Flowfund impact investments
A helpful picture of the various concepts of investing can be found on the website of Phenix Capital:
We will classify our most illustrative investments in this section, while recognizing this is not a straightforward exercise.
The biggest position in the investment portfolio of Flowfund is the Global Equity Fund (listed large companies) managed by Generation Investment Management. We also participate in their Asia Fund (listed companies) and two of their Private Equity funds (unlisted companies). Looking through the company names in its portfolio’s, some would qualify in the ‘spectrum of capital’ pictured above as ‘ESG Integration’ and some as ‘Financial First Impact Driven’.
In our home country, Holland, we are an active supporter of initiatives promoting impact investing by setting the example. As such we have been a founding investor for Social Impact Ventures in 2015/2016, and so are we at the upcoming start of their second fund in 2020.
In 2017 we have participated in the first close of Pymwymic Healthy Ecosystems Fund, and in 2020 we have topped up our participation.
In 2020 we committed to participate in 4impact Fund I.
Wire Group has started a PE fund-of-impactfunds: Wire Private Markets Fund and Flowfund is a founding investor for this fund. For several years Wire Group has been very helpful to us in finding and selecting PE impact funds abroad (below) and we welcome their initiative to make life very easy for impact investors through their fund-of-impactfunds.
We consider the Dutch impact funds above as true impact driven funds, generally ‘balanced’ between ‘Financial first’ and ‘Impact first’.
A particular ‘Financial first’ case is our participation (at the first close in 2018) in Forward.one (also based in Holland). Most of the companies in their portfolio intentionally target positive societal & environmental impact, but the prospectus does not explicitly claim an impact dimension to the investment process.
Abroad we have positions in a few impact driven PE funds: Better Ventures Fund II and Better Ventures Fund III (based in California), Ananda Impact Fund III (based in Germany), EcoEnterprises Fund III (based in Costa Rica), and Regenero Impact Fund (jointly managed by Belgian De Groof Petercam and Swiss Quadia). We consider these as ‘balanced’ on impact and financials with some tilt to ‘Financial first’.
Our policy is not to invest directly in social enterprises (and to do this through the PE funds mentioned above), but some exceptions have arisen over time. Thus we have made capital available to:
- Carbon Tanzania to support their innovative business approach to protect forests and wildlife;
- Fastned to support the transition to Full Electric Vehicles;
- Weeding Technologies to support herbicide-free weed control at scale;
- WakaWaka to support those who live off-grid and need some electricity.
In all of these direct investments our intention at the time of investment has been ‘Impact first’, while we respect that management at the same time targeted to offer Flowfund a competitive risk-adjusted financial return.
Flowfund also holds two non-equity impact investments: participation in the responsAbility Agriculture Fund, and in the BlueOrchard Microfinance Fund. We tend to classify these as ‘Impact first’; however, the risk-return profile of these portfolios currently appears better than in the traditional fixed income space.
We hope that sketching these impact investments underscores that this part of the investment universe is developing nicely, and encourages readers to do their bit.