Greetings, Agents of Impact!
👋 Join us today on LinkedIn Live. The social returns on investments in historically Black colleges and universities are rising as affirmative action recedes. Join ImpactAlpha’s Sherrell Dorsey and David Bank, with Mirtha Donastorg of The Atlanta Journal-Constitution, Milken Institute’s Troy Duffie, Carla Whitlock of Tuskegee University, JFF’s Taj Eldridge and other special guests, today at 10 am PT / 1pm ET / 6pm London. Join directly on LinkedIn.
- Catch up quickly: “Social returns on investments in HBCUs rise as affirmative action recedes.”
Featured: Impact Private Equity
‘A’ for Effort: Private equity giants Bain, Apollo, TPG and KKR grade their own impact initiatives. A billion-dollar impact fund used to be an industry milestone. Now $1 billion is table stakes for legacy private equity firms moving into impact, sustainability and climate action (see, for example, KKR, TPG, General Atlantic, BlackRock and Ariel Alternatives), and fund sizes have climbed as high as $15 billion (Brookfield). Impact reporting has likewise come of age. Once a practice primarily of nonprofits, the world’s biggest private equity firms now publish fund-specific and sometimes company-wide impact reports, and even slip impact reporting into their broader annual reports. We pored over hundreds of pages (so you don’t have to) from TPG, Bain Capital, KKR, Apollo and Soros Fund Management to cull social and climate-related outcomes. One metric that caught our attention: impact yield. Does your fund report its impact? Shoot a note and your report to [email protected].
- TPG. The asset manager’s impact funds have accumulated $15 billion under management and a portfolio of more than 55 companies. TPG claims $9 billion in “quantified impact” across its funds, representing what it says is the economic value of the social impact associated with its portfolio companies’ business outputs (for context, see “Can we put a dollar value on impact? Reactions to the Rise Fund’s ‘impact multiple of money’”). The “impact yield” of TPG’s $2.3 billion first impact fund, was up 113% last year, according to the firm’s 2022 impact report.
- Bain Capital. Since 2015, Bain Capital Double Impact has raised two funds of $800 million and $390 million, made two dozen investments, notched four exits – and had a hiccup or two. “We believe inclusive organizations deliver better results,” Bain’s impact group wrote in its latest report. More than 40% of management positions at Double Impact’s portfolio companies are held by women, people of color, veterans, LGBTQ+ and others from underrepresented backgrounds.
- Apollo Global Management. Unlike some other financial services companies (ahem, BlackRock), the $548 billion asset manager and private equity investor remains an unabashed champion of ESG, impact, and diversity, equity and inclusion practices. The firm’s 2022 sustainability report suggests much of Apollo’s impact remains aspirational or a work in progress. Apollo’s Sustainable Investment Platform deployed $6 billion last year in climate and clean energy capital, toward a goal of $50 billion by 2027 and $100 billion by 2030. The more-focused Apollo Impact Platform has $924 million in assets.
- KKR. The investment’s manager’s global impact segment includes a pair of funds that have raised over $3.2 billion, including at least $1.9 billion for its second fund. KKR last year introduced nearly a dozen employee ownership programs with portfolio companies to boost productivity and increase retention. Separately, KKR has been an active investor in renewable energy, investing $15 billion in renewable energy since 2011 through its infrastructure and credit strategies. It invested $400 million last year in New Delhi-based Serentica Renewables.
- Soros Fund Management. George Soros’ family office launched its climate action strategy in 2020. The four prongs of the initiative aim to zero out direct and indirect emissions across the fund’s portfolio by 2040, restrict fossil fuel exposure, engage companies on climate action, and invest in climate solutions. One challenge: obtaining accurate data for asset classes such as private equity and debt, according to its 2022 climate action progress report.
- Keep reading, “‘A’ for Effort: Private equity giants Bain, Apollo, TPG and KKR grade their own impact initiatives,” by Jessica Pothering, Amy Cortese, Roodgally Senatus, David Bank and Dennis Price on ImpactAlpha.
Dealflow: Investing in Health
Five35 Ventures backs Zuri Health to expand mobile healthcare in Africa. Kenya-based Zuri has a mobile app to help patients connect with doctors and local healthcare services. It also offers SMS messaging for “the over 65% of the population without access to smartphones or the internet,” the company says. The woman-led company, which calls itself a “virtual hospital,” launched in Kenya amid the pandemic in 2020. Zuri has expanded its services to eight other African countries. South Africa-based Five35 Ventures likes how Zuri is “leveraging technology for low-cost ways to access otherwise inaccessible health platforms,” Five35’s Hema Vallabh told ImpactAlpha. “They’re like an Uber for healthcare.” The undisclosed funding follows Zuri’s pre-seed financing last year.
- Big pharma. Zuri was among Bayer Foundation’s 2022 Women Empowerment Award winners. Bayer has partnered with Zuri to “provide 100 million women in low- and middle-income countries with modern contraception yearly by 2030.”
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FINCA Ventures invests in farmer livelihoods, financial inclusion and education. The venture arm of the global microfinance institution FINCA invests in early-stage social enterprises providing essential products and services for low-income people. Its latest investments include Cassvita, an agtech venture helping farmers in Cameroon grow cassava as a climate-resilient alternative to other crops. Cassvita connects farmers to financing for inputs, buys their harvest, and processes it into flour as a wheat substitute or for making instant fufu, a popular West African dish. Cassvita says its processing prevents crop spoilage, boosting farmers’ income by as much as 400%.
- Basic services. FINCA Ventures also backed the Mexico-based fintech Bamba, which is facilitating access to new and flexible insurance products, and Rising Academies, which operates a network of low-cost private schools in West Africa and Rwanda. FINCA launched its venture arm in 2018. The fund has made 25 investments, writing checks of $100,000 to $500,000.
- Check it out.
Dealflow overflow. Other news crossing our desks:
- AXA’s alternative investments group earmarked $49 million to invest in native forest restoration in Brazil. (Reuters)
- Seedstars and German development agency GIZ launched Enhancing Financial Inclusion in Palestine to support early-stage fintech startups bolstering financial literacy and inclusion for un- and underbanked Palestinians. (Seedstars)
- Baltimore-based Etch secured $7.5 million for its “closed loop” system to decarbonize natural gas and recycle the fuel for indefinite reuse. (Axios)
- Nigeria’s MyCover.ai raised $1.3 million to make it easier to underwrite and distribute affordable insurance products and process claims. (Disrupt Africa)
Impact Voices: Impact Management
Online Curriculum: Impact for decision-making, Part 1. The annual impact report. It takes valuable time and resources to produce, but once completed it rarely affects investment decisions (see above). In a series of videos and guest posts on ImpactAlpha, Jackson Gates and Mike McCreless of Impact Frontiers, and Marieke Spence of Impact Capital Managers, offer a different approach: impact financial integration. The three-part series introduces tools such as “multidimensional impact ratings and impact-financial scatterplots that can help investors integrate impact more systematically into their decision-making.”
- Across silos. Despite the development of robust impact management methods, “the disciplines of impact management and investment management are not designed to be interoperable,” Gates, McCreless and Spence say. “People usually learn one or other; few learn both.” Impact ends up siloed from the financial considerations that drive decision-making.
- Keep reading and watch the first module, “Impact for decision-making, Pt. 1,” by Jackson Gates, Mike McCreless, and Marieke Spence on ImpactAlpha.
Agents of Impact: Follow the Talent
Ahead of this year’s COP28 summit, the EU could lose two of its top climate change negotiators: Frans Timmermans, who’s running to become the next Dutch prime minister; and Spanish climate minister Teresa Ribera, who has represented Spain at COP since 2018… Gerry Anderson, ex-chairman and CEO of DTE Energy, joins ArcLight Capital Partners as a senior advisor and ArcLight Power Infrastructure board member… Low Income Investment Fund promotes Tyler Jackson to impact capital deputy director.
Goldman Sachs’ sustainable investing group seeks an asset management associate in London… AlphaMuni Foundation has an opening for an executive director in Nairobi… 60 Decibels is on the hunt for analysts and managers in Kenya, India and Latin America… Rally Assets has an opening for a finance and operations director in Toronto… VC Include seeks an executive director in New York… Also in New York, Overdeck Family Foundation is recruiting a research and impact officer.
Cooley LLP is looking for a director of social impact and sustainability in San Francisco…The Solar and Energy Loan Fund is launching the Southern Climate Equity Accelerator to raise capital for community organizations accelerating clean energy in low-income communities in the US… Catch the final webinar in Making Finance Work for Africa’s four-part series on climate risks and opportunities in Africa, this Thursday, July 27.
Thank you for your impact.
– July 26, 2023
