Impact Finance Bulletin: New tie-up Thrive Africa to back impact businesses across the continent
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.
- Africa: New tie-up Thrive Africa to back impact businesses across the continent
- Global: Impact fund managers increasingly ambitious on financial returns, new listing shows
- UK: Budget 2021: Social Investment Tax Relief win for campaigners – but fight continues
- UK: Resonance makes raft of SITR investments ahead of crunch time for relief scheme
- France: First impact fund for French investment firm Founders Future
- Netherlands: Social impact bond helps dozens of asylum seekers and repays investors
- UK: New Conduit EIS Impact Fund seeks retail investors to back ‘scaleable impact solutions’
- UK: England’s £10m catalytic fund to ‘show others how green finance works’
- South & Central America: Latimpacto launches first study into venture philanthropy in the region
- Europe: Institutional investors and recycled returns play growing role in €6bn impact funds
- Czech Republic: Award-winning Czech NGO wins €1m grant to train women and young people in IT
- US: Food giant Mondelēz to help social startups scale up
- More funds and programmes in brief
- More deals in brief
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Africa: New tie-up Thrive Africa to back impact businesses across the continent
Social investment manager and advisor Tshikululu and wealth manager African Alliance Asset Management have teamed up behind a new impact investing initiative.
Thrive Africa, which will provide a “single-point solution for impact investment across the continent”, is currently fundraising for its first impact fund, which will initially focus on infrastructure, clean energy and financial inclusion.
African Alliance Asset Management, founded in 1996 in Eswatini, had assets under management of US$1.1bn as of January 2020.
CEO Nicholas Piquito told Africa Global Funds that the new fund aimed to raise $50m by year-end, and would target “sophisticated institutional and private investors” including pension funds, family offices, endowments, wealth managers and high net-worth individuals. Initially, typical ticket size would be $2-$5m, Piquito said, with investments focused on southern and east Africa.
Sibonakaliso Mavuka, special projects manager at Tshikululu, told CNBC the fund would back companies that already had a “long-standing track record” and were looking at “expanding their social impact as well as their bottom line”. Thrive Africa is currently looking at financial inclusion prospects in Eswatini, Botswana and Mauritius, and clean energy in Kenya, Mavuka said.
Global: Impact fund managers increasingly ambitious on financial returns, new listing shows
Impact fund managers included in this year’s ImpactAssets 50 database are increasingly targeting higher investment return rates, the latest listing reveals.
Published by impact financial services group ImpactAssets, the ImpactAssets 50 list (IA 50) is a global database of impact investment fund managers updated annually that aims to bring more investors and their financial advisors into impact investing.
This year’s list shows that a total of 87% of IA 50 fund managers targeted investment returns at market rate or above, compared with 78% last year. As many as 69% were aiming for market rate return, and 17% above that.
A great part of these ambitions are being achieved, as 92% of impact funds managers across the board (also including those targeting concessionary rates) delivered either in line with or above their target returns.
Read more on Pioneers Post.
UK: Budget 2021 – Social Investment Tax Relief win for campaigners, but fight continues
A crucial tax relief policy to stimulate social investment will be extended for two years, the chancellor Rishi Sunak revealed when he outlined the UK government's 2021 Budget.
Social Investment Tax Relief (SITR) offers tax relief to individuals to encourage them to invest in social enterprises. As much as £15m in investment has been raised by organisations through the scheme so far since it began in 2014. It was set to end on 5 April 2021, but Big Society Capital, Social Enterprise UK, Resonance and Co-operatives UK campaigned for the scheme to be extended.
Conservative MP Danny Kruger, who backed the campaign tweeted that he was “delighted with [the] announcement...we lead the world on the use of private capital for public good.”
However, campaigners were disappointed that the scheme was extended for only two years.
Melanie Mills, senior director of social sector engagement at the UK’s social investment wholesaler, Big Society Capital, said: “Two years is really not long enough if you look at the cycle of raising and investing money.”
Read more on Pioneers Post.
UK: Resonance makes raft of SITR investments ahead of crunch time for relief scheme
Social investment firm Resonance has made investments in four different organisations, totalling over £500,000 from its social investment tax relief funds – while campaigning alongside others for an extension SITR, due to lapse in April. On Wednesday, the Budget confirmed that the relief would be extended for two years.
- Social enterprise Raised in Bristol received a second investment of £126,500 from the Resonance South West SITR fund. Previous investment from Resonance in late 2019 enabled Raised in Bristol to open its second and third nurseries; this latest deal will allow it to fit out the new premises for its fourth nursery and provide support on wages and rent for the first couple of years.
- Community Mentoring and Support, a community interest company that delivers education and community outreach to vulnerable children and families in Devon and Gloucestershire, also received its second investment from the South West SITR Fund. It will use the £180,000 loan to open a new specialist school for vulnerable children excluded from mainstream education.
- Gloucestershire social enterprise SoFab Sports, which supports young adults with learning disabilities, received a second £100,000 investment from the same fund, enabling it to expand its warehouse space and take on new employees. Resonance also gave SoFab Sports a Covid-19 emergency support grant.
- Resonance’s West Midlands SITR fund invested £100,000 in Spectrum Days, which provides specialist support to people with profound and multiple learning disabilities and their families. The loan will be used to buy vehicles to transport members to and from Spectrum’s centre.
France: First impact fund for French investment firm Founders Future
Paris-based startup investment firm Founders Future has launched a new impact fund, Sifted reported.
The fund, which is the firm’s second and aims to raise €50m, will focus on seed and first-round investments for startups that have a “transformative potential”, founder Marc Menasé told Sifted. It will target mission-driven enterprises working in vertical farming, last-mile delivery, mental health, mobility and the circular economy.
Founders Futures’ first fund invested in startups focused on the future of work, the future of banking and the future of health, including a number of French fintechs.
“We want to back products that will make the 21st century cleaner,” Menasé, a tech entrepreneur himself, told Sifted. “Tech has incredible leverage in that and there’s a great younger generation of mission driven-entrepreneurs, we see real ambition for income in this group.”
Netherlands: Social impact bond helps dozens of asylum seekers and repays investors
A social impact bond in the Dutch city of Veldhoven has helped dozens of asylum seekers find financial independence within three years, the report on the results of the programme shows.
The bond, launched by ING bank and Fundatie Van den Santheuvel, Sobbe in 2017, invested in the IamNL programme which supported settled asylum seekers to better integrate into Dutch society and find long-term employment, therefore no longer relying on government aid. For each asylum seeker who moved out of the benefit system, the municipality of Veldhoven gave money back to the fund, providing returns to investors.
More than 80% of the 98 participants passed their integration exam within two years, and 62.5% were no longer reliant on social assistance within three years, the report showed.
The SIB was entirely repaid with an 8% return for investors. IamNL is now planning to work with more municipalities in the Netherlands.
UK: New Conduit EIS Impact Fund seeks retail investors to back ‘scaleable impact solutions’
The Conduit EIS Impact Fund will enable investors to benefit from the government’s enterprise investment scheme, which allows 30% income tax relief on investments of up to £1m per tax year.
The fund will back up to 10 early-stage and Seed A businesses operating in the areas of climate, health and wellbeing, education, and financial inclusion and economic opportunity – sectors that represent big global challenges yet boast “the fastest growing innovations and scalable impact solutions”, according to a statement from the fund’s partners. It has a target return of 2.5x, with the added benefits of EIS tax reliefs.
The target first close is £3m, with a total target fund size of £5m. The minimum ticket per investor is £25,000, available to both retail and professional investors.
Ascension Ventures – named last year the UK's most active impact investor, making the most equity investments into UK ventures since 2011 – is the fund manager of the fund. Conduit Capital is providing financial investment for the fund’s launch and will support portfolio companies, while investment platform Conduit Connect will source and vet investees.
UK: England’s £10m catalytic fund to ‘show others how green finance works’
Charities, businesses and local authorities in England can apply for grants of up to £100,000 to get nature projects ready for private investment.
The £10m Natural Environment Investment Readiness Fund (NEIRF) aims to create a pipeline of projects for the private sector to invest in, and to develop new funding models that can be replicated elsewhere. This would “demonstrate the UK’s leadership in nature finance”, according to a statement from the Department for Environment, Food and Rural Affairs (Defra), ahead of the UN’s COP26 climate change conference in Glasgow in November.
Delivered by the Environment Agency, a public body, on behalf of Defra, the fund will help organisations get specialist advice, engage investors and build capacity to develop their project to the stage when it is ready to receive and repay investment.
Emma Howard Boyd, Environment Agency chair, tweeted that NEIRF would both support projects that enhance nature and help prepare for climate shocks, and “show others how green finance works”.
Read more on Pioneers Post.
South & Central America: Latimpacto launches first study into venture philanthropy in the region
Latimpacto, the Latin American venture philanthropy network launched in 2020, published its first study of the venture philanthropy ecosystem in the region, with the aim of catalysing more innovative investments across Latin America and the Caribbean in the next two years.
The Latimpacto research interviewed 187 professionals involved in ‘investing for impact’, mapped 120 initiatives, and created 37 detailed case studies from seven countries.
Of the investors that expect a financial return, 36% wanted to recover their capital plus a moderate level of interest, and 32% wanted to preserve the capital, showing that investors were willing to take a greater risk, according to the researchers.
The Aspen Network of Development Entrepreneurs has previously identified US$3.7bn in impact investments in the region, compared with the global impact investment market of US$715bn.
Read more on Pioneers Post.
Europe: Institutional investors and recycled returns play growing role in €6bn impact funds
Institutional investors play an increasingly important role in supporting billions of euros of impact investing in Europe, according to research published last month.
The report by the European Venture Philanthropy Association (EVPA) shares findings from 112 European investors that ‘invest for impact’ – investing with a primary focus on achieving a social impact, with any associated financial returns a secondary objective. In 2019, these investors supported social purpose organisations with €6.2bn, the report reveals.
The proportion of capital available provided by institutional investors – entities such as pension funds, insurance companies and sovereign wealth funds – doubled from 12% in 2017 to 24% in 2019. This contrasts with a movement in the opposite direction for the proportion provided by individual donors/investors, which almost halved from 23% to 12% during the same period.
The proportion of funding from financial institutions, governments and recycled returns on investments also increased substantially, while the proportion from endowments and trusts, and from corporations, significantly decreased.
Read more on Pioneers Post.
Czech Republic: Award-winning Czech NGO wins €1m grant to train women and young people in IT
An award-winning nonprofit social enterprise that provides affordable IT training for women and girls in the Czech Republic has received a €1m grant from Danish philanthropic organisation the Velux Foundations to grow its operations with a focus on young people.
Founded in 2014, Czechitas aims to connect women with information technology and enable them to take it on as a successful career. In the Czech republic, 90% of ICT specialists are men.
The organisation has grown from a few hundred participants to more than 13,000 last year, and it is aiming to reach 30,000 people in the next year with the help of the grant, as online training makes it easier to reach students.
Read more on Pioneers Post.
US: Food giant Mondelez to help social startups scale up
Mondelez International has launched Sustainable Futures, an ‘impact investing platform’ that provides grants and training to young social enterprises addressing global issues, including climate change.
Through the platform, the $76bn-worth company intends to support projects that protect forests, reduce carbon emissions or increase resilience in areas from which it sources raw materials.
To apply, enterprises must be US-based with at least $500,000 in revenue and have high growth potential. The 10 chosen startups will each receive a $20,000 grant and participate in a 12-week programme that includes expert mentoring, workshops, access to Mondelez leadership and external partners.
“We don’t have all the answers, but we do know that alone, we can never achieve significant progress in the fight against systemic issues like climate change,” said Dirk Van de Put, CEO and chairman of Mondelez International.
Among the first beneficiaries are an NGO in India that will set up a women-owned social enterprise that up-cycles packaging, and INMED Aquaponics Social Enterprise in South Africa, which supports agro-entrepreneurs in “climate-smart” food production.
More funds and programmes in brief
- Oxford University and Global Accelerated Ventures (GAV) have created the “world’s first conservation venture studio”. It aims to launch 13-20 startups addressing climate issues.
- Imas, an foundation that invests on behalf of the charitable arm of Ikea, has committed $250m to seed a sustainable equity fund designed by Osmosis, a London-based specialist investment boutique.
- The Irish government has announced a new €800,000 Social Enterprise Regeneration Programme to help social enterprises recover from the impact of Covid-19. It will provide training and mentoring to help them strengthen their operations and improve their services.
- Goldman Sachs has issued its first sustainability bond, of $800m, to accelerate climate transition and advance inclusive growth. The firm aims to deploy $750bn in sustainable financing, investing and advisory activity by 2030.
- The French government is launching a €10m social impact bond to “innovate access to work”, and projects can apply for the funding until 3 June.
- Alquity has launched a Global Impact Fund, its first move out of emerging markets, to invest in companies with strong ESG credentials.
- The Green Finance Institute and Laudes Foundation have announced a partnership to accelerate green finance for decarbonisation of the built environment.
- The NatWest Group has issued a €1bn affordable housing social bond, the first of its kind by a UK bank. Last year NatWest committed to providing £3bn of funding to the UK’s affordable housing sector by the end of 2022.
More deals in brief
- Europe: The European Investment Fund has invested €45m into funds that provide equity funding to enterprises supporting the “blue economy” – the sustainable use of ocean resources for economic growth, improved livelihoods and jobs, while protecting the marine environment. Additional deals are expected in the next few months, which could inject a total of €300m into the European blue economy.
- UK: The Birtenshaw Group, a special educational needs and disability organisation, has secured a £15.3m loan from Triodos Bank UK. The loan will be used to build new facilities with additional 72 school places for children with special educational needs and disabilities in the town of Bolton, in the north west of England.
- Sub-saharan Africa: The African Visionary Fund, a new pooled fund backed by philanthropic foundations including the Skoll Foundation, has announced its first $1m investment into six sub-Saharan African companies operating in key sectors including education, health, human rights and livelihoods.
- Israel: Nonprofit lender The Ogen Group has received $1m impact funding from web giant Google to provide low-interest loans to small businesses throughout Israel and help them with the economic fallout of the pandemic, the Times of Israel reports.
- UK: The Youth Endowment Fund has announced grant funding worth up to £20m for projects that aim to keep children out of the criminal justice system. Applications will open in April.
- Kenya: EDF is taking a 23% stake in Bboxx to accelerate access to solar home systems for off-grid communities and businesses, bringing clean energy to over two million people in Kenya.
- Ghana: A total of up to $2bn in loans will be made available to women-led SMEs in Africa by the African Development Bank’s Affirmative Finance Action for Women in Africa in partnership with the African Guarantee Fund.
- Ireland: Sales, marketing and oil retail giant DCC has committed €1m in financial investment and strategic support to Social Entrepreneurs Ireland over the next five years. DCC has been supporting SEI since 2010.
- UK: City Funds in Bristol, a partnership between BBRC, Bristol City Council and Quartet Community Foundation, committed over £2.4m to the local social economy in 2020 as part of a citywide strategy supporting community response to the COVID-19 pandemic.
- UK: Impact investor Social and Sustainable Capital approved £43.8m of new investments for 14 organisations during 2020, according to its latest report. Since 2014 it has made 63 investments totalling £135.1m.
- Netherlands: Shaping Impact Group’s Inzet Fund, which supports chronically dependent people (people with long-term illnesses or disabilities and the elderly), has invested in iClusion, a young company that improves access to clinical research and accelerates drug studies.
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