Greetings Agents of Impact!
In today’s Brief:
- What’s at stake in GP stakes
- Cutting costs with solar for small businesses in Guatemala
- Curbing food waste and carbon emissions
- Trump’s sovereign wealth investments
Featured: LP / GP
Asset managers looking for impact are scooping up ‘GP stakes’ in impact fund managers. Owning part of an impact fund manager’s business is becoming as common as fleece vests. For some investors and largest asset managers, simply being limited investors in impact funds is not enough; they are buying takes in the general partnerships to get closer to the business of fund management. Schroders owns most of BlueOrchard, a microfinance-focused impact fund manager. M&G controls a majority stake in the impact manager ResponsAbility. Temasek took a minority stake in LeapFrog Investments, an emerging markets-focused private equity impact fund, as part of a broader investment agreement. “The whole is greater than the sum of its parts,” said Torbjorn Caesar of Actis, an infrastructure impact manager that spun out of UK development finance institution British International Investment (then CDC) and was acquired by General Atlantic last year.
- Emerging managers. Selling a stake in their own fund management business can help smaller impact fund managers overcome a daunting set of challenges. Partnerships with big private equity funds “provide emerging GPs access to their partner’s brand, network, relationships and expertise,” explains the team at TPG Next, which last year launched a “GP stakes” fund with a $500 million commitment from the CalPERS pension fund to invest in fund management firms founded by diverse, minority and underrepresented investors. Capricorn Investment Group, the asset manager founded by former eBay president Jeff Skoll, launched the Sustainable Investment Fund, a strategy to provide early stage growth capital for impact-focused fund managers. The fund has helped seed more than a dozen impact fund managers, including real assets investor Vision Ridge Partners, and Martis Capital, formerly Capricorn Healthcare.
- Alignment and dilution. For impact fund managers struggling to raise capital in a tough environment, the sale of a portion of their operating business presents both opportunities and risks. In the LeapFrog deal, Temasek committed a total of $500 million, including commitments to future LeapFrog funds, along with a minority equity investment in the firm. Temasek also took a non-executive seat on LeapFrog’s board and was one of the LPs in LeapFrog’s fourth fund. Investors buying GP stakes investors have access not only to general partnership fees, but also to the carried interest, or profits, in the funds’ investments. That dilution may reduce the capital that can be reinvested in the firm and in future funds, and can present an obstacle for future limited partners concerned about incentives for the fund’s active managers. According to TPG Next, “It’s an opportunity for a partner to invest in innovative investor entrepreneurs and shape their stories from the beginning.”
- Keep reading, “Asset managers looking for impact are scooping up ‘GP stakes’ in impact fund managers,” by David Bank and Snehal Shah on ImpactAlpha. Catch up on all of our coverage of LP / GP: Inside the business of impact investing.
Dealflow: Clean Energy
Atta Impact backs Albedo Solar to install solar for Guatemala’s small businesses. Albedo Solar is lowering small businesses’ high electricity costs by helping them switch to solar power. The Guatemalan company designs solar proposals based on a business’s current electricity costs. Customers pay 10% of the installation fee up front. The remaining payments are staggered over three to four years. The company estimates it can help its customers – many of them women-led businesses and nonprofits – save 90% on their energy costs in the long term. Costa Rica-based Atta Impact Capital invested in Albedo to provide “accessible [renewables] financing solutions where no one else has done so before” in the country, said Atta’s Abigail Napsuciale.
- Place-based investing. Atta cuts checks for early stage impact ventures in Mexico and Central America. It launched its first fund, Mesoamerican Catalytic Fund I, last year, with $1 million in recoverable grants from IDB Lab and Costa Rican nonprofit Fundacion CRUSA. Its portfolio includes Rutopía, a Mexico-based sustainable tourism company that focuses on Indigenous and rural communities, and El Salvador’s Vitrinnea, an e-commerce platform for pre-owned clothes, decor and electronics.
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SHIFT Invest invests in food waste reduction company OneThird. OneThird, a Dutch food tech company, raised €3.5 million ($3.6 million) in a Series A round backed by impact investors, including SHIFT Invest and the Netherlands’ Invest International. The company’s AI-based, near-infrared scanning technology predicts the shelf life of fresh produce. That enables food companies to adjust how they store, transport and sell their produce, in order to ensure that fruit and vegetables reach consumers before they spoil and reduce waste across the supply chain. The technology can be used for tomatoes, strawberries, blueberries and avocados.
- Waste reduction. “Reducing food waste is not only a significant environmental imperative but also a substantial economic opportunity,” said Henrike Langbroek, OneThird’s new CEO. More than one-third of all food produced globally is lost or wasted each year – hence the company’s name – resulting in approximately $1 trillion in economic losses. Food waste and loss also generates up to 10% of greenhouse gas emissions globally. Previous investors Pymwymic, a Dutch impact investor, and Oost NL, a regional Dutch development company, re-upped.
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Dealflow overflow. Investment news crossing our desks:
- Goldman Sachs Asset Management is said to be launching a new climate credit strategy. The West Street Climate Credit fund seeks to raise as much as $3 billion to lend to companies to help them decarbonize. (Bloomberg)
- Manulife Investment Management, a timberland and farmland investment manager, raised $480 million for its Manulife Forest Climate Fund, for reforestation initiatives that can generate high-quality carbon credits (see related, “Corporate buyers nudge voluntary carbon markets toward higher-quality projects“). (Carbon Herald)
- Japan’s Global Brain and Norinchukin Innovation Fund invested in Hakki Africa, a Kenya- and Japan-based microfinance firm providing used car loans to taxi drivers. (Global Brain)
- Marunouchi Innovation Partners closed fundraising for its Climate Tech Growth Fund with $744 million. The fund, launched last year by Mitsubishi, was looking to raise $1 billion to help commercialize and scale clean technologies. (Marunouchi)
Signals: Situational Analysis
What kind of investments can we expect from Trump’s sovereign wealth fund? In signing an executive order Monday calling for a sovereign wealth fund, US President Donald Trump mused that the first deal could be for TikTok, the Chinese-owned social media powerhouse. Such a fund could also provide a vehicle to create a national stockpile of bitcoin. The idea of a state-run fund that could invest, for profit, in line with national priorities, has some intrinsic appeal. The US, through its research labs and funding, has helped develop key technologies, from the internet to genomics. Why shouldn’t it make a return? “We are going to monetize the asset side of the US balance sheet for the American people,” Treasury Secretary Scott Bessent declared at the signing.
- Potential for abuse. In a recent column, Roy Swan of the Ford Foundation envisioned an American sovereign wealth fund supporting capital investments for working families. He cited quality jobs, affordable housing development, overlooked geographies like Appalachia, and the relocation of supply chains to Africa – “all while expanding our economy, increasing the resilience of our supply chains and strengthening our national security.” A government purchase of TikTok would be a horse of a different color, giving Trump and his billionaire tech pals control of nearly every major social media platform used by Americans. Such possibilities highlight the potential for abuse of sovereign wealth funds more broadly. “These state-owned and government-controlled funds are also highly susceptible to corruption, including embezzlement, fraud and political exploitation,” the Anti-Corruption Data Collective reported last year.
- Profitable investments. Some have suggested that the US International Development Finance Corp., or DFC, created in the first Trump administration, could manage the proposed sovereign wealth fund. Investments by the government are not new, and Trump is not supportive of all of them. The White House has frozen loan disbursements from a successful Energy Department program that has generated profits for Americans. In total, the Loan Programs Office has made some $69 billion in low-cost loans and guarantees, often conditioned upon meeting financial and technical milestones, to help startups commercialize and scale innovative technology and attract private investors. Back in 2010, Tesla received a $465 million loan from the LPO to build its first factory in Fremont, Calif.
- Stiffing partners. While the Trump administration considers new investments, it is reneging on old ones. The shuttering – temporarily or permanently – of the $43 billion US Agency for International Development, or USAID, has thrown hundreds of organizations and their workers into chaos. Chemonics, a Washington, DC-based international development company that received $4.5 billion in USAID funding between 2013 to 2022, has furloughed employees and reduced costs. Chemonics had been selected to manage the USAID Climate Finance for Development Accelerator, a $250 million initiative designed to mobilize $2.5 billion in public and private climate investments by 2030. Other top USAID contractors include the nonprofit Catholic Relief Service, development consultancy DAI, and the nonprofit Mercy Corps. Most such companies operate on a “cost-reimbursable” basis, meaning they must front their own funds and wait to be repaid by USAID. They may have a long wait. On Monday, Elon Musk declared USAID was “beyond repair” and would be shut down this week.
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Agents of Impact: Follow the Talent
Marie Nemcova steps down as Media Development Investment Fund’s chief operating officer after nearly 30 years, to become a part-time senior advisor. Kristyna Machova, previously senior program officer, will become operations and programs manager. MDIF will retire the COO position. Bilal Randeree was promoted to chief program officer… Engine No. 1 appoints Lyndsey Merrill, previously a special assistant to President Joe Biden, as managing director and head of business development.
ImpactAssets welcomes Curtis Cohen as an investment operations associate, Kimberly Morris Hall as assistant counsel, Nilanjana Chowdhury as a grant operations associate, and Sophia Sunderji as impact measurement and management lead… Ember, a UK-based energy transition data and policy think-tank, recruits three RMI executives: Kingsmill Bond as an energy strategist and director, Daan Walter as a principal, and Sam Butler-Sloss as a manager… Worthmore names Franklin Mora, previously with Vital Healthcare Capital, as managing director.
The Center for Public Impact is looking for a North America-focused senior associate… Philanthropy Northwest is hiring a finance and grants administration director… South Pole is recruiting a sustainable finance principal consultant… Lime has an opening for a sustainability reporting manager in New York or Seattle… Ceres’ Accelerator for Sustainable Capital Markets seeks a director… Acumen’s Hardest-to-Reach Initiative is on the hunt for an investment manager in London.
Cycle Capital is looking for an impact investing analyst in Montreal… LISC has an opening for a fund design director in Washington, DC… Climate United is looking for a senior officer for tribal outreach… The city of New York’s Comptroller Office is recruiting a head of diverse and emerging manager strategy… Climate Policy Initiative is hiring a global director of finance in San Francisco.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– Feb. 4, 2025
