What do you get when you combine four UN agencies, an international NGO, and an alliance of 30 African states? Bamboo Capital Partners' founder Jean-Philippe de Schrevel, tells Geneva Solutions how he came up with the "crazy" idea to unite six SDG funds and create a $500m investment platform launched at Davos this year.
A veteran of the impact investment scene in Geneva, de Schrevel founded BlueOrchard, the microfinance fund manager now owned by Schroders, in 2001 before leaving in 2007 to launch Bamboo Capital Partners, an impact investor focused on emerging markets. His aim was to create a “pioneer fund” that tested new business models across new sectors:
“If you are really serious about helping poor people live a better life, providing them with access to financial services for their small companies is great, but they also need access to clean energy, access to education, access to affordable housing, healthcare, you name it.”
The company is focused on four key areas: financial inclusion, access to clean energy, access to healthcare and the agribusiness - with technology as a means to maximise the impact.
In January, Bamboo Capital in coalition with other private and public sector organisations, launched SDG500, a $500 million blended finance investment platform dedicated to helping to achieve the SDGs across six individual funds.
These included the CARE-SheTrades Impact Fund, dedicated to financing to businesses promoting gender equality and women’s entrepreneurship. Other partners include the Stop TB Partnership, International Fund for Agricultural Development, the United Nations Capital Development Fund, and Smart Africa,.
In an exclusive interview with Geneva Solutions, he explains the story behind the unique coalition - a feat he said represented “20 years of work” .
How did the idea of the SDG500 investment platform come about?
This came about through a succession of different partnership discussions with different parties that we started two and half years ago. We decided to reposition Bamboo as very much a platform for impact investing in emerging markets, but also as a platform that would be open to partnerships….We first responded to a proposal from IFAD, the International Fund for Agricultural Development and we won the mandate to run their fund, lending to smallholder farmers in Africa and little cooperatives.
You eventually had six different funds. What inspired you to bring them together?
At the end of last year, we had six funds in front of us and suddenly we had the crazy idea, why don’t we put them together to represent a $500m opportunity. Very often people talk about mainstreaming impact investment but when comes to an institutional investor with a $50m fund, they don’t have the time to look at it. Now when you come with a $500m fund then suddenly you can attract large investors that will find a way of investing in your project.
On top of that, $500m remains only a drop in the sea of needs. But if we crack that nut then it can be something that can be scaled dramatically. Because then we can involve new NGOs, other UN agencies, and this could potentially become billions in terms of the programme of investing in something that is very well organised and financially managed and at the same time with the guarantee of social impact and true social impact on the ground.
Can you describe the other five funds?
The second fund, BUILD, with the UN Capital Development Fund (UNCDF) was another public tender, that we also won against 12 or 13 other managers. That fund is really focused on the least developed countries and will be lending money at very early-stage SMEs.
The third fund is a partnership with an international NGO, Care USA, and comes from a conversation two to three years ago with the managing director back then of Care Enterprises, who felt the need to start impact investing as part of its activities. They added one element, which is the gender justice thesis to their investment. We added a third partner, ITC , in Geneva and specifically their SheTrades programme helping women-led, women-owned enterprises in emerging markets grow through trade.
The fourth emerged from an alliance we had with 30 African states - Smart Africa. They have a number of different projects linked to incubators and accelerators of technology solutions in the different countries of their alliance and they decided that Bamboo would be the manager for their tech for impact fund.
It fifth is a tech for impact fun specifically for Latin America. And last but not least, Oasis [an earlier Bamboo fund] had also made a few investments in access to primary healthcare specifically in India and Indonesia. On the back of this experience another programme of the UN, Stop TB, approached us to become the manager of a healthtech fund.
How is the SDG500 structured?
Of the $500m dollars you have $140m that is the sum of all the first loss tranches of those funds. So that is $140m of public money, or foundation money, that will trigger the investment of $360m from the private sector. As part of investors in the first loss tranche we already have the EU, the government of Switzerland, Luxembourg, and Norway have just decided to invest as well. We also have the Ivory Coast. We need another $50-60m and our first loss will be complete.
What has been your experience attracting institutional investor money?
In May, the Global Investors for Sustainable Development Alliance (GISD) - a group of global banks and institutional investors that have been convened by UN secretary-general, onboarded the SDG500 as one of the products that should be supported by institutional investors. This has opened several doors and we are now talking to major global banks with wealth management divisions that have expressed initial interest in the product. That is also the case with two very large insurance companies that need to invest their reserves, and the notes are of interest to them. We also have the interest of multiple family offices, be they in Asia, Europe or in US interested in the mezzanine equity piece.
When do you hope to close the fund?
The target is the end of the year.
How has Covid-19 impacted your plans?
Not so much on the ground because they need the money more than ever. But what has changed is the way specifically governments are reallocating their priorities in terms of spending and investing. We are trying to convince them that the first loss piece of the SDG 500 is a must-go, even if this is money that should be earmarked for the Covid-19 crisis, because precisely we are going to help companies providing the lifeline to people in very poor countries. It is a conversation that has been postponed because of the urgency of the situation. But now post-summer in Europe we are reactivating those conversations.
How are NGOs shifting their approach to impact investing?
What global NGOs are seeing is a need for accountability and probably a need for efficiency of the work of each dollar deployed. Again, it is not to say that donations and grants are not effective - it is absolutely necessary and must increase. But [donations and grants] can only be directed at some specific problems that cannot be dealt with by the private sector solution. And when they see impact investing on the ground, they come to realize that helping small scale companies grow faster and better is probably also a very efficient way of solving many of the problems they are trying to solve.
How about appetite from the private sector?
On the private sector side, I’m sure you have noticed the increasing excitement about the ESG approach. but then on the tail end of ESG comes impact, which is a more focused approach to providing solutions for wealth management. The next generation is pushing banks to think beyond making money but making money in a sustainable way. It’s about the planet and profit. This is a powerful trend that we have been noticing over the last couple of years. And the SDG500 comes at the crossroads of all those trends.
How does Geneva rank as a hub for impact investing compared with other cities?
I think Geneva is a special place for impact. We have the UN system in Geneva and we are collaborating with four agencies from the UN. You have other players - Blue Orchard and Symbiotics actively engaged in Geneva and that are born here. You also have private banks that are very much engaged in ESGs and sustainable investments and impact as well. We certainly are at the forefront. Now, other cities and regions are catching up fast. But the good thing also is that a significant part of the private wealth of the world is also managed in Geneva. So you add that to the ecosystem of the UN, impact investors and private banks and that’s a very powerful combination. But I hear cities like Singapore, Hong Kong, New York, San Francisco are coming up very big in impact investing. And that’s a good thing becasue we need many people to contribute to this movement and the needs are so big that I don’t think we will ever have enough actors in impact investing.
Is there enough dialogue taking place between the international development and finance communities in Geneva?
There is never enough. And it’s tough because until now those were worlds that were not talking the same language and not even talking to each other. But I sense in the last couple of years an increasing willingness to become more open, to work together to try and understand the mechanics of what each party is putting in place. I see more UN agencies talking to us in the wake of the SDG500 announcement in Davos and that’s very promising.