2030 Finance | October 18, 2017

Unlocking the blue economy, microfinance exit, Make Our Planet Great Again, scaling mini-grids

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Greetings, ImpactAlpha readers!

#Featured: ImpactAlpha Original

Engaging local communities to unlock investment in the Blue Economy. Poor fisheries management around the world means foregone economic benefits of about $83 billion a year. One key to recovering that loss: local community engagement in fisheries management and recovery. ImpactAlphareturns to its “Financing Fish” theme with a dispatch from the recent Sankalp Southeast Asia Summit in Jakarta.

“What we’re finding around the world is there are lots of interesting examples of cooperatives being formed around fisheries, where there are rights and interests being allocated to local communities,” said Michael Arbuckle, an independent director of FishServe Innovations, a fisheries manager in New Zealand. Impact investors seeking to develop sustainable seafood resources must realize that the state of the oceans is not only a key environmental issue but also a key social issue for millions of people who depend on coastal resources, says Manuel Bueno Vera, a director of the $20 million Meloy Fund. More than 40 sustainable seafood companies will be featured at this year’s finals of the Fish 2.0 business competition at Stanford University Nov. 7–8.

Read “Engaging local communities to unlock investment in the Blue Economy,” by Michael Standaert on ImpactAlpha:

Engaging local communities to unlock investment in the Blue Economy

#Dealflow: Follow the Money

Bamboo Capital exits microfinance firm Vitas Group. Geneva-based Bamboo Capital six years ago acquired a 29% share in Vitas, the microfinance arm of global development nonprofit Global Communities. Vitas provides financing to unbanked and underserved small-business owners in Jordan, Lebanon, Romania, and Palestine. Over the course of Bamboo’s investment period, Vitas’ loan portfolio grew from $82 million to $247 million; it serves 112,000 borrowers. Vitas CEO Elissa McCarter LaBorde said the firm’s success since Bamboo’s investment helped “crowd in” two local private-equity investors. Vitas repurchased Bamboo’s shares using internal funds. The financial terms of the deal were not disclosed.

Santander backs Mexican mobile-payments startup. ePesos offers low-cost, short-term working-capital loans via a mobile wallet to unbanked small business owners in Mexico, where more than 60% of adults don’t have a bank account. The Spanish bank led the $6 million funding round through its $200 million Santander InnoVentures fund. VilCap Investments, Pomona Impact, Fiinlab and Sorenson Impact Foundation also participated. ePesos was part of Village Capital’s 2016 fintech startup cohort in Mexico, where it was chosen for a $75,000 investment from VilCap and Pomona. The company is planning to expand its service to provide payroll advances to employees.

KrazyBee raises $8 million to improve credit access for India’s youth. The Bangalore-based startup launched two years ago to offer affordable credit and loan products to India’s students and young professionals to help them build a credit score. “The need for urgent personal finance for purchase requirements is highly underserved,” says Shirley Mao of Xiaomi Technologies, which led KrazyBee’s Series A round. E-city Ventures and RK Group also participated. KrazyBee was launched in 2015 and offers financial products like cash credit, financing for two-wheel vehicles, and tuition fee credit. KrazyBee offers its own products and six other microlenders also use its platform. The startup has disbursed over $23 million in credit over the last 18 months. Most of KrazyBee’s customers are under 30; its average line of credit is $185.

See all of ImpactAlpha’s recent #dealflow. Send deal tips and news to [email protected].

#Signals: Ahead of the Curve

Presidential leadership to mobilize finance for climate action — from France. French President Emmanuel Macron is doing his U.S. counterpart one better with a campaign to Make Our Planet Great Again. For the second anniversary of the global climate agreement reached in Paris, Macron is convening a global Climate Summit on December 12. Make Our Planet Great Again is more than a slogan: Business France has developed an online tool to guide entrepreneurs, researchers, NGOs and “all responsible citizens” through French administrative procedures. In an editorial, President Macron says he supports the recommendations of the Task Force on Climate-Related Financial Disclosure and is hopeful the European Union will adopt comprehensive recommendations for sustainable finance. He suggests France’s own policy framework as a model, specifically a law that requires institutional investors to report annually how their portfolios address climate change and support the clean energy transition (check out this handy guide from the U.N. Principles for Responsible Investment). Macron likes green bonds (France issued a big one) and green financial centers, especially if they’re in Paris. Macron’s Climate Summit will follow a Climate Finance Day on Dec. 11.

#2030: Long-Termism

Scaling up mini-grids for rural electrification in India and Africa. Mini-grids, small community-based power plants and distribution systems, could provide more than 40% of the connections needed to deliver clean power to the world’s 1 billion people who still don’t have access to reliable electricity. Yet, mini-grid developers are still rolling out tens of mini-grids per year, not hundreds or thousands. And even that is a long way from the target of 10,000 minigrids in India by 2021, and the need for 100,000 in Africa by 2040. Mini-grids are still a mini-blip when it comes to achieving Sustainable Development Goal №7 — universal access to modern, clean, affordable and reliable energy by 2030.

What’s the holdup? Access to affordable long-term debt, which is critical to capital-intensive infrastructure such as mini-grids. In 2013, just one percent of electricity investment went to decentralized solutions like mini-grids. (Puerto Rico update: the first of Tesla’s Powerwall battery packs have apparently landed on the island.)

Now, major European utilities and multinationals such as Caterpillar and Mitsui are starting to ramp up their mini-grid investments. The Green Climate Fund invested $80 million to anchor Deutsche Bank’s Universal Green Energy Access Program, which hopes of mobilize $3.5 billion in debt finance over 15 years, some of which will go to building 10,500 solar mini-grids. The Microgrid Investment Accelerator, or MIA, with backing from Facebook and Microsoft, plans to leverage $12.5 million in grant funding to mobilize $115 million with the goal of connecting more than one million people by 2036. “The cost curve is going in the right direction. Innovation is happening, including integration with productive power,” said MIA’s Alexia Kelly. “Microgrids have the ability to drive comprehensive self-generated economic development in communities.”

Read “Mini-grid developers get ready for debt capital,” by Power for All’s William Brent on ImpactAlpha:

Mini-grid developers get ready for debt capital to scale up access to clean energy

Onward! Please send news and comments to [email protected].