Calvert Foundation Moves into Syndication to Pool Dollars for Impact Loan Funds

From ImpactAlpha

By David Bank

The Calvert Foundation is best known for its Community Investment Note, a workhorse fixed-income product that in the last two decades has raised more than $1.4 billion for community development, renewable energy, sustainable agriculture and more.

Now, the Bethesda, Md., financial services firm is adding a new line of business, Capital Aggregation, to syndicate fixed-income opportunities to institutional and accredited investors. By using its expertise and infrastructure to source and manage such deals, the thinking goes, Calvert can bring new investors and aggregate new capital for impact investing.

“We’re scaling the infrastructure for moving additional capital into communities,” Jennifer Pryce, Calvert’s CEO, told ImpactAlpha. For investors, she said, Capital Aggregation is meant to be “a one-stop shop to build out the fixed-income portion of their impact investing portfolio.”

In the past year, Calvert has aggregated capital for five such private-debt deals, including an asset-backed credit facility for an off-grid solar provider in Africa and a mezzanine debt fund that leverages federal New Markets Tax Credits to finance small businesses in low-income areas of the U.S. Of the total $70 million raised, Calvert itself provided about $27 million.

Calvert has identified 50 investors interested in placing capital and expects this year to close three to five more deals in the range of $10 million to $50 million. “We’re starting to see new names,” Pryce said. “That’s really exciting — additional capital.”

Calvert’s new line of business is part of a broader effort among impact investing pioneers to establish effective “intermediaries” to smooth the investment process for both investors and enterprises. In addition to syndication, initiatives are underway to provide liquidity, risk-mitigation, credit-rating and securitization — all elements of a mature and well-functioning market.