The new trustbusters, online education in Southeast Asia, muni bonds for distributed green infrastructure, Unilever post-Paul Polman



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Featured: ImpactAlpha Original

New trustbusters aren’t waiting for government to democratize the economy. To some investors, monopoly is the definition of winning. “Competition is for losers,” boasts venture capitalist and Facebook investor Peter Thiel. A new set of investors are taking precisely the opposite approach. They are deploying financing and ownership structures designed to prevent or even reverse the accelerating trend toward monopolization. These new trustbusters are not waiting for government antitrust enforcement. Rather, they are building companies that can prosper – and repay investors – without being acquired by one of the small handful of giants in each industry.

This counter-narrative requires “alternative investment structures that help entrepreneurs raise capital while keeping ownership – over the long term – to the founding team, with an eye towards expanding it to coworkers and employees,” says Ross Baird, CEO of Village Capital, which has backed more than 100 early-stage firms in the U.S. and around the world. New Belgium Brewing Co., makers of the popular Fat Tire Ale, is bucking the concentration of the beer industry, with an employee stock ownership plan that has helped more than 700 employee-owners in Fort Collins and Asheville, North Carolina control the firm. The Creative Action Network, an artist-activist community in San Francisco, avoided traditional venture capital in favor of a revenue-sharing structure that lets investors exit without an acquisition.

Read, “New trustbusters aren’t waiting for government to democratize the economy” by Dennis Price on ImpactAlpha.

Dealflow: Follow the Money

Northstar Group backs Topica’s platform for online education in Southeast Asia. Vietnam-based Topica offers online English tutoring, entrepreneurship, skills training and even university-level degrees. Singapore’s $2 billion private equity firm Northstar Group put $50 million into the company’s Series D round. Topica was founded in 2006 to give “anyone a chance to [use] technology to upgrade their working efficiency and improve quality of life.” The company has partnered with 16 universities and graduated 6,200 degree students from Vietnam, Indonesia, Thailand, Singapore, Malaysia and the Philippines. Read on.

European Investment Bank backs solar transition for Mexico. Mexico’s goal is to generate 35% of its power from renewable sources by 2024, and 50% by 2050. The EIB, a unit of the European Union, is financing $87 million in debt for three solar power plants, including the largest solar park in the Americas. The EIB is aiming to invest one-quarter of its capital in climate change mitigation and adaptation initiatives. The plants, jointly-owned by Canadian pension fund CDPQ, Mexican pension fund CKD Infraestructura México’s investment group, and Italian energy company Enel, came online in September. Here’s more.

Signals: Ahead of the Curve

Tapping the municipal bond market for distributed green infrastructure. Boring is exciting in the $3.8 trillion municipal bond market. Last month’s $61.4 million issue from the Industrial Development Authority of Pinal County, Arizona looked like a typical tax-exempt muni. But the bond is one of the first to finance a “renewable natural gas” project, according to Goldman Sachs. The biodigester, expected to go online early next year, collects manure from dairy farms and feedlots that previously had been stored in open lagoons. The avoided emissions of methane, a powerful greenhouse gas, qualify the project for federal and California fuel credits. The transaction signals that “distributed green infrastructure” may be able to scale rapidly with lower-cost, tax-advantaged capital.

  • Lower cost of capital. The proceeds of the 7.5% 15-year bond were loaned to the Wastewater Opportunity Fund, a $184 million fund of Equilibrium Capital, based in Portland, Oregon. Equilibrium’s Dave Chen said the refinancing “significantly” lowered the fund’s cost of capital, despite a difficult time in the bond market generally and for green bonds in particular.
  • Steady cashflows. The methane is scrubbed, injected into the Kinder-Morgan pipeline and sold to British Petroleum to power buses and other vehicles in Los Angeles, according to the development authority. That gives the project steady, long-term cashflow to repay the bond.
  • Waste to fuel. Governments around the world are seeking to provision renewable fuels for both energy security and to combat climate change. In effect, waste products, like cow manure, become feedstock for the low-carbon energy infrastructure.

“We didn’t go to impact investors, we didn’t go for program-related investments. We went to the municipal bond market,” Chen told ImpactAlpha. “We broke through into the world of a well-understood debt form called the muni bond to finance our work building distributed green infrastructure.”

Keep reading, “Tapping the municipal bond market for distributed green infrastructure,” by David Bank on ImpactAlpha.

Agents of Impact: Follow the Talent

Paul Polman steps down as CEO of Unilever after a decade at the top of the global corporation. Polman’s successor is Alan Pope… Resilience Capital Ventures’ Gillian Marcelle joins the board of Johannesburg-based Tafari Capital… The Center for Cultural Innovation in San Francisco seeks a program director of catalyzing capital… The Office of the Illinois State Treasurer is looking for an investment analyst to advance diversity and inclusion.

December 3, 2018.

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