Happy Friday, ImpactAlpha readers!
We’re in Philadelphia today for the two-day Total Impact conference hosted by the Good Capital Project and ImpactPHL. Yesterday was all about preparing financial advisors for the flood of client interest in impact investing. “If you’re a financial advisor and you’re not offering impact, you’re behind the curve and soon you’ll be obsolete,” said Just Capital’s Martin Whittaker.
Today, the spotlight turned to “local” and opportunities emerging in Philadelphia’s impact ecosystem. “We want to build a deeper community of impact investors here in Philadelphia,” said Don Hinkle-Brown, CEO of Reinvestment Fund, in announcing PhilaImpact, which will increase access to capital for schools, supermarkets, health care and housing projects with measurable impact in the Philadelphia region. Reinvestment Fund and the Philadelphia Foundation each committed $5 million toward the fund’s $30 million goal.
Read, “Philadelphia Model: Reinvestment Fund and Philadelphia Foundation commit $10 million to place-based PhilaImpact fund,” by David Bank and Dennis Price, on ImpactAlpha.
The Brief’s Big Ten
1. Bill McGlashan on The Rise Fund’s ‘impact multiple of money.’ The CEO of TPG Growth pulled back the curtain on the $2 billion Rise Fund in a Q&A with ImpactAlpha. McGlashan told David Bank that each Rise Fund investment is underwritten not only for financial targets, but for a specific impact target, in dollars. That “impact multiple of money, or IMM, can be delivered in increased income for smallholder farmers, reduced greenhouse gas emissions, lower costs through diabetes prevention or other quantifiable social goods. What we learned.
- Kicking the tires… Nonprofit Finance Fund’s Antony Bugg-Levine asks “Has any credible, independent third-party reviewed details” of the Impact Multiple of Money methodology?” We’re on the case, @ABLImpact.
- Late breaking… Former U.S. Secretary of State John Kerry joins the Rise Fund as an advisor, with a focus on renewable energy.
2. The Impact Alpha: What’s material in the age of Trump? The “field assistance bulletin” issued by the U.S. Department of Labor queued up the right question, says David Bank in this week’s column: Is the environmental, social and governance performance of a company or a fund “material” to long-term financial performance? If so, it follows that prudent pension-fund fiduciaries are not just allowed, but duty-bound, to consider them in investment decisions. In other words, game on.
- The GIIN said… The new guidelines “reflect an outdated view that understands the priority of the investor to be maximization of short-term shareholder profits over everything else,” said Abhilash Mudaliar. Such conventional wisdom, he said, has been “shown to be inconsistent with long-term, sustainable investment success.”
3. Deals of the week… Drink from the firehose every morning in our new Dealflow newsletter, or check the stream anytime on ImpactAlpha.com. Here’s a peek:
- Education and workforce finance… Techtonic Group raises funds to teach software skills and diversify tech… Enuma secures funding to fill early learning gaps.
- 2030 finance… Swedish pension fund adds $100 million to Dutch SDG-loan fund… CoPower unveils new green bond offering for Canadians… OhmConnect raises funds to expand the “energy sharing” economy.
- Inclusive finance… Arman Financial Services raises funding to serve India’s unbanked… Chinese investor and Goodwell Investments back MFS Africa to speed business transactions… Tala raises $65 million for alternative credit scoring and mobile lending… Pula secures seed funds to offer small farmer insurance.
- Gender-lens investing… Women’s health in the U.S. attracts development-bond interest… Women’s World Banking plans new, larger fund for women’s financial inclusion.
4. Life after Abraaj. The $206 billion LGT Group, the asset manager of the royal family of Liechtenstein, is ramping up LGT Impact, its impact investing arm. LGT recruited Sev Vettivetpillai, who headed impact investing for Abraaj, the Dubai-based private equity firm, to build a team of about 50 investment professionals and raise regional funds for Latin America, sub-Saharan Africa, South Asia and Europe, focused on education, health care, energy and agriculture. Vettivetpillai left Abraaj amid the firm’s ongoing controversy.
5. Show me the ‘blockchain for good’ deals… For all the promise of blockchain-enabled technologies to solve global challenges, actual investments in “blockchain for good” have been slow to emerge. The latest signal: One of the most ambitious efforts, the $50 million in-house venture fund of Consensys, the Brooklyn blockchain provider, is scaling back its social impact focus. What’s next.
6. …And the African mini-grid deals. A new analysis suggests 100 million people in Africa could be cost-effectively served by mini-grids today. That’s an investment opportunity in the range of $11 billion. But the top five mini-grid developers in Africa raised barely $100 million from 2012 to 2017; investors put $750 million into pay-as-you-go home-solar companies in the same period. European utilities, global corporations and Bill Gates’ Breakthrough Energy Ventures are evaluating the mini-grid market. Financing energy access.
7. The plan to mobilize trillions for the U.N. Global Goals. A ‘Clean Investment Club’ of asset owners is forming in advance of California Gov. Jerry Brown’s Global Action Climate Summit in September. Club membership would require investors to commit 2% of their portfolios to sustainable infrastructure by 2020 and 5% by 2025. That would mobilize $500 billion for sustainable infrastructure; about a third of the estimated private sector funding gap. And that’s only one part of a broader plan.
8. Early data signals success of Social Impact Incentives. Clínicas del Azúcar, a string of low-cost diabetes clinics in Mexico, increased services to low-income populations and earned a $64,000 payment from the Swiss development agency. Bjoern Struewer of Roots of Impact touts the payment as an early proofpoint for Social Impact Incentives. SIINC up.
- A new “Social Success Note”… will lower interest payments on a loan to Impact Water if impact targets are met.
- More impact incentives… Beneficial Return will waive the final payments on its loans to Sistema Biobolsa and Iluméxico in Mexico if they achieve their impact goals.
9. Apply a racial lens. Race-neutral efforts to boost economic opportunity have failed. Going forward, organizations across sectors must deliberately incorporate a racial lens into their efforts to boost economic security. Businesses run by people of color are more likely to employ people of color and to support the creation of wealth for entrepreneurs of color. To kick off a new series on ImpactAlpha, Living Cities explores the lessons from its $57 million in impact investments in 33 companies. Six lessons from 10 years of impact investing.
10. Impact investors to financial advisors: step up or get out of the way. Seven in 10 investor clients have requested impact opportunities from their advisors, according to a recent survey; only one in five financial advisors thinks it’s important. Registered investment advisors are a crucial “gateway” for mainstreaming impact and sustainable investing. Seizing the opportunity.