There’s a new impact fund for investors looking to have a positive impact while turning a profit.
Palladium is launching its first impact investment fund – the Palladium Impact Fund I – following two successful direct investments, design of the world’s largest development impact bond (DIB), and three years spent developing a strong pipeline of investment opportunities.
The fund is expected to invest in small and medium-sized enterprises in emerging markets, with a focus on agribusiness value chains and off-grid clean energy in sub-Saharan Africa (SSA).
This particular fund will also look to apply a “gender lens”, which prioritises benefits to women through economic empowerment and opportunities.
“For this first fund, we want to focus on investing in empowering African women,” explains Andrew Tillery, head of Palladium Impact Investments. “Women perform the majority of agricultural activities, own a third of all firms, and are key to the welfare of their families.”
The fund will aim to alleviate poverty and economically empower over 500,000 rural households, as well as create at least 3,500 full-time jobs – 60% of which will be for women.
"For an investment to have an impact, it has to be sustainable, which means it needs to generate a financial return."
Impact investing has grown rapidly in popularity, while experts estimate a $2.5 trillion gap between current funding levels and what it will take to accomplish the UN’s Sustainable Development Goals (SDGs). The need for funding is real, and investors are increasingly looking for ways to put their money to meaningful use, while generating a financial return.
“Fifty-four years of experience has taught Palladium that for an investment to have an impact, it has to be sustainable, which means it needs to generate a financial return,” says Tillery.
Working with many of the world’s largest aid agencies – including USAID, DFID, and DFAT – with staff in 90 countries, has contributed to a significant pipeline of investment opportunities, local networks, and a strong sense of what real impact takes.
The team has leveraged this network and expertise to invest its own capital, both in Naasakle, a mother and daughter-owned shea nut harvesting and processing business in Ghana, and PEG Africa, an off-grid solar energy project. Palladium has a further 10 potential investments under due diligence.
"We want to transform how development is financed, bridging the gap between aid and investing."
Palladium CEO Christopher Hirst believes that after three years of direct investing, now is the time to explore other sources of capital to deliver the same impact – and the same returns.
“We’re ideally placed to use our extensive international development work and global reach to source ideas for potential, credible investment opportunities,” he says. “Ultimately we want to transform how development is financed, bridging the gap between aid and investing.”
To Andrew Tillery, financial returns are what make investments sustainable, but this is a fund that is serious about the social side of the equation: “The Palladium Impact Fund I wants to move the needle on the world’s greatest challenges.”
Palladium Impact Fund I investors will aim to include foundations, family offices, pension funds, and institutional investors. Palladium will manage the fund, anchored by a $5 million investment of its own capital.