TGIF, Agents of Impact!
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The Week’s Agent of Impact
Ellis Carr, Capital Impact Partners. Community development financial institutions, or CDFIs, have been making loans for decades in neighborhoods and sectors where mainstream capital dared not tread. Along the way, they’ve demonstrated that affordable housing, schools, healthcare and grocery stores that serve low-income communities are not as risky as often perceived by outside capital. Yet CDFI lending has been constrained by their own access to capital, which was mostly supplied by big banks looking to fulfill Community Reinvestment Act requirements. In the last few years, some high-performing CDFIs have found another source: the public bond markets. Since 2017, Impact Capital Partners, an Arlington, Va.-based CDFI with a national presence, has raised $160 million by offering its Capital Impact Notes to foundations, insurance funds and impact-focused mutual funds, as well as retail investors.
The challenges faced by low-income neighborhoods that have been systematically disadvantaged requires “a continuum of capital, brought in at scale,” says Carr, Capital Impact Partners’ president and CEO. The notes are offered monthly, rather than on a one-time basis, as some other CDFIs have done. “It’s important to maintain a presence in the market as an issuer,” Carr told ImpactAlpha‘s David Bank at a gathering at the Aspen Institute in Washington, D.C. That track record, he says, “will allow us to bring other products to market, debt-like or even equity, that allows different channels of mainstream capital to come in.” The notes have an A+ rating from S&P Global, and the CDFI has made the ImpactAssets 50 list three years running (see No. 1, below). Carr is just getting warmed up. “The fundamental question we ask ourselves is, how do we rethink the way that capital flows, and scale is a big part of that.” – Amy Cortese
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The Week’s Big 8
1. Emerging impact fund managers unlock impact alpha. Small impact funds and first-time fund managers face steep obstacles to raising capital. But with fresh ideas, innovative theses and real-life experiences, they often outperform conventional funds and larger impact investment funds. ImpactAssets identified more than a dozen, alongside its annual ImpactAssets 50 list. Take a look.
- Returns on inclusion. “Only by supporting small and first-time impact managers will we usher in women and managers of color to the space in meaningful numbers,” tweeted Shift Capital’s Brian Murray. Added Village Capital’s Allie Burns, “We also need a system that incentivizes staying small(er) – shouldn’t just be first-time funds that are playing at the very early + catalytic stage!”
2. Electric vehicle fleets spark disruption. Muffi Ghadiali, founder of software company Electriphi, calls the electrification of transportation “the biggest shift in energy use we’ve ever seen.” The adoption of electric vehicles by corporate, utility, and public fleets creates opportunities for fleet-management software startups that promise to optimize charging schedules, electricity infrastructure, tax credits and financing. Get energized.
3. Prudential’s $1 billion blueprint. Prudential Financial committed to building a $1 billion impact investment portfolio by 2020 long before such ten-figure funds became the new normal. The insurance company, with $1.5 trillion in assets, said this week its impact portfolio had crossed the $1 billion mark. Prudential’s 80/20 split between investments targeting risk-adjusted market rates of return and “catalytic” investments for long-term impact offers an impact roadmap for other institutional investors. Take a spin.
- Carlyle Group’s approach. The $224 billion private equity firm plans to roll out an ESG strategy across its broader portfolio. “It’s no longer possible to generate high rates of return unless you invest for impact,” says Carlyle’s Megan Starr.
4. Agtech investments give nature a boost. Mission-driven investors are looking for early-stage tech companies with solutions for the negative environmental impacts of modern agriculture. They are building a pipeline of impact-driven companies making biological crop treatments, food preservation techniques and tech-controlled farms aiming to replicate, improve, and restore natural growing environments. Dig in.
5. JPMorgan plays climate ‘catch-up.’ The world’s largest financier of fossil fuels says it will quit funding new oil and gas developments in the Arctic and impose new restrictions on financing coal companies. Critics argue those measures don’t mitigate the climate risks of what JPMorgan is not scaling back: financing for tar sands drilling, pipelines and deep sea drilling. Drill down.
6. Green bonds for trash. There’s a $1.7 trillion annual opportunity for investors in the waste management market. A new white paper from UBS Global Wealth Management outlines a framework for dedicated “waste reduction bonds” to coax companies to curb food, energy and plastics waste. Recycle this.
7. The case for ‘pandemic-lens’ investing. As the COVID-19 coronavirus outbreak is proving, containing a pandemic requires both immediate action and long-term preparedness. “Pandemic bonds” and catalytic R&D funding can mobilize private capital to support government and philanthropic efforts, but innovative models are in short supply. Spread the word.
8. Gender alpha. Impact investors have more gender-diverse leaders (40%) than asset managers generally (4%), according to an analysis from Russell Reynolds Associates. Check it out.
The Week’s Dealflow
Inclusive economy. Rockefeller Foundation commits $65 million to boost economic mobility for low-wage workers… Prison education startup Nucleos attracts investment from founder of Dave’s Killer Bread… Sokowatch raises $14 million to expand services for informal retailers… Accion Venture Lab backs Prayaan Capital’s $1.2 million round.
Locavesting. Nonprofit Finance Fund’s $10 million fund to spur homeless housing in L.A… Arctaris acquires Maine ski resort to revitalize rural economy… Carolina Opportunity Funds’ first investment is in sustainable agriculture… Local Initiatives Support Corp. closes loan to L.A.’s Lendistry.
Circular economy. MycoWorks raises $17 million for sustainable alt-leather… Renewal Funds backs water management software company Olea Edge.
Climate finance. BNP Paribas closes sustainability-linked loan with JetBlue Airways… Buffalo gears up for a $30 million environmental impact bond.
Low-carbon economy. SUSI Partners raises €275 million for second European energy efficiency fund… Lilac Solutions raises $20 million from Breakthrough Energy Ventures.
Wellbeing. Town Hall Ventures raises $260 million second healthcare fund… HealthJoy raises $30 million to help employees navigate healthcare benefits.
Farmer finance. Danone allocates supplier funding to incentivize regenerative agriculture.
Institutional shift. Goldman Sachs launches an environmental impact portfolio.
The Week’s Talent
Emory’s Erika James was named the first woman and African American dean of University of Pennsylvania’s Wharton School… Alex Kravitz was named director of Total Impact… Stephanie Gripne of Impact Finance Center is Net Impact’s first Innovator-in-Residence… Meghan French Dunbar is stepping down as CEO of Conscious Company Media… Ginger Cassady was named executive director at Rainforest Action Network… Debbie Chang was named president and CEO of Blue Shield of California Foundation… Phil Kirshman steps away from his role as chief investment officer of Cornerstone Capital Group… Mark Herrera will leave his client-engagement role at RSF Social Finance.
The Week’s Jobs
Aperio Group is looking for a SRI/ESG investment strategist in Sausalito, Calif… In Washington, D.C., Village Capital seeks an investment manager on its strategic innovations team, Omidyar Network is hiring a principal and a director of strategic communications on its “reimagining capitalism” team, and Blue like an Orange Sustainable Capital is looking for an investment analyst… Spring Point Partners seeks an associate director of impact investments in Philadelphia… Kin&Co is hiring an associate director in Toronto… Applications for Beeck Center’s 2020 student cohort are open.
The Community Foundation for Greater Atlanta is searching for a CEO… Calvert Impact Capital seeks an associate general counsel in Bethesda, Md… Wellspring Climate Initiative is looking for a project director in Irvine, Calif… Pictet Asset Management is hiring an ESG strategist in Geneva… The Catholic Impact Investing Collaborative is searching for a director of membership and partnerships… New Forests is recruiting an associate director of investments in natural climate solutions and other roles in Sydney and Singapore… Upstart Co-Lab seeks a senior associate in New York.
Participant Media is looking for an assistant to the president of worldwide marketing and communications in Los Angeles… Pacific Community Ventures is hiring a data operations analyst in Oakland… Aqua-Spark seeks an investment manager in Utrecht, Netherlands… The ImPact is looking for an Asia community manager… Mission Driven Finance is hiring a project manager in San Diego… Wefunder is looking for a city partner in “a big city of your choice.”
Thank you for reading.
–Feb. 28, 2020
