TGIF, Agents of Impact!
- Building markets with intentionality
- Brian Walsh and David Bank on ‘This Week in Impact’
- Blended finance rebound
🗣 Investing with intentionality. Agents of Impact move markets. Fed up with the pace of Puerto Rico’s disaster recovery, Eduardo Carrera of Platform for Social Impact is putting in place the building blocks to bring in private capital alongside public funding for the island’s social infrastructure. That means credit enhancement, first-loss capital, bridge loans and VC investments in projects that center children and youths, as I reported for the third edition of ImpactAlpha Latin America this week. “If we’re not making an effort to move that capital with intentionality, we’re wasting precious time,” Carrera said in San Juan last month. Zoila Jennings reports on how the Robert Wood Johnson Foundation is trying to change how capital flows through communities, while Rochelle Witharana explains California Wellness Foundation’s focus on diversity in its funds management to advance health equity and racial justice. The essays are part of ImpactAlpha’s series with Mission Investors Exchange ahead of next week’s Los Angeles confab of philanthropic asset owners that are seeking to reshape capital markets as well as align their own resources.
Family offices in Latin America are leading the region’s growing marketplace for impact investing, according to Latimpacto’s Manuela Jiménez López. In Africa, local institutional investors are likewise coming to realize long-term value of steering capital towards human and green infrastructure, reports Lucy Ngige. Ahead of next week’s Milken Global Conference, Milken’s 10,000 Communities Initiative unveiled market-making tools to ease the deployment of capital to community climate infrastructure projects unleashed by the Inflation Reduction Act, as Rachel Reilly reported. The rebound in blended finance (see, Deaflow spotlight, below) suggests an appetite for stacked capital to de-risk high-impact deals and build ecosystems, as Amy Cortese reports. And tech giants like Apple and Microsoft are not only investing in nature-based carbon offset projects, they’re pushing to improve the integrity of carbon credits, reports forest veteran Shaun Paul. That is helping raise prices for carbon, enabling more high-quality projects. Making markets work, for people and the planet, is what Agents of Impact do. – Dennis Price
Other must-reads on ImpactAlpha:
- “Better Brew: Josh Gotbaum on what the Starbucks fight means for labor – and impact,” by Imogen Rose-Smith
- “These impact investors are finding opportunities and doing deals in Latin America (videos),” by David Bank
- “How Fundación Bancolombia invests in Colombia’s small businesses for rural economic development,” by María Fernanda Díaz
The Week’s Podcasts
🎧 This Week in Impact. Host Brian Walsh takes up ImpactAlpha’s top stories with editor David Bank. Up this week: The rebound in blended finance; how Big Tech can restore forests – and the credibility of the voluntary carbon markets; and, how a California foundation invests 100% of its $1 billion endowment with a diversity, equity and inclusion lens.
- Listen to the new episode of This Week in Impact. Get the podcast in your feed by subscribing on Apple or Spotify.
The Week’s Deal Spotlight
Blended finance rebounds in 2023 with bigger deals and a focus on climate. Blended finance is back. The amount of catalytic capital deployed to de-risk renewable energy, sustainable agriculture, small business lending and health and education in emerging markets picked up in 2023, according to Convergence’slatest State of Blended Finance report. Bigger ticket-sizes pushed the total of all blended-finance transactions to a five-year high of $15 billion, despite a 25% drop in the number of deals. The rebound from the steep drop in blended-finance totals in 2022 was driven by increased activity from development finance institutions and multilateral development banks under pressure to mobilize private capital for climate action and Sustainable Development Goals. Still, the use of concessional debt and equity, first-loss positions and guarantees is far below what is needed to bridge financing gaps.
- Billion-dollar deals. Convergence found that quasi-public development finance institutions and multilateral development banks play a key role in boosting private investment. In deals over $100 million, one dollar of concessional capital from these institutions mobilized over $5 of commercial capital; without their participation, the leverage was only half as great. In a recent guest post on ImpactAlpha, Dalberg’s Kusi Hornberger and Marcos Paya analyzed more than three dozen $1 billion-plus blended finance deals from Convergence’s historical database (see, “Lessons from more than three dozen big blended finance deals”). One finding: Larger deals meet financial goals more often than their impact goals.
- Climate infrastructure. Private investors increased their activity in 2023 as well. Corporations and project developers accounted for nearly half of all financial commitments from the private sector in 2021-2023, largely providing equity to finance energy projects. The tools of private finance, such as guarantees and risk insurance, are also showing up more in blended finance deals. The amount of such guarantees grew by 40% last year, accounting for 43% of all concessional funding in 2023.
- Get the full scoop, and check out the full roundup of ImpactAlpha’s deal reporting this week.
The Week’s Talent and Jobs
💼 See and share more than two-dozen new impact jobs posted this week on ImpactAlpha’s Career Hub and view hundreds of more jobs in impact investing and sustainable finance. Have a job listing to post? Submit it here.
The Predistribution Initiative named Juan Jardon-Pina, formerly of Deetken Impact, as a senior associate based in Mexico City… Fiorella Schiffino, previously with Inovia Capital, joined Raven indigenous Capital Partners as chief financial officer… Northern Trust’s Lyle Logan joined the board of Impax Asset Management as a non-executive director.
The Beeck Center for Social Impact and Innovation promoted Molly Porter to managing director… Ayah Abulghanam, previously with USAID, joined Mercy Corps Ventures as a program officer… Radhika Fox, previously with the US Environmental Protection Agency, joined the Robert Wood Johnson Foundation’s impact investments team as a strategic advisor… Dalberg promoted James Eustace to partner and Europe regional director.
That’s a wrap. Have a wonderful weekend.
– May 3, 2024
