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Global Impact Pool Quarterly Investor Letter

09 October 2020

Specifically, we aim to:

  1. Contribute to the provision of basic goods & services for the underserved including water and health & wellbeing;
  2. Provide for decent jobs with fair employment practices to eradicate poverty;
  3. Support sustainable consumption and production aimed at doing more and better with less, and;
  4. 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.

IMPACT HIGHLIGHTS

 

Financial return

Over the quarter the Global Impact Pool posted a return of +0.3% for the FA class.

Portfolio highlights

In this second quarter, the GIP team added a new impactful investment to the Global Impact Pool portfolio. It concerns an investment in the Ecosystem Integrity Fund IV (EIF). EIF specializes in investing in relatively young companies that contribute with their service or product to the transition to a more sustainable economy. The investments are mainly in North America, but the impact focus of those companies is inherently global. EIF's focus is on companies with a proven product or service, and a good number of customers, but who are not yet profitable. With the help of EIF and other investors, a plan that leads to profitability is underway. EIF IV is managed by an experienced team. This is the fourth fund with which the team invests in accordance with the same philosophy. Investments take place within the themes: energy, energy efficiency, transport, chemistry and agriculture, and are always aimed at improving the sustainability of existing products and services. More details about the impact objective and investment strategy of this new investment can be found in the fund one-pagers later in this quarterly letter. An example of a company in the EIF portfolio is featured in the Impact Case Study. 

Although the ultimate impact of the COVID-19 pandemic is not yet clear, the management team is satisfied with the development of the Global Impact Pool and the funds in which the Pool invests. The pandemic has not (yet) caused problems in the fund managers' portfolios, a sign that the companies invested in are relevant and that the fund managers appointed by the Global Impact Pool are selective with their investments in which risks are carefully assessed. 

The management team still mainly works from home and maintains intensive contact with the appointed fund managers through video conferencing. The management team of the Global Impact Pool changed this quarter. One of the four portfolio managers, Ulrike Beyrich, has left the team to focus on other projects within Kempen. For the time being, Ulrike's departure will be handled by the other three portfolio managers.

Developments portfolio

The summary below gives a brief overview of the main developments at our impact fund managers this quarter. Where possible, we provide an update on how COVID-19 affects management of the impact fund. For more detailed information about the developments in the impact funds in which the Global Impact Pool invests, please refer to the fund one pagers at the end of this quarterly letter.
 
Emerging Consumer Fund III: The pandemic has accelerated the growth of companies active in health and digital financial services, the two main themes in the ECF III portfolio. This has led to some significant revaluations in the portfolio. The management team is successful in putting capital to work and has already added five new companies to the portfolio in 2020. At the end of the second quarter, the portfolio consisted of ten companies. 68% of the fund assets are invested and / or reserved for new, concrete investments.
Agriculture Fund: In the second half of the quarter, the number of loans issued by the fund increased, although these are selectively provided in the current COVID-19 environment. This keeps the quality of the portfolio high. About half of the investments this quarter were made in the coffee value chain, particularly in South America, in anticipation of the upcoming harvest. Loans were also provided to cashew traders in Asia, cocoa farmers in South America and sugar processors in India. The portfolio remains well diversified and currently consists of loans to 41 companies in 24 core countries.
ESPF 4: Despite the pandemic, the portfolio continues to develop well. Despite some delays at suppliers, the construction of a wind farm in Sweden has been completed, making the farm now fully operational. The construction of a solar energy park in Sardinia will also be completed very soon.
Accion Quona Inclusion Fund (AQIF): After the initial focus on strengthening the financial position of the companies, this quarter was more dominated by recovery and future growth. This quarter, the portfolio companies further convinced the Quona management team that with their predominantly tech-driven, digital services they have the ability to successfully adapt to different market conditions. Some companies have already seen their sales recover to pre-COVID levels and are well positioned for further growth. Two new companies were added to the portfolio this quarter, bringing the total number of new investments in 2020 to four.
The Green Bond Fund benefited this quarter from falling interest rates on the capital markets, causing green bonds to appreciate in value. While the issuance of new bonds lagged the broad bond market in the first half of the year, the management team expects to offset this in the second half of this year. It is expected that Germany in particular will become more active in the issue of green bonds. 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 99 companies / (semi) governments and 176 green bond loans.

The Ecosystem Integrity Fund IV (EIF) was added to the Global Impact Pool portfolio this quarter. EIF focuses on relatively young companies that make a clear contribution to the transition to a more sustainable economy. This investment contributes to the Global Impact Pool's mission to contribute to "sustainable consumption and production: to be able to "do more with less" in a smarter way.

For more detailed information about the developments in the impact funds in which the Global Impact Pool invests, please refer to the fund one pagers at the end of this quarterly letter.


[1] Source: Impact of investment by GIP in the Agriculture Fund (per Q2)
[2] Source: Impact of investment by GIP in the Emerging Consumer Fund III, AgriDebt Fund and Quona (per Q2)
[3] Source: Impact of investment by GIP in Green Bond Fund (per Q2)

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2020, 07 October

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Disclaimer

Luxembourg. 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 license 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 KCM (www.kcm.nl).
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.

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