Hello ImpactAlpha readers!

#Dealflow: Follow the Money

Mariner Investment and Crédit Agricole securitization could drive $2 billion in green investment. Impact investing has been adapting tools of mainstream finance to drive capital toward social impact. Now comes a $3 billion securitization, billed as perhaps the first “socially responsible synthetic risk transfer.” Crédit Agricole’s Corporate and Investment Bank issued $3 billion in notes to U.S.-based hedge fund Mariner Investment, backed by a portfolio of real asset loans to more than 200 borrowers. Crédit Agricole will use at least $2 billion of the proceeds for new investment in the green sector, including renewable energy finance, energy efficiency lending for commercial real estate, and public transportation. The bank will report on the composition of the new green portfolio following the Green Bond Framework. Mariner’s Molly Whitehouse said she hopes the deal “will be the first in a wave of issuances of Green Capital Notes." Synthetic securitizations are not known for their positive social impact: collateralized loan obligations and mortgage-backed securities gained notoriety in the financial crisis of 2008.

Accion International raises $141 million for Frontier Inclusion Fund. Accion will invest in fintech startups serving the more than two billion unbanked and underbanked customers worldwide. Investors in the final close included AXA, JPMorgan Chase, Mastercard, MetLife, Prudential and multilateral organizations and foundations. Globally, VC-backed fintech reached $12.7 billion last year, according to CB Insights. Accion’s fund, managed by Quona Capital Management, already has invested in nine ventures.

IFMR seeks $82 million for financial inclusion funds. IFMR Investment Managers, based in Chennai, is looking to raise at least 550 crore rupees ($82 million) to drive financial services for India’s huge population of un- or underbanked citizens. Two debt funds, a 10-year, 200 crore rupees ($29 million) fund and a five-year, 350 crore rupees ($53 million) fund, will invest in firms offering microfinance, agri-business finance, affordable housing finance and in mid-size companies. IFMR will de-risk the funds for other investors by committing 10 percent of the capital itself as subordinated debt. IMFR’s Vineet Sukumar said, “The underlying inclusive finance market is not very well understood by the mainstream investor community.”

Morgan Stanley launches two sustainability strategies for smaller investors. The bank’s wealth management unit has launched two sustainable investment products in which individuals can get started with as little as $10,000. Hilary Irby, head of Morgan Stanley’s Investing with Impact initiative, said the low investment threshold was part of a strategy to make sustainable investing more accessible. Morgan Stanley’s brokerage group launched similar offerings in 2014 with a minimum investment threshold of $400,000. One of the new products, Impact Access Equity, is strictly for equities. The other, called Impact Access Balanced, is a 50-50 mix of equities and fixed-income investments. The Investing with Impact division, launched in 2012, has grown to over 140 products.

#Signals: Ahead of the Curve

Will electric taxis make China’s air cleaner – or dirtier? Beijing is moving to phase out gas-powered taxis as part of an effort to tackle its crippling smog levels. Smog in the city is on the decline but it still worst among Chinese cities. To help clear the air, 70,000 gas taxis in the city will be replaced with electric vehicles as part of a government plan. In the short-term, however, electric taxis may make the problem worse, because China is heavily dependent on coal. Tsinghua University found that charging electric vehicles emits two to five times as much particulate matter as gasoline-fueled cars. Electric vehicles are cleaner in the long run, as China adds more renewable power as part of its effort to cut its 2015 carbon emissions by 18 percent by 2020.

Breckenridge adopts Social Progress Index to underwrite muni credit risk. Municipal bonds are a powerful financial tool for strengthening communities (see, “These social impact bonds have an old-fashioned name: tax-free munis”). By the same token, stronger communities lower bond risk. Breckinridge Capital, a $25 billion fixed-income investment advisor, is using a new framework to reward cities for “inclusiveness.” The 40 indicators account for diversity and tolerance, opportunities for women and environmental performance. Specifically, the framework follows the Social Progress Index in assessing how a community meets basic human needs for healthcare, sanitation and safety; provides foundations of wellbeing, including environmental quality; and offers opportunities, such as access to advanced education and personal choice. Inclusive communities attract talent and companies, writes Breckenridge’s Jem Hudson, and feed “a virtuous cycle that benefits all.”

#2030: Long-Termism

Thank mobile money if the world meets the 2030 Sustainable Development Goals. Touted as a path to financial inclusion, mobile money directly touches at least 11 of the 17 Sustainable Development Goals, says GSMA, a global association of mobile phone operators, in its 10-year State of the Industry Report on Mobile Money. “A decade from now, everyone, including the world’s poor, should be able to send money to any number in the world in real time, to pay for goods or services electronically, and to access a wide range of financial products and services,” the report says.

The expansion of mobile money should boost sustainable development as well. The GSMA cites an earlier report from CGAP (pdf), the Consultative Group to Assist the Poor, to showcase the role of digital finance tools in SDG No. 2, promoting food security. In Kenya, for example, half of farmers sell their goods via mobile money services. For SDG No. 3 (achieving good health and well-being), mobile health wallets allow low-income patients to pay for health services. SDG No. 5 (promoting gender equality) can be accelerated by allowing women to replace unpaid work with income-generating work from their homes. Mobile money is already powering SDG No. 7, by enabling pay-as-you-go financing that is improving access to water, sanitation and energy.

Since mobile money hit its groove with the launch of M-Pesa in Kenya in 2007, 300 mobile money services have created more than 500 million accounts worldwide. Studies have found a positive effect on poverty alleviation: in Kenya, M-Pesa is credited with helping lift 200,000 households out of extreme poverty.

Onward! Please send any news and comments to editor@impactalpha.com.