Global financial institution Calvert Foundation has announced a new business line, Capital Aggregation, designed to pool capital from multiple institutional and accredited investors, in the form of syndications and participations in fixed income transactions, to enable investment at scale in mission-driven organizations.
Calvert Foundation will originate and structure each Capital Aggregation transaction and act as administrative agent. It will target deals in the range of $10m-$50m and expects to participate in every transaction, ensuring an alignment of interest with investors. Over the past 24 months, Calvert Foundation has already identified approximately 50 institutional and accredited investors interested in placing capital in Calvert Foundation originated Capital Aggregation transactions, and the organization is actively seeking to expand this base.
The new business line comes as a response to growing inefficiencies in the impact investment marketplace. Growth-stage, scaled organizations seeking larger capital rounds face a complex, time-consuming process that typically requires raising funds from multiple capital sources, increasing transaction costs and timeframes. At the same time, institutional and accredited investors are increasingly challenged to find impact investments across impact sectors and geographies that meet a diverse range of risk/return profiles for their fixed income portfolios. It is the goal of Capital Aggregation to ease these challenges for both sides of the marketplace.
“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.
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“Calvert Foundation is uniquely suited to catalyze capital flows to meet the growing capital needs of the global communities we serve. 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.”
In the last year, Calvert Foundation has closed on five transactions, aggregating and/or administering over $70m. It anticipates closing 3-5 additional Capital Aggregation transactions this year.
Calvert Foundation has gained prominence as a source of values-aligned flexible capital for mission-driven organizations. At the same time, investors and co-investors have come to rely on the company for developing and providing access to a robust pipeline of high-impact and high-quality deals that generate social, environmental and financial returns.
Capital Aggregation is an important next step to the organization’s fulfilling its mission of creating a more efficient impact marketplace to scale investment in mission-driven organizations.
“We are encouraged by the exciting growth we see in interest in impact investing from financial institutions, foundations, family offices and other investors, but also see an increased focus on niche portfolio creation rather than in investments that meet market demand,” added Pryce.
“We know that players active in fixed-income markets have the capacity to do enormous good, and we believe that by pooling investor interest and dollars, our Capital Aggregation business can accelerate capital flows to the communities we serve to maximize our collective impact.”