Greetings, Agents of Impact!
👋 Hop on today’s Call: Muni Impact. Join Harvard’s David Wood, Renaye Manley of the Service Employees International Union and Preeti Bhattacharji of J.P. Morgan Private Bank, along with Lourdes Germán of Public Finance Initiative, Tim Coffin of Breckinridge Capital Advisors and Heron’s Barbara VanScoy, in conversation with ImpactAlpha’s David Bank and Dennis Price, to explore, “How asset allocators are driving racial equity in municipal bonds.” Zoom right in to today’s call at 10am PT / 1pm ET / 6pm London (no RSVP required, but be prepared to sign in or create a Zoom account).
Featured: Catalytic Capital
How wealthy individuals and family offices are embracing catalytic capital. Wealthy individuals and family offices are under-tapped sources of catalytic capital, the scarce and crucial element in many high-impact investments. Individuals and families can operate without the financial hurdles or fiduciary constraints of institutional investors, freeing them to assume higher risk, accept lower returns or set longer time horizons to maximize impact. The appetite is there, according to research from Toniic, the network of family offices and foundations actively moving assets toward positive impact and funded by the Catalytic Capital Consortium (disclosure: C3 also sponsors ImpactAlpha’s catalytic capital coverage). In a survey of 90 impact-focused family offices and “high net wealth individuals,” 30% said they are open to accepting lower or uncertain returns for the same risk as commercial investors “most of the time,” and about 60% “some of the time.” Almost one-third said they would take more risk for the same expected return as commercial investors “most of the time,” and about 55% “some of the time.” These wealthy investors also signaled they are willing to accept longer time horizons than commercial investors: 90% indicated that they would do it most or some of the time. “There is potential to unlock more catalytic capital from these investors,” Toniic’s Dario Parziale writes in a guest post on ImpactAlpha.
- Systemic change. A primary motivating factor among respondents is to “generate positive impact that would otherwise not be possible.” Family offices and high net wealth individuals, or HNWIs, are motivated by a personal interest in supporting individuals, enterprises or funds that cannot attract market-rate capital, as well as a broader desire for systemic change. Many require counterfactual evidence of impact to deploy catalytic capital.
- Non-financial barriers. Despite the interest, 90% of HNWI and family office investors are limited in their portfolio allocation growth for catalytic capital, mainly due to constraints other than capital. Nearly 60% cited “limited capacity,” including personal bandwidth, a shortage of team members able to provide support, and/or the ability to access shared resources. Additional obstacles: resources to conduct due diligence and access to deals with appropriate ticket sizes.
- How-to. The research suggests a need for “more formal and structured ways to connect HNWIs and family offices with other investors so they can learn about and participate in catalytic investment opportunities,” writes Parziale. Toniic’s free catalytic capital course addresses the knowledge gap for investors new to catalytic investing. Its Catalytic Investment Decision Model helps investors weigh the “implied subsidy” of such investments against the potential impact.
- Keep reading, “How wealthy individuals and family offices are embracing catalytic capital,” by Toniic’s Dario Parziale on ImpactAlpha.
Dealflow: Financial Inclusion
Aviom Housing Finance scores $30 million to help low-income Indians become homeowners. The Delhi-based financial services company offers affordable housing loans to low-income families in India, many of whom work in the informal and semi-formal sectors and don’t meet most lenders’ mortgage standards. The lending opportunity is enormous: the majority of India’s 1.4 billion people live below the international poverty line. Aviom’s average loan size is $4,000. It disbursed $61 million last year. Nuveen led the company’s Series D round.
- Gender smart. Aviom’s Shakti initiative employs more than 3,000 rural women as loan officers. The program provides livelihood opportunities for women “while providing effective customer sourcing for Aviom,” states C4D Partners, an impact investing firm that backed Aviom’s Series B round in 2019. C4D got a partial exit in the latest deal.
- Small business finance. Separately, Indifi Technologies raised $35 million for its digital lending services for India’s small businesses. ICICI Venture led the round. BII, Omidyar Network India and other existing investors participated. Financial inclusion companies like Aviom and Indifi receive the most impact capital in India.
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Tem. raises £2.5 million to streamline renewable energy transactions for smaller buyers. The end of the pandemic and Russia’s invasion of Ukraine caused energy costs to spike in the UK. Dozens of small energy companies went bust, raising prices further for small businesses and consumers. Former energy trader Joe McDonald created Tem. to match small businesses with renewable energy suppliers, and lower their bills by as much as 10-fold. The AI-based platform handles invoicing, payments and customer management to replace “the outdated energy trading companies and help our customers reduce their carbon footprint while saving money on their energy bills,” McDonald says.
- Clean energy markets. Tem.’s seed round, led by European B2B investor AlbionVC, “will allow us to bring our technology to more customers,” said McDonald. Purpose-driven venture fund Revent also participated. Tem. has facilitated over £10 million in energy transactions in the UK. The London-based company plans to expand to Europe and the US as it looks to unlock $1 trillion in renewable energy transactions by 2030.
- Check it out.
Dealflow overflow. Other news crossing our desks:
- Alitheia Capital invested in a $3 million round for Haul247, a Nigerian logistics tech startup that got its start during the pandemic to streamline supply chains. (Disrupt Africa)
- Miami’s On.Energy closed a $20 million Series B round to develop energy storage capacity in Texas. (On.Energy)
- London-based venture capital firm Black Seed raised £5 million ($6.3 million) for a fund that will invest in Black-led enterprises in the UK. (Sifted)
- Amp Energy India scored $250 million from Sumitomo Mitsui Banking Corporation, Intermediate Capital Group, and the Asian Infrastructure Investment Bank to ramp up commercial and industrial renewable energy generation. (Amp Energy India)
Signals: Personal Finance
Targeting solutions with impact ETFs, ‘cut carbon notes,’ and other new investment products. A new family of exchange-traded funds will align around companies that derive the bulk of their revenues from solutions for the Sustainable Development Goals. Five ETFs from London-based investment platform CIRCA5000 will invest in companies targeting green energy and technology (ticker: C5KG), sustainable food and biodiversity (C5KF), clean water and waste (C5KW), social and economic empowerment (C5KE), and health and wellbeing (C5KH). Underpinning the investment products are newly released indices from Montreal-based impact analytics firm impak. Impak’s analysis, which aligns with the norms of the Impact Management Project, goes beyond ESG to assess a company’s contribution to solutions. Impak says that investing five years ago in a basket of the most impactful companies would have yielded a total return of 93% versus a 55% return for the S&P 500. The CIRCA5000 ETFs launched on the London Stock Exchange last week for institutional investors.
- Impact mutual fund. Separately, the Nia Impact Solutions Fund (NIAGX), a mutual fund launched last year to invest in companies that contribute to environmental sustainability and social justice, is now available at Charles Schwab. Among its top three holdings: Danone, First Solar and Gilead Sciences. The fund returned nearly 3.2% through Feb. 28, while the MSCI ACWI IMI index returned 2.6%.
- Cut carbon notes. The proceeds of Cut Carbon Notes, a new investment-grade, fixed-income security from Calvert Impact, will provide low-cost, long-term funding for energy efficiency improvements to commercial, industrial, multi-family, and non-profit buildings with the goal of reducing carbon emissions. The notes, which earn investors between 5% and 6.5%, are available to retail and institutional investors.
- Launching a financial product we should know about? Drop us a note at [email protected].
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Agents of Impact: Follow the Talent
Marathon Capital hiresAndrew Suh, a former managing partner at Mercury Value Partners, as country manager of its South Korean operations… Denham Sustainable Infrastructure appointsTim Radcliff, ex- of Solomon Partners, as managing director… Emma Sissman, a former portfolio director at SJF Ventures, joins Goldman Sachs as vice president of sustainable investments.
Platinum Pacific Partnersis on the hunt for a head of impact investing in Sydney… The Greater London Authorityis recruiting a green finance fund credit committee member… Cycle Capitalis looking for an impact investing analyst in Montreal… Inyova Impact Investingis hiring a people operations manager in Zurich… Habitat for Humanity Internationalseeks a real estate and impact investing associate general counsel in Atlanta.
ECMC Groupis looking for a remote impact investing director… Cerberus Capital Management is recruiting an ESG and sustainability senior associate in New York… Water Missionis on the hunt for a finance manager in Honduras… 60 Decibelsis hiring a Kenya head of office in Nairobi… ThirdWay Partnersseeks an investment director in Johannesburg.
DeveloPPP will allocate up to $107,000 in grants to impact startups in Ghana, Kenya, Nigeria and Tanzania, with a focus on women founders… The first session for this year’s IMPACT FIRE TALKS, an investor-only, free online event that focuses mainly on the European impact investing market, is set for Weds., June 21… Also next Wednesday, Salesforce will host a webinar on the evolving role of the chief sustainability officer featuring NYU’s Alison Taylor, Said Business School’s Robert Eccles and Nike’s Noel Kinder.
– June 14, 2023