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#Dealflow: Follow the Money
IIX raises $8 million with Women’s Livelihood Bond on Singapore Stock Exchange. The bond offered by the Impact Investment Exchange is expected to help 385,000 women in Cambodia, Vietnam, Philippines and other southeast Asian countries transition from subsistence to sustainable livelihoods. It will provide credit and loans to microfinance institutions and women-oriented impact enterprises. The four-year, 5.65% bond is part of abroader social bond initiative and could be a model for other bonds to finance energy, education, or at-risk youth. The bond was structured with support from DBS and ANZ banks. USAID provided a loan guarantee. The Rockefeller Foundation provided grants for structuring and distribution. Fundraising for the Women’s Livelihood Bond, originally pledged at the Clinton Global Initiative, took longer than anticipated, as investors sought additional risk-reduction provisions.
Closed Loop Fund backs plastics recycling venture IntegriCo. IntegriCo makes products for railroad infrastructure using recycled plastics. The 10-year-old company claims its products have diverted 70 million tons of plastic from landfills. IntegriCo will use Closed Loop Fund’s investment to expand plastic sourcing and manufacturing from a new, Louisiana-based plant. Closed Loop Fund, a corporate-backed investment fund focused on recycling initiatives, did not disclose the amount of its investment. The fund, which recently secured $6 million from Nestlé, is aiming to invest $100 million by 2020.
Lok Capital returns $65 million to investors and raises $80 million more. Gurgaon-based Lok invests in financial institutions serving low-income Indians, and is expanding into healthcare, agriculture, and housing. Lok has exited four companies in the past 12 months, enabling the firm to return $65 million in principal from its second fund, with three years to go. Last year, it fully exited 10 investments from its $22 million first fund, and returned 10% in profits to investors. Its track record has boosted Lok’s fundraising for its third fund, which has secured $80 million toward a $100 million target. With backing from domestic Indian investors for the first time, Lok expects about one-third of its investors to be private; for its first fund, all but 5% of its capital came from development finance institutions.
See all of ImpactAlpha’s recent #dealflow.
#Signals: Ahead of the Curve
Economically targeted investments by pension funds are impact investments by another name. For decades, U.S.-based public and private pension funds have been seeking risk-adjusted returns from worker-friendly affordable housing, in-state businesses, infrastructure, and other high-impact projects. Pension funds have invested more than $86 billion in more than 100 such economically targeted investments, according to a new report from Insight at Pacific Community Ventures (which cataloged the investments here). Finding investment vehicles able to take large investments remains an obstacle to pension funds’ broader embrace of economic, social and environmental impact investments. That is changing, the report notes, with fund managers such as Storebrand, Equilibrium, Obviam and Investing 4 Growth all able to receive investments between $50 and $100 million. New products from BlackRock Impact, Bain Capital, and TPG Growth should enable more pension funds to deploy more capital in impact investments. U.S. pension funds collectively manage $6.5 trillion in assets.
Next generation of Brazil’s wealthy families are moving toward impact investing. Between 2003 and 2014 more than 29 million Brazilians rose out of poverty and are now seeking “to purchase higher quality education and healthcare, sustainable consumer goods, and ethically-sourced food,” according to a new report on the Brazilan impact investing opportunity from the ImPact, which launched its Brazilian chapter this week. Brazilian funds or investors have only contributed about a third of the $76 million invested in impact businesses since 2003. The rest has come from international investors. In a podcast last week, ImpactAlpha spoke to the ImPact’s Fernando Scodro of Grupo Baoba, who sees growing interest among the next generation of wealthy families. See more coverage of ImpactAlpha’s coverage of The ImPact’s impact investing primers for families.
Making babies the new-fashioned way. Advances in fertility treatments and gene selection could make sex passe — as a way to get pregnant. Hank Greely, director of Stanford Law School’s Center for Law and the Biosciences says in two or three decades most American babies will begin with the selection of embryos created in a lab with their parents’ DNA. “People, particularly where I live in Silicon Valley, will want to do it to get their perfect egg,” Greely said at this week’s Aspen Ideas Festival, reports Quartz.
Beyond any ethical concerns, the rise of such designer babies raises a host of social and political questions. Greely says low-income parents, at least in the U.S., will get access to advanced reproductive technology for free, because the cost of such fertility treatments will be a fraction of the avoided costs of caring for sick babies. But there’s likely to be a gap between rich and poor countries.
“Should his vision come to pass, wealthy nations such as the US and China could begin this practice long before Somalia, for example,” writes Quartz’sOlivia Goldhill. “And so it seems almost inevitable that the world would become genetically divided between those who can breed out the flaws, and those who cannot.”
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