Impact Finance Bulletin: ‘Dynamic’ municipal body developing first India-funded impact bond

Our regular impact finance bulletin brings you the latest funds, deals and programmes in the world of investing for good. Read on for our selection of impact investment headlines from the past month.

Impact Finance Bulletin

 

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India: ‘Dynamic’ municipal body developing India’s first government-funded social impact bond

Pimpri Chinchwad Municipal Corporation and UNDP India are to create what would become the first social impact bond in which an Indian government body has agreed to be the outcome funder. 

PCMC, a local government body in the city of Pune, Maharashtra, operates more than 30 healthcare facilities with an aggregate 1,500 bed capacity, which have played a crucial role during the Covid-19 pandemic. 

The new SIB would allow PCMC to upgrade infrastructure, build capacity of staff and establish protocols that can support higher quality healthcare – ultimately enabling more urban Indians to use state rather than private health facilities.

This is in line with our vision of making Pimpri-Chinchwad the most liveable city in India by 2030

The UNDP will provide technical assistance through its SDG Finance Facility, which supports the growth of SDG-aligned innovative financing mechanisms. The Palladium Group is designing the new SIB; it previously designed the world’s first development impact bond in healthcare, in Rajasthan (in which USAID and MSD for Mothers were the outcome funders). The partners will seek investors from the public and private sectors.

Shravan Hardikar, commissioner at PCMC, said: “The social impact bond places PCMC at the forefront of adopting innovative mechanisms to drive social development, specifically in the healthcare sector, which is the cornerstone of our urban planning. This is in line with our vision of making Pimpri-Chinchwad the most liveable city in India by 2030.”

A Palladium spokesperson said it was particularly interesting to be implementing the impact bond at municipal level and that it reflected PCMC’s “desire to be dynamic and leading in this space”.

 

US/India: MacArthur Foundation puts $7.5m ‘catalytic capital’ into India VC fund Ankur

The US-based MacArthur Foundation is committing $7.5m of ‘catalytic capital’ – patient, risk-tolerant, concessionary and flexible investment capital – in Ankur Capital

Mumbai-based Ankur is a venture capital fund that invests in early-stage technology startups for India’s “next billion” – the wave of low-income users taking up or expanding their use of digital services.

The all-Indian firm works in areas including agritech, food, healthcare, financial inclusion and education. It offers capital and business training to early-stage startups, and connects investees with later-stage investors who can provide additional and longer-term financing. It previously raised investment itself from CDC Group, the UK’s development finance institution, and The Dutch Good Growth Fund

The MacArthur investment is part of the $150m Catalytic Capital Consortium, created in 2019 along with Omidyar Network and Rockefeller Foundation. MacArthur has previously invested catalytic capital, last December, in the UK’s Women in Safe Homes fund.

 

Global: Coalition explores ideas for new impact investment fund to back creative enterprises

The members of a continent-crossing team led by Nesta, Upstart Co-Lab and Fundación Compromiso aim to catalyse the development of a new global impact investment fund dedicated to supporting creative enterprises. 

This month, the three partners, whose organisations are based in the UK, the USA and Argentina, launched a new project called Creativity, Culture and Capital to coincide with the start of the United Nations International Year of Creative Economy for Sustainable Development. The project aims to boost the amount of impact investment directed towards creative enterprises around the world, so that these enterprises can play a greater role in the world’s recovery from the Covid-19 pandemic and help to create a fairer, more sustainable economy.

Ideas around developing a global impact investment fund are at a very early stage but Nesta's Fran Sanderson said it might develop as an investment wholesaler – in the style of the UK’s Big Society Capital, which passes on funds to local and regional fund managers which then make direct investments in enterprises. 

Read the full story on Pioneers Post.

 


UK: Aberdeen Standard and Big Issue Group launch multi-asset climate fund

Global asset manager Aberdeen Standard Investments has teamed up with the group behind The Big Issue magazine on a new investment fund focused on climate mitigation. 

The Multi-Asset Climate Solution Fund allows investment in companies whose products and services play a decisive role in mitigating climate change, such as  renewable energy, electric vehicles, and energy efficient buildings. As a multi-asset fund, investors will be able to spread risk across equities, bonds and real estate.  

Aberdeen Standard Investments brings “strong multi-asset capabilities and expertise in ESG investing”, while The Big Issue Group, which also includes social investor Big Issue Invest, brings a “long-standing commitment to dismantling poverty and providing a wide range of opportunities to those in need”, according to a statement announcing the launch.

The fund will allow customers to put their money to work financing the climate transition with less volatile investment returns

Aberdeen Standard Investments has committed to sharing 20% of the net revenue generated by the new fund to support The Big Issue Group’s social causes. 

Craig Mackenzie, lead fund manager of MACS, Aberdeen Standard Investments, said companies driving the shift to a zero-carbon green economy offered “a strong growth opportunity” and that the multi-asset approach would allow customers “to put their money to work financing the climate transition with less volatile investment returns”. 

Nigel Kershaw, chair of The Big Issue Group, said the MACS fund was “a natural extension” of the group’s mission, given potential negative effects of climate change on vulnerable people. He added: “We are proud of our partnership with Aberdeen Standard Investments and are excited to bring such an innovative product to market.” 

MACS will initially be available to financial advisers through Standard Life’s Wrap and Elevate platforms; retail investors will in future be able to access it directly through The Big Exchange, the ethical investment platform created last year by The Big Issue and a coalition of industry partners.

 

US: Social Finance invests $5.8m in Alchemy Code Lab career impact bond

Portland-based software training provider Alchemy Code Lab has secured a $5.8m investment from impact investing nonprofit Social Finance US as part of a career impact bond. 

The funding will enable Alchemy to roll out a tuition funding model that allows students to repay their fees as a fixed percentage of their income only after they secure employment – and once they earn at least $50,000 a year.

The career impact bond aims to provide training for people who face barriers to education or employment to improve their career outcomes, and allows students to enroll in training with no upfront costs.

Our mission is to create a better tech industry, and that includes providing opportunities to those who have incredible potential, regardless of their financial status

“Our mission is to create a better tech industry, and that includes providing opportunities to those who have incredible potential, regardless of their financial status,” said Alchemy founder Marty Nelson. “The ISA [income share agreement] option allows us to continue to accept the applicants who are most promising and focus on preparing them for a rewarding career.”

Alchemy expects to offer the funding option to half of each cohort over the next three years (up to 180 students in total).

Social Finance US has previously set up career impact bonds with training providers Acuitus and General Assembly.

 

Israel: First crowdfunded impact bond to tackle loneliness among the elderly 

Social Finance Israel is launching a new social impact bond aimed at tackling loneliness among old people, which will be partly crowdfunded via the Fundit platform. 

The investment runs for 2.5 years and has a total size of NIS 2.3m (£511,000), 1.6m of which was provided by anchor investors prior to crowdfunding. The campaign has attracted 228 investors on the platform to date.

The money raised will be used to improve the lives of 200 elderly residents of Tel Aviv Yafo by providing them with tools to reconnect with the community, including visits by social workers and volunteers, neighbourhood activities and use of digital communications.

“We are giving them a toolbox to live an independent life and engage in the community,” Social Finance Israel CEO Yaron Neudorfer told i24NEWS last July. The impact bond was unique, he added, because it would not only be offered to private investors but also to the wider public, allowing citizens to “engage and participate in the funding of a programme to help the elderly people of Tel Aviv”.
 

UK: Government urged to invest wisely following announcement of £800m from dormant assets for ‘good causes’

Key social enterprise and impact investment organisations said the UK government should carefully assess how to best use the £800m to be made available from dormant assets for “good causes”. 

The government announced on 9 January that it would legislate to expand the Dormant Assets Scheme, which has used money from dormant accounts to support social and environmental initiatives across the UK since 2011.

In its current form, the scheme takes funds from bank and building society accounts which have not seen any activity for more than 15 years and where owners cannot be tracked down. A total of £745m has been invested so far, including £425m used to establish Big Society Capital in 2012. The expansion would encompass a wider range of dormant assets contained in insurance policies, pensions, investment and wealth management, and securities. In 2017, the Dormant Assets Commission identified that up to £2bn could be available in the expanded pool.

The government estimates around £1.7bn could be made available to transfer to Reclaim Fund Ltd, which administers the scheme. However, the Reclaim Fund will continue to retain a proportion of the money in case of future reclaims by owners, making around £800m available to invest.

Read the full story on Pioneers Post.

 

UK: ACH receives £1m funding to support refugee entrepreneurs

ACH, a social enterprise specialised in refugee integration and employment services, has received almost £1m in EU funding for a new project to support entrepreneurs in the West of England and the West Midlands.

The Effective Digital Entrepreneurship and Business Support (EDEBS) project will help 500 existing businesses or pre-start entrepreneurs who are refugees or migrants. Unlike classic business training, the project will be tailored to the particular needs of refugee entrepreneurs, ACH said.

The initiative stems from the observation that most forms of business support, which involve a formally structured course using a “teacher-pupil” approach, are often not appropriate for refugee communities, Richard Thickpenny, ACH’s chief innovation officer, said. EDEBS aims to make resources available to entrepreneurs in a way that allows them to acquire knowledge autonomously as they need it, while helping them to develop networks by connecting them to established refugee businesspeople.

The two-year project is 90% funded by the €3.1bn European Union Asylum, Migration and Integration Fund (AMIF), which aims to make management of migration flows more efficient across the EU, and 10% by ACH and its partner the West Midlands Combined Authority (WMCA).

Read the full story on Pioneers Post.

 

More deals in brief

 

More funds in brief

  • West Africa: West African Development Bank (BOAD) issues first African sustainability bond. This issue, amounting to €750m with a 12-year maturity attracted 260+ investors across the world, mostly from Europe. The issue was oversubscribed six times, with total demand amounting to €4.4bn.
  • Europe/Russia: The European Venture Philanthropy Association (EVPA) launches Collaborate For Impact with the European Commission, a five-year, €5m project to support social entrepreneurship in the EU’s Eastern Partnership countries and Russia
  • France: Government announces UrgenceESS, a €30m fund for the social and solidarity economy. It aims to support 5,000 small organisations by the spring. 
  • UK: The Resilience and Recovery Loan Fund surpasses £20m in total funding approved to 57 charities and social enterprises, with around £9m in funding left. Of the current total, over £18.4m worth of loans and over £2.4m worth of grants have been approved. 
  • Wales: Egni Co-op, which installs panels on schools, businesses and community buildings, passes £3m community shares target – and extends it to £4m.
  • Singapore: Global impact private equity manager SEAF launches SEAF Women’s Economic Empowerment Fund with Danish pension fund Pædagogernes Pension as cornerstone investor and financial support from UNESCAP and Global Affairs Canada.
  • Africa: BLOC Smart Africa impact fund launches to invest in businesses with scalable technology. The Governments of Luxembourg and Côte d’Ivoire have subscribed €10m into the first loss tranche of the fund, aiming towards a target of €100m.
  • UK: Responsible investment manager Alquity announces it is to target over $3bn in assets under management with 10x growth in revenues within five years, through a new partnership with East Capital Group and by completing its capital raise.

 

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