The Brief’s Big 6: Opportunity alpha, racial-equity cannabis investing, Philly steps up, media podcast, Agent of Impact: BNP Paribas’ Hervé Duteil



TGIF, ImpactAlpha readers!

Seeking Opportunity Zone impact alpha. At least 20 Opportunity Funds are trying to raise more than $1 billion. The shortage now: dealflow. “They can’t find deals because they aren’t working with and embedded in the community,” Economic Innovation Group’s Rachel Reilly tweeted from an Opportunity Zone event in Washington DC this week. Without local market expertise and partners, fund managers will find it difficult to find deals, mitigate risks and manage the assets, Reilly explained in Twitter-speak. “Private market wasn’t investing in these places prior. Need local buy-in to be successful long term.”

Local roots are key to the kind of “Opportunity Alpha” we signaled in our year-end report. This week, Renaissance Equity Partners launched a $50 million Opportunity Fund to invest in mixed-use developments around historically black colleges and universities. The fund, part of Calvert Impact Capital’s Opportunity Zone Incubator, plans to develop up to a dozen projects with Opportunity Zone equity plus federal Housing and Urban Development loans. Habitat for Humanity is raising Opportunity Zone capital for affordable housing and small businesses in a mobile home park in Charlottesville, Virginia, in order to create a “nationwide blueprint for redevelopment without displacing current residents,” according to Curbed. Habitat has the requisite roots: It bought the mobile home park more than a decade ago.

“The trick to making the Opportunity Zones more than a quick-flip real-estate play, and to generate more than low-wage, temporary jobs,” we wrote, “is active community participation and deep engagement that surfaces better ideas, activates talent, reduces risks and makes for better investments. Game on!”

– Dennis Price, editorial director

Featured: The Brief’s Big 6

1. ‘Inclusive cannabis’ investors apply a racial-equity lens. The crackdown on illegal pot put hundreds of thousands of people behind bars in the U.S. Now, those felony drug convictions are keeping many formerly incarcerated would-be entrepreneurs and employees out of the newly legitimate – and booming – cannabis industry. Some cities and investors are specifically advantaging those disproportionately impacted by the decades of prohibition. Oakland reserves half of the city’s cannabis permits for “equity applicants” with cannabis-related arrests, local residency or below-average incomes. Christine de la Rosa, co-founder of Oakland’s People’s Dispensary, told ImpactAlpha her collective is seeking to make “sure those who have been most harmed from the War on Drugs are able to benefit from this industry that is now legal.” Pass it around.

2. Leveraging Philadelphia’s assets to boost livelihoods and revive neighborhoods. Philadelphia’s impact investors are stepping up to finance job-creation and support local businesses. Real estate developer Shift Capital has deployed $37 million in industrial, commercial and residential properties in the drug-affected Kensington neighborhood and is helping local businesses set up shop. Philadelphia investors, led by the Reinvestment Fund, pulled together $5 million to help non-profit First Step Staffing bring to Philly its model to help the homeless and formerly incarcerated find jobs. Venture investor Ben Franklin Tech Partners recently raised $15 million for the region’s job-creating startups. Ben Franklin’s Jason Bannon tells ImpactAlpha: “We can’t wait for capital going to New York, California and Boston to show up.” Stepping up.

3. Are impact investors missing the media opportunity? (podcast) Billionaires from Marc Benioff (Time) to Jeff Bezos (Washington Post) to Patrick Soon-Shiong (Los Angeles Times) to Laurene Powell Jobs (The Atlantic) are busy reviving old-line newspapers and news magazines. That it’s billionaires riding to journalism’s rescue are “incredibly problematic,” Imogen Rose-Smith, an investment fellow with the University of California, says on the latest Returns on Investment podcast. There’s an impact opportunity in independent media, says ImpactAlpha’s David Bank. “Trusted journalism is a competitive advantage in places where you can’t trust anything,” said Bank. “If the media has become untrustworthy, then trustworthy media will have an advantage.” Read on, and listen in.

4. Agent of Impact: Hervé Duteil, BNP Paribas. As the French bank’s chief sustainability officer for the Americas, Hervé Duteil is bringing financial chops to corporate social responsibility. The bank helped the World Bank float the first bond for development projects linked to the Sustainable Development Goals. It arranged the $95 million Tropical Landscapes Finance Facility to pay for wildlife-friendly, socially inclusive and climate-sensitive rubber production in two Indonesian provinces. In France, the bank has helped finance more than a dozen social service providers to build their programs and prove their value. In the U.S., BNP has backed social impact bonds supporting families dealing with substance abuse in Connecticut, and veterans in Massachusetts. “We’re in the business of tapping private sector money, of bridging private capital and projects,” Duteil said this week at BNP Paribas’ Impact Capital Forum in New York. “Our primary concern is to see if we can participate in the development of a product that works so that it can really bring that money-flow towards projects in need.” Follow ImpactAlpha on Instagram.

  • Follow the talent with ImpactAlpha’s weekly report on career moves, job openings, events and opportunities.

5. Deals of the week. Stay on top of the dealflow all week long on ImpactAlpha.com. Deals that stood out:

6. A Who’s Who of impact fund managers make the ImpactAssets 50. The San Francisco-based financial services firm’s annual ImpactAssets 50 helps investors find qualified impact fund managers, but it’s not a ranking or a competition. “The IA 50 is built to filter out the noise that is growing louder in impact investing and help investors focus on deep, meaningful impact,” says Align Impact’s Jennifer Kenning.

  • Billion-dollar babies: The IA 50 includes a half-dozen fund managers with more than $1 billion in assets, including, Kairos Investment Management Company, North Sky Capital, LeapFrog Investments and Enterprise Community Partners, Turner Impact Capital and Low Income Investment Fund.
  • Newbies: Newcomers to this year’s list include Advance Global Capital, Impact Engine, SunFunder, Strategic Development Solutions, and WaterEquity.
  • Dive in.

March 1, 2019.

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