Greetings, ImpactAlpha readers!
We had a great response to our first Agents of Impact conference call earlier this month. Please join us on The Call, No. 2, Thursday, June 28th at 10 am PT / 1 pm ET am PT / 5 pm GMT. We’ll take Private Equity Watch live and dig into the impact of TPG, Bain Capital, KKR and other big dogs of private equity. RSVP here.
Featured: The Brief’s Big 10
1. Connecting the dots and charting the narrative. That’s a baker’s dozen of weekly columns that have tried to lift ImpactAlpha’s beat reporting into a cogent narrative. David Bank’s column, “The Impact Alpha,” has traced the inexorable logic of impact that is spreading to “hybrid” investors standing up products and strategies inside the biggest asset managers and owners. Conventional finance, sometimes called “mainstream,” is quickly becoming “legacy.” Things are going to get interesting. Scan the roundup.
2. Private-equity watch. Colony Capital has acquired the Abraaj Group’s Africa, Latin America and Turkey funds. The Los Angeles-based investment manager, founded by financier Tom Barrack, did not acquire the $1 billion Abraaj Growth Markets Health Fund. Bloomberg reported the restructuring firm AlixPartners is expected to take over until a permanent manager can be found for the fund’s ambitious health care strategy.
- What went wrong with the Gates Foundation’s investment.
- The backstory of the $1 billion bet on health networks for 21st century megacities.
3. Meet the 8,700 census tracts certified for Opportunity Zone investment. Local leadership already is organizing to show off what’s investible, bring in multiple sources of capital and streamline zoning and permitting, Steve Glickman and John Lettieri told ImpactAlpha. “The zones that are most successful do this early and well.” Their Economic Innovation Group, which helped write the tax provision, is trying to address concerns about the influx of capital. “We’ve spent a lot of time with mayors and groups of community stakeholders and strategists.” The poverty rate in the Treasury-certified Opportunity Zones is nearly 31%; family incomes are 59% of the median for their areas.
- Local leaders. The Accelerator for America is meeting next week in Las Vegas to push forward local Opportunity Zone efforts. The accelerator, chaired by Los Angeles Mayor Eric Garcetti, already is working with South Bend, Oklahoma City and Louisville. Colorado, Oregon, Ohio, North Carolina and Indiana are among the most active states, say Glickman and Lettieri.
- Inclusion zones. Impact investors are mobilizing around “inclusive” Opportunity Zones, with rules for funds and safeguards against dislocation, and to ensure they truly expand access for low-income residents and businesses. Find out more.
4. Donor-advised funds add impact options to keep up with demand. The $85 billion in donor-advised funds in the U.S. already is tax advantaged and designated for mission. It’s not surprising that DAF-holders are demanding options to make impact investments as well as grants. Fidelity Charitable says the amount of its DAF capital committed to impact investing more than doubled last year to $856 million. As client demand grows, so have the options across asset classes for account holders to direct more capital toward impact. A snapshot.
5. The M-word: Investors bring ESG into the materiality world (podcast). Whether the Trump administration likes it or not, consideration of environmental, social and governance factors in investment decision-making has become accepted, if not required, practice for asset owners and managers worldwide. One word: materiality. Roundtable regulars Imogen Rose-Smith, Brian Walsh and David Bank take up fiduciary duty and the April “ESG” memo from the Department of Labor in ImpactAlpha’s Returns on Investment podcast. Read on and listen in.
6. Deals of the week. Drink from the deal firehose all week long on ImpactAlpha.com. A few that stood out:
- Private equity watch. TPG’s Rise Fund bets on accelerated growth in solar electricity in India… Leapfrog Investments takes stake in Nigerian pension fund manager ARM Pensions.
- Gender lens. Goldman Sachs commits $500 million to women-led businesses… Brazil’s LadyDriver secures $500K in seed funds for safe ride-sharing for women.
- Inclusive fintech. CapitalG backs Indian small business lender Aye Finance… Ricult raises $1.85 million for alt-credit score lending to small farmers in Asia.
- Foundation investments. Gates Foundation and Horizons Ventures invest in Evolve’s infant probiotic… Kellogg Foundation backs loan fund for Battle Creek… Jessie Ball duPont Fund makes $3 million affordable housing loan to LISC… Bonus: Mission investors lend $7 million to restore Sandy-impacted homes.
7. For fund managers, “impact carry” could multiply impact performance. That fund managers deserve performance-based compensation is almost an article of faith (witness the durability of the carried-interest preference in U.S. tax law). “It’s time we introduce impact carry,” writes Bamboo Capital’s Arun Asok from Singapore. “Incentives for creating social returns should be structured to generate further social impact.” The full proposal.
8. World’s small farmers finally get a technology boost. GreenFingers Mobile enables agricultural organizations to digitally manage their farmer networks. Farmforce helps smallholders gain access to formal markets by making traceability and compliance a part of smallholder production. Tanner Methvin, a partner at Impact Amplifier, a startup accelerator in Cape Town, says technology ventures are beginning to address the challenges of a half-billion small-scale farmers in the global south. Check it out.
9. Laying an ethical foundation for the blockchain future. The blockchain is hot. But without a strong ethical foundation, the “techlash” rocking the tech world will turn on crypto as well. A report on ethical design for blockchain from Georgetown University’s Beeck Center aims to help developers mitigate data and privacy risk by being vigilant from the start about how applications are built. Why blockchain needs ethics.
10. Seven realities of impact investing in Asia. Entrepreneurs need more than money and investors want to collaborate. Accelerators can help, but somebody needs to pay for them. At the Asian Venture Philanthropy Network in Singapore, Conveners.org’s Avary Kent heard from next-gen wealth holders gearing up to deploy capital from climate to education that the marketplace still lacks critical infrastructure. More takeaways.
— June 22, 2018.