TGIF, Agents of Impact! In the Brief:
- New investment narratives
- HBCUs take climate action
- Green investments in low-income communities
- Secondaries for funds in emerging markets
🗣 Flipping the script. “Don’t get too flipped out,” one Federal Reserve banker urged investors when an uptick in inflation sparked a temporary market rout this week. That got us thinking about flips of the narrative sort that may not only be welcome, but overdue. For example: the conventional inflation-fighting playbook of raising interest rates to tamp down demand. That blunt tool risks stunting both the strength of workers and the urgent rollout of green infrastructure. I wrote this week about an alternative school of thought that would instead promote abundance – increasing the supply of green energy, affordable housing, healthy food and other “scarce” resources to meet surging demand and reduce costs. Another one: the conventional wisdom that housing for the homeless population requires government subsidies. In Los Angeles, SDS Capital’s Deborah La Franchi is building permanent supportive housing more quickly and cheaply using only private capital, as Roody Senatus reported. Similarly, ignoring the externalities of individual investments, even high-flyers such as the “Magnificent Seven,” can be detrimental to your overall portfolio – and society, as Benedict Partners’ Billy Gridley noted.
Scarcity thinking in need of reversing is everywhere. Must philanthropic foundations exist in perpetuity, hoarding their endowments and keeping grants to the legal minimum? Lynne Hoey of the Kataly Foundation, explores the foundation’s mission to spend out its $450 million reserve within 10 years and redistribute wealth to frontline communities. By asking “what is enough?” Kataly is challenging “the underlying assumption that philanthropy always needs more in its coffers,” she wrote. Financial firms looking to support enterprises owned by people of color or employees can likewise take a look at their own governance and ownership. After 40 years, the sustainable investment firm Natural Investments has converted to a perpetual purpose trust. “We instantly changed our governance and power dynamics,” Michael Kramer explained in a guest post. Abundant, cheap green energy. Affordable housing for all. Distributed wealth and shared power. Agents of Impact are scripting a new plotline, with a compelling narrative. – Amy Cortese
Must-reads this week on ImpactAlpha:
- “Rising risks as the S&P 500 is outsourced to ‘the Magnificent Seven’,” by Benedict Partners’ Billy Gridley.
- “How ‘community-benefit bonds’ can help scale mortgage assistance programs,” by Matt Posner of Court Street Group and Oswaldo Acosta of City First Enterprises.
The Week’s Short Signals
🌱 HBCU climate action. Historically Black colleges and universities have a pivotal role to play in building solutions to systemic inequities exacerbated by climate change. A new survey and blueprint reveal climate action already underway at Bennett College, Bowie State University and other HBCUs. (UNCF’s Institute for Capacity Building)
🏦 Racial equity in munis. The Wall Street Journal is taking up themes raised in ImpactAlpha’s coverage of racial equity in the municipal bond market. Stanford’s Destin Jenkins, the 36-year-old author of “The Bonds of Inequality,” was profiled this week as “The Stanford professor taking on racism in the $4 trillion muni-bond market.” (WSJ)
📈 Strategic investments in distressed communities. Biden-era legislation has kicked off an investment surge in clean energy, semiconductors and electronics, biomanufacturing and other strategic sectors in the US. Low-income communities have so far received an outsized proportion of new investment. (Brookings Institution)
♿ Disability alpha. Americans with disabilities make up 12% of the population but account for up to one-third of economic gains since the pandemic. The economic participation rate of disabled Americans is near record highs, as remote work has helped reduce barriers. (Bloomberg)
🗺️ Impact roadmap for families. Globally, wealthy families manage roughly $10 trillion. A new guide from the UK Impact Investing Institute provides practical steps, information and resources to help families adopt an approach to impact investing. (Impact Investing Institute)
😎 Impact CEOs. Generate Capital’s Scott Jacobs, 3Degrees’ Steve McDougal and Vital Farms’ Russell Diez-Canseco top Big Path Capital’s MO 100 Top Impact CEO rankings of leaders leveraging capitalism to create shared prosperity. (Big Path Capital)
The Week’s Dealflow
Deal spotlight: Building an impact secondaries market. Local fund managers in Africa and elsewhere are often best positioned to deploy capital where it’s needed in their communities and markets. But without exit pathways, “capital can get trapped,” says John Owers of British International Investment. “That creates a fundraising environment that makes it very difficult for general partners to raise new funds.” This week the UK development finance institution completed the first deal in a new strategy to help itself and other investors exit emerging market impact funds. BII sold three long-held fund stakes to the Swiss impact investment firm Blue Earth Capital. “We’re hoping that by demonstrating a portfolio sale like this, we can encourage other limited partners to think about their interest in creating some supply into the secondary market,” Owers told ImpactAlpha.
- Instant gratification. The positions BII sold to Blue Earth are in funds that have already notched numerous portfolio exits. Blue Earth’s investors, many of whom are new to impact investing, will have the benefit of near-term liquidity because of the funds’ maturity, explained Blue Earth’s Nicolas Muller. “Our LPs will not go through a traditional J-curve. They will see cash coming back on almost a regular basis.” He added: “By doing this, we think we can remove one of the barriers to bringing new investors into emerging markets, especially Africa.”
- Future commitments. Why would BII exit funds as its returns are rolling in? “It’s a portfolio management tool,” said Owers. “It’s particularly important for us if we can facilitate [capital] mobilization.” He declined to comment on the returns BII is making beyond saying BII is “comfortable with where we’ve landed.” The development finance institution remains committed to supporting emerging market funds, including by building new vehicles. “This should in no way signal that we’re looking to exit the funds [strategy] in our markets,” said Owers. “It absolutely remains key and fundamental and central to BII as an impact investor.”
- Share this post.
Energy transition. Denmark’s Aegir Insights secured €8.5 million to provide data and analytics software for off-shore wind projects… IDB Invest directed $100 million to modernize Jamaica’s electricity grid… Indian solar finance company Metafin raised $5 million in equity… Camus Energy raised $25 million to help utility operators integrate power from electric vehicles and batteries, solar inverters and smart thermostats… Lilac Solutions raised $145 million for green lithium production.
EVs. Ascend Capital raised 500 million rupees to provide financing to buyers of commercial electric vehicles in India… Two other Indian EV finance companies, Mufin Green Finance and OTO, also raised new investments… Electric motorbike maker River notched $25 million in a Series B round… Kenyan electric motorcycle and bus maker Roam raised $34 million in equity and debt.
Fund news. Catalyst Fund seeded nine African climate tech startups… Ghana’s Injaro Investment Advisors raised 216 million Ghanaian cedis to make local currency investments in small and mid-sized companies.
Green bonds. Social Investment Managers and Advisors raised $131 million in a green bond issuance to finance commercial and industrial solar developers in Africa… The Green Guarantee Company raised $100 million to provide guarantees for private and listed green loans.
Impact tech. First Circle backed Egypt’s Balad for cross-border payments… Hippo Harvest scored $21 million for greenhouse-grown produce… Brazil’s Traive raised $20 million for its farmer finance tech.
Investing in health. Health in Her Hue closed $3 million for its digital health app designed for Black women’s healthcare needs… Paris-based Essence App raised €500,000 to improve productivity and workflows around women’s menstrual cycles… Germany’s Earlybird Health raised €173 million to invest in digital health, diagnostics, and medical devices and research in Europe… Ilara Health raised $4.2 million to digitalize Kenya’s rural and peri-urban healthcare providers… Omidyar Network India led a $2 million seed round for affordable remote health diagnostics company Neodocs.
Returns on inclusion. Beta Boom scored $14.5 million to back “under the radar” founders… TPG Next signed on as an anchor investor in Black-led Visualize Group.
Waste to value. Bollegraaf Group made a strategic investment in UK-based Greyparrot… InMotion Ventures invested $1.2 million in Energy Source, a Brazilian lithium battery recycling venture… United Arab Emirates-based Zero Carbon Ventures is developing a facility with Egypt’s Green Planet to convert organic waste into graphene, hydrogen and fertilizer from Cairo’s waste streams.
The Week’s Talent and Jobs
Promotions
Working Capital Fund promoted Evan Okun to principal… Gratitude Railroad promoted Emma Leavy to principal… ImpactAssets promoted Sally Boulter to senior director of engagement and client experience, and Kavita Vijayan to head of marketing… MCE Social Capital promoted Christina Lukeman to business development and communications senior director, and Maria Raurell to investments and risk senior director.
New hires
Sorenson Impact Institute’s Geoff Davis joined the executive board of Common Ground Kaua’i… Working Power named Yerina Mugica, formerly of Natural Resources Defense Council, as co-executive director… Greystone’s Low-Income Housing Tax Credit syndication group added Sarah Laubinger, previously with Boston Financial, as chief operating officer and Todd Jones, also previously with Boston Financial, as chief investment officer.
The Vistria Group hired Lisa Davis, previously with PGIM Real Estate, as partner and head of asset management of its real estate team… Alex Munoz, a former principal at GI Partners and Goldman Sachs, joined Galvanize Climate Solutions as asset management vice president… Clay Cove Capital’s Amachie Ackah joined Surdna Foundation’s board of directors.
Featured jobs
Dynamic Planet seeks a campaign director. The director will lead the strategy and development of a multi-year campaign to communicate the benefits of ocean regeneration through marine protected areas to coastal communities around the world.
Emerson Collective is hiring an investment associate in Washington, DC. The associate will join the organization’s asset management division to conduct investment research and impact evaluation and support end-to-end investment management.
💼See and share all of the week’s impact jobs. Posting jobs on ImpactAlpha’s Career Hub is a subscriber benefit. Submit your job postings today.
That’s a wrap. Have a wonderful weekend.
– Feb. 16, 2024
