Global Impact Pool Quarterly Investor Letter
Specifically, we aim to:
- Contribute to the provision of basic goods & services for the underserved including water and health & wellbeing;
- Provide for decent jobs with fair employment practices to eradicate poverty;
- Support sustainable consumption and production aimed at doing more and better with less, and;
- Contribute to abundant clean energy and reduction of CO₂ emissions.
Bearing in mind our mission, there is also the explicit target to generate a market rate financial return.
Over the quarter the Global Impact Pool posted a return of -1.46% for the FA class.
Most investments continued to develop well over the fourth quarter of 2019. At the end of the quarter, the GIP team successfully concluded its due diligence on an investment in the Accion Quona Inclusion Fund (AQIF). AQIF focuses on financial inclusion by making investments in early-stage fintech companies in Emerging Markets. As a result, this latest investment focuses on SDG 8: Decent work and economic growth. More specifically, the fund focuses on sub goal 8.10: “Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all”.
More details on the impact targets and the investment strategy of AQIF can be found on the fund one pager in this Quarterly Report. An example of an investment of this fund is highlighted in the Impact Case Study.
Emerging Consumer Fund III: last quarter, the investment team of the Emerging Consumer Fund III supported portfolio companies withadjusting and responding to the COVID-19 challenges. Opportunistic growth opportunities were identified for some companies, particularly amongst healthcare companies. Although the economic consequences of COVID-19 in the medium and long term are uncertain, it is expected that the high quality of the LeapFrog companies (solid balance sheet and strong market position) provides a good basis for future success of this portfolio.
Agriculture Fund: as a result of the COVID-19 measures, the investment team has further tightened the due diligence process of disbursements. For example, they started to use external parties for additional independent risk analyses. In combination with their our own research, the risks are identified as much as possible in this way. Another precaution of the team is that loans are currently mainly provided to companies that the team knows well and with whom there is a long-term relationship. Loans are disbursed with a shorter term and in tranches. This focus has increased the quality of the portfolio and the liquidity. The portfolio remains well diversified and currently consists of loans to 39 companies in 23 countries.
Enhanced Sustainable Power Fund 4 (ESPF 4): industrial activity in Europe has declined as a result of COVID-19, and consequently electricity prices have fallen sharply. The projects in the ESPF 4 portfolio largely receive a fixed agreed rate for the electricity generated and are therefore not expected to be directly affected. The two projects under construction are somewhat hindered by delays in suppliers for whom it is more difficult to deliver materials on time. It seems that this delay is limited to just a few weeks.
Accion Quona Inclusion Fund (AQIF): the companies in the AQIF portfolio are still relatively young and in the growth phase of their existence. The Quona team has prepared a traffic light overview to monitor how portfolio companies are affected by the corona crisis, focusing on the cash position. To date, the portfolio companies still have enough cash on the balance sheet to continue operations well into the next year. Where possible, the Quona team takes measures to further strengthen the cash position of the companies.
Two new investments have been added to the portfolio: Sokowatch and Ula. Sokowatch is an online business-to-business marketplace, whilst also providing last mile delivery in a select number of African countries. Ula is an online marketplace aimed at companies in Southeast Asia. AQIF now has a total of ten investments in its portfolio. The Fund is expected to invest in a further ten companies in the next two to three years.
The Green Bond Fund saw green bond prices fall as a result of COVID-19. The decline was mitigated by the swiftly announced European Central Bank buy-back program. Demand for green bonds remains high, and the total size of the green bond market increased to 547 billion euro. The Green Bond Fund continues to have a well-diversified portfolio of green bonds issued to finance sustainable projects with a positive impact on the environment. The portfolio consists of 92 companies / (semi) governments and 163 green bonds.
For further details on the developments of the funds in which the Global Impact Pool is invested, please see the Fund ‘one-pagers’ at the end of this letter that can be downloaded below.
 Source: Impact of the investment by GIP in AgricultureFund (Q4) and organic Growth Fund (Q3)
 Source: Impact of the investment by GIP in Emerging Consumer Fund III (per Q3)
 Source: Impact of the investment by GIP in the Green Bond Fund (per Q4)
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Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorized as a management company and regulated by the Dutch regulator Autoriteit Financiële Markten. The Sub-Fund is registered under the licence of KCM at the Autoriteit Financiële Markten and not subject to Luxembourg supervision. The shares of the Sub-Fund are admitted for (public) offering in the Netherlands, the UK, France and Switzerland. The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (only for the Netherlands) and the prospectus. These documents of the Fund are available on the website of Kempen.
The Sub-Fund may have investments in financial instruments mentioned in this document and it may at any time decide to execute buy or sell transactions in these financial instruments. The views expressed in this document may be subject to change at any given time, without prior notice. The information in this document not intended and should not be considered as research, an investment recommendation or as an offer and provides insufficient information for an investment decision.
Although the contents of this document have been compiled with the utmost care, and are based on reliable sources of information, no guarantee or warranty is given and no liability is accepted, express or implied, regarding the completeness or accuracy of the contents.