The Bethesda, Md.-based Calvert Foundation is launching a new private financing marketplace for impact investing.
Capital Aggregation, announced on Wednesday, marks the birth of a new business line for Calvert Foundation that pools funds from institutional and accredited investors in the form of syndications and participation in fixed-income transactions, enabling investment at-scale into organizations designed to create social and environmental impacts.
“As both impact investors and impact markets have matured, we see a need for the facilitation of larger, broader flows of capital that can supplement our own investment appetite and are aligned with our investment objectives,” said Jennifer Pryce, president and CEO of Calvert Foundation, in released comments. “Calvert Foundation is uniquely suited to catalyze capital flows to meet the growing capital needs of the global communities we serve.”
Calvert will originate, structure, administer and participate in each Capital Aggregation transaction. The transactions will target deals in the range of $10 million to $50 million. This represents an underserved sweet spot in the impact investment marketplace, according to Calvert, where growth-stage organizations often struggle to raise larger amounts of money due to the complexity and costs of the transactions.
Calvert Foundation says that it has identified nearly 50 institutional and accredited investors interested in Capital Aggregation transactions over the past two years. Many of these investors have also struggled to find impact investments that can diversify the range of risk/return profiles within their fixed-income portfolios.
Though Capital Aggregation formalizes Calvert Foundation’s business line, the firm has offered private debt opportunities around impact investments in the past as a lead lender and administrative agent. In 2016, the company closed on five transactions aggregating or administering more than $70 million, and it anticipates closing an additional three to five transactions this year.
“Our Capital Aggregation business essentially creates a one-stop solution by structuring and administering investable transactions for mission-driven organizations that ease the associated capital raising process by connecting them with a syndicate of investors who seek exposure to high-quality, risk-appropriate deals that generate social, environmental and financial returns,” said Pryce. “We are encouraged by the exciting growth we see in interest in impact investing from financial institutions, foundations, family offices and other investors, but we also see an increased focus on niche portfolio creation, rather than in investments that meet market demand.”