South.
  • Keep reading, “Inclusive community funds finance local businesses, affordable housing and pathways to wealth creation,” by Jessica Pothering and Roodgally Senatus on ImpactAlpha.
  • Know an impact fund manager currently raising capital? Drop us an email or complete this short form.

Dealflow: Inclusive Fintech

Cross-border processor Rev acquires online payments company Netspend to reach underbanked customers. Roy and Bertrand Sosa founded Netspend during the dot-com boom. Their innovation: prepaid credit cards. “We thought, how are people that don’t have bank accounts, debit cards, credit cards, going to pay on this new thing called the Internet?” Roy told ImpactAlpha. Fifteen years since leaving the fintech pioneer, the brothers are back at the helm. Their fintech venture, Rev Worldwide, acquired Netspend from parent company Global Payments, for $1 billion in cash. “This acquisition represents both a reunion and reimagining of the vision of financial empowerment we pioneered at Netspend more than 20 years ago,” Roy said. Private equity firm Searchlight has taken a minority stake in what marks the firm’s first impact investment. 

  • Financial inclusion. The Sosas founded Rev in 2016 to make multi-currency processing easier across borders. They envision a broader suite of financial products for underserved and underbanked individuals, particularly the Latino community in the U.S., by bridging Netspend’s physical footprint with Rev’s digital services. The brothers are keen to seize on the Mexican-American population boom, the surging remittance economy, and Americans’ tourism spending in Mexico. They’re planning better-priced and more efficient cross-border payments, savings products, insurance and access to credit, “to empower consumers and nano and small business owners,” said Roy. “We’ll put everything on the table to solve for exploitation and really deliver on financial inclusion.”
  • Read on

Calvert Impact crosses the $1 billion mark in retail sales of Community Investment Notes. It was no small feat in 1995 when Calvert Impact (then Calvert Foundation) launched an impact note available to retail investors through brokerage firms for as little as $1,000. Calvert Impact has sold $1 billion in Community Investment Notes to more than 20,000 retail investors (adding institutional investors, the total is more than $2.5 billion). The notes fund affordable housing, small businesses, and green solutions.

  • Interest rates. Investors don’t seem to be cowed by the high interest rate environment. “We’re seeing demand increase across the board now as pandemic stress has subsided, many government programs have run their course, and many of our portfolio partners are adjusting to the new rate environment,” said Calvert Impact’s Justin Conway (for context, see “In an inflationary environment, are bond buyers still interested in CDFIs?”). Calvert Impact recently bumped up its interest rate; a one-year note now pays 3%.
  • Check it out

Dealflow overflow. Other investment news crossing our desks:

  • Mumbai-based Avaada Group raked in over $1 billion from Brookfield’s $15 billion global transition fund to finance local green hydrogen and ammonia projects. (PE Hub)
  • New Delhi-based clean energy producer Serentica Renewables, which raised $400 million from KKR last November, secured an additional $250 million from the private equity investor. (Reuters)
  • California-based Ohmium International, which produces electrolyzers for green hydrogen, raised $250 million in a round led by TPG Rise’s $7.3 billion climate impact fund. (Ohmium)

Signals: Neighborhood Economics

Can Black churches spark a revival in Jackson, Mississippi? The predominantly Black city of 150,000 people has faced water, sewer and hospital crises and most recently the takeover of some police and court functions by the state government. The focus of last week’s Neighborhood Economics conference in Jackson, however, was not crisis, but resilience; not liabilities, but assets. “There’s been a disservice in describing this place,” Neighborhood Economics’ Leroy Barber said to open the event. “We are not here to help poor old Jackson. We are here to learn love, resilience and community from people who live it every day.” Neighborhood Economics’ Kevin Jones recapped the conference on last week’s Impact Briefing podcast. Some takeaways: 

  • Church assets. Like pastors across the country, Jackson’s Black church leaders have untapped assets, primarily in land and real estate. “The bread and butter of this thing are our pastors,” said Shonda Allen of Working Together Jackson. “Every economic entity intersects at the Black church in Jackson, Mississippi.” The Rev. Jimmie Edwards’ Rosemont M.B. Church, for example, has amassed 120 parcels around the church in the West Jackson neighborhood known as The Bottom and is building community gardens and school partnerships, with plans to develop affordable housing. Most members of Rosemont’s congregation no longer live nearby. “We adopted the wrong model,” said Crossing Capital Group’s Sidney Williams, himself a pastor in New Jersey and co-founder of the Oikos Institute for Social Impact, which helps churches leverage their assets for community benefit. “We left behind the people in the census tracts where our churches used to be. And so part of it is we have to return back to those communities.”
  • Impact real estate. Ownership of assets was at the heart of racial wealth-building strategies on display at Neighborhood Economics. “We can change generational wealth in one generation by creating an owner of an asset, something to transfer,” said Wilson Lester of Partners in Equity, a North Carolina fund that helps primarily Black business owners acquire the buildings in which they operate (see Lester on Agents of Impact Call No. 50). Chicago Trend’s Lyneir Richardson is raising a fund to revitalize commercial corridors in low-income neighborhoods and let community members invest in the projects. “The ultimate risk mitigation is those people who will patronize and protect and respect the asset that is in their community,” Richardson said. In Kansas City, women-led Local Code is developing its first two commercial projects on the city’s east side. “Our model is, once the projects are done, we sell them back to the community,” said Local Code’s Ajia Morris. “What we are proud of doing is turning commercial real estate into an asset that low- to moderate-income people can buy into.”
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Agents of Impact: Follow the Talent

Susannah Burrage, ex- of Innosight, joins Zeal Capital Partners as head of portfolio management… CDC Small Business Finance is recruiting a senior business advisor in the San Francisco Bay Area… ResponsAbility is hiring an office manager in Tbilisi, Georgia, a climate finance investment officer in Bangkok, and a sales and business development manager in Zurich. 

Triodos Investment Management is recruiting a product manager in the Netherlands… Veris Wealth Partners has an opening for an impact investing senior research analyst in New York… Also in New York, NY Green Bank is on the hunt for an investment administration and portfolio support associate… Enterprise Community Partners is hiring a senior asset manager in San Francisco.

SoLa Impact is recruiting a finance and accounting intern in Los Angeles… Milken Institute is looking for an associate for its Center for Financial Markets in Washington, DC. In New York, the institute has an opening for an innovative finance director… Collab Fund is looking for two associates for a two-year program to source and evaluate new investments and support existing portfolio companies.

Thank you for your impact.

– May 2, 2023