Highlights: March 2019 NY IMpact & Opportunity Zones
At our inaugural Impact & Opportunity Zones Conference in New York, over 65 participated from a diverse group of SFOs, foundations, funds (PE/VC/Credit/RE), and entrepreneurs. See highlights and agenda below/
Most family offices apply various impact filters to investing. The next generation is pushing impact harder (asking to measure it better), and older generations plan to invest more into sustainable areas. Opp. Zone regulations will be clarified soon, and most plan to invest into OZ projects, including a large Chinese FO (non-US investors may benefit more depending on tax treaties).
> THE OPENING PANEL set the tone for thoughtful discussions, underscoring how great returns can be earned from impact investments in niches such as water rights (Matt Diserio of Water Asset Management) and food supply (Anthony Tiarks of Parabel).
> THE IMPACT PANEL moderator Ann Davlin provided useful context on the approaches to impact investing. The panel focused on “above market-based return” opportunities. In Public Markets, Rob Brown of Atlas Impact noted how his fund invests in companies that embrace sustainability models and shorts those that don’t. In PE, Dan Prawda of GEF Capital focuses on the lower middle market with lower acquisition multiples yet applies a type of impact filter. In Venture, Barry Adams of Prairie Crest Capital shared how his fund is catalyzing potentially huge new waves of more sustainable developments in areas such as natural fibers and emulsions, leveraging Midwest university research. In Credit, Rich Nespola shared perspectives as a FO financing companies that make a positive impact. In Global PE, Paul Kloppenborg of GCC (Netherlands) noted that “cleantech” investors can achieve outsized IRRs but also make a positive measurable impact on the environment.
> THE OPPORTUNITY ZONES PANEL & ROUNDTABLE demonstrated how nascent Opportunity Zones are in the marketplace, yet that there is already some infrastructure to deploy solutions. Al Puchala of CapZone Impact Investments shared insights on how OZ came to be the “law of the land” and how it works. Michael DePompei of Haynes & Boone showed slides on developments and provided insights on final regulations to be released in the next few weeks. Beth Steinberg (principal of her SFO with both RE and operating businesses) shared how she is looking at OZ projects. Jordan Taylor of Phoenix-based RE developer True North Studio noted the importance of local partnerships, and that projects must be beneficial to the community in order to succeed.
> The “Town Hall” Debrief enabled Co-leaders of the Roundtables to share take-aways followed by Q&A. The OZ roundtable focused on specific opportunities that are being actively pursued, and then discussed the best way to approach investing and potential partnerships/strategic alliances. The CleanTech & Water roundtable focused on natural gas and investments in the energy industry noting how innovative firms can generate higher returns and lasting income. Some warned of lower returns in U.S. solar/wind projects given falling electricity prices (as opposed to water rights), while Denham Capital noted high prices and favorable market dynamics in several markets outside the U.S. The Ag/Consumer/VC roundtable featured investors such as Adam Rein of MissionPoint Partners that backs funds and directs but also a platform to facilitate philanthropic investments. Family offices had the treat of enjoying tastings of Parabel’s Lentein-based drink while watching a video stream of its Florida farm that harvests daily.
In closing, we asked everyone “what scares us?” Answers ranged from millennials (including from a fellow millennial) being too rigid and unprepared for a crisis, a concern about too much credit in the economy and global trade or other wars. As for what excites us, not surprisingly, the conversation veered to the potential for OZ investments to keep the economy growing while funding badly needed infrastructure and other projects.
We would like to extend our deepest gratitude to Haynes & Boone for hosting our conference and a thank you to all for collaborating.
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