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Global Impact Pool Quarterly Investor Letter

17 September 2019

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:
  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 positive return of +0.6% for the FA class. Of the underlying investments, the Emerging Consumer Fund III, the Agriculture Debt Fund, the Enhanced Sustainable Power Fund 4 and the Green Bond Fund all contributed positively to performance. The Organic Growth Fund detracted from performance.

Portfolio highlights

Most investments continued to develop well over the second quarter of 2019. The fund managers are able to deploy capital at a good rate. This is positive for investors as a fully invested portfolio decreases the J-curve effect. A J-curve effect, also called ‘the hockey stick-effect’, is when investment returns initially start off negative for a short period, after which the returns show a sharp upward trajectory. This hockey stick profile occurs because investments (such as the Emerging Consumer Fund III, and the Enhanced Sustainable Power Fund 4) are being valued at cost for these years, whilst costs are being incurred to enter into and build the new project, as well as to pay the fund management team.

In our last quarterly letter, we gave a sneak peek into a new investment. To provide an update, this investment is currently keeping us waiting for a little longer. We have completed our due diligence, and the wait is now for other investors to also complete theirs, for a joint investment date. As indicated last quarter this investment aims to contribute towards the more efficient use of water and re-use of (waste) water. After official completion of the investment we can and will inform investors in more detail on this investment in the quarterly letter.

Emerging Consumer Fund III added a new investment to its portfolio, making a portfolio of six investments: three investments provide capital towards affordable and good quality healthcare, and three towards affordable and good quality financial services. The Fund has been closed for new investments this quarter, which means the team can now fully focus on putting committed capital to work.

Agriculture Debt Fund continues to deploy capital towards financing and growing agricultural small- and medium- sized businesses with a specific focus on ensuring fair prices and wages for farmers and workers, protecting the environment, and a safe work environment. They have built a diversified portfolio of 62 institutions in 34 core countries, reaching 24,514 farmers. In the Impact Case on the next page we have highlighted an investment from this portfolio, Suminter, and we discuss in more detail how the investment is linked to impact.

ESPF 4 added a new project to its portfolio over the quarter. It concerns a to-be-built solar project in Spain. The ground has been secured, and the grid connection is ready. The wait is now for the last permit to come in. Only once all permits have been granted will KGAL start building works on the project. This investment process keeps costs contained should a project unexpectedly not go ahead.

Organic Growth Fund had a disappointing quarter due to increased competition and strategic changes in the portfolio companies. Due to the multiples valuation approach the team applies to its valuation, which changes on a quarter to quarter basis, price volatility of this investment is higher than the underlying company fundamentals imply.

Green Bond Fund continues to be a diversified portfolio of bonds where the proceeds will be applied to finance new or existing projects that have a measurable positive impact on the environment. The portfolio has 92 issuers and 144 issues. Impact is measured amongst others by SDG 7: Affordable and Clean Energy, and more specifically by Greenhouse gas emissions avoided. Through the investment in the Global Impact Pool 400.363 tons CO₂ was avoided.

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. 


[1] Source: Impact of the underlying total fund investment, not just capital allocated by GIP
[2] Source: Impact of the underlying total fund investment, not just capital allocated by GIP
[3] Source: Impact of the underlying total fund investment, not just capital allocated by GIP

Download our Quarterly

2019, 17 September

Global Impact Pool - Quarterly Report

Download

Disclaimer

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.

 

Our team

Marjoleine van der Peet
Narina Mnatsakanian

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