Cyrille Antignac¹ is an Investment Partner at Wellers Impact where he looks after investments and acts as a portfolio manager of Water Unite Impact fund. Cyrille has 20 years of experience in Corporate Finance and Private Equity in Asia, Africa and Europe. He is also the founder and former chairman of UBERIS, an impact investing firm. He is also an author and lecturer in leading universities on the topic of impact investing.
Have you noticed any outstanding trends over the course of your career in impact investing?
I go back a decade when impact investing was marginal. I remember a world where trying to do good with investments was regarded as a sacrifice on financial returns. People used to think that creating a positive impact with money was a synonym of lesser profits and returns.
10 years on, we can see that the trade-off between financial and non-financial returns has almost disappeared. When surveyed every year, impact investors involved in this new asset class for a decade or more report actual returns on a par with classic investment. This is very encouraging.
The result: impact investing is the fastest growing asset class in the whole asset management industry. It has grown from zero to around USD 1 trillion today. If you look at the broader universe of listed security invested through ESG, it is equally striking. We are now seeing over USD 20 trillion seeking to move into investments with a defined strategy for sustainability.
I am convinced this trend will reinforce the risk of seeing more impact and green washing. We now need to make sure that extra-financial performance finds common standards to sort good, reliable and trustworthy professional investors from opportunists. There is a long way ahead but the days when we feared that impact investing was just a fad are definitely over.
How do impact investments and grants compare? And how do the two drive each other?
The idea to blend together philanthropic and private funds is new. It is a feature of impact investing and venture philanthropy. In the “old world” of classic business, otherwise called “finance-only”, the objectives of investors and philanthropists never met. They remained strictly separate.
The advent of the “Impact Enterprise” changed this. It offers philanthropists social impacts needed for their mission. At the same time, it delivers returns to investors. As a result, both types of funds have started to work together. This is called “blended finance”.
Using a blended finance approach helps reduce the investment risk for private investors. For example, private capital can be focused on growing a business whilst more peripheral needs like feasibility studies, R&D, developing IPs, ESG and social metrics, key recruitments, improve financial systems etc can be funded by grants.
Better still, grants can be used to compensate capital losses by offering a first-loss buffer to private investors. First-loss acts as a guarantee to shield private investors against capital loss. Such a “catalytic first-loss capital” mechanism is what our fund Water Unite Impact offers to private investors.
What initially attracted you to work in circular economy solutions?
The notion of circular economy is gaining ground. In order to understand circular economy, let’s go back to the notions of “linear” versus “circular”. A linear model is what has been used since the first industrial revolution. In this model, natural resources taken from the environment are a one-off from cradle to grave. In circular models, they are re-used several times in a “cradle-to-cradle” way because products are designed to be recycled. Circular economy models rely on recyclability to reduce the amount of resources taken from the environment or on biodegradable resources so that waste does not pollute the planet.
Circular economy is not just a niche segment of the economy; it is a response to the scarcity of natural resources and provides a solution to make the economy sustainable. It combines cost reduction with a lower environmental footprint. For this reason, circular model innovation is expected to increase in value over the coming years as the entire economy will increasingly go circular.
How have micro-levies aided impact investment projects you have been involved in?
Micro-levies are a great way to finance impact innovation and fundraise for impact enterprises. They present a number of advantages including:
- Micro-levies demonstrate a good way to associate corporates with the ecosystem of impact enterprises and innovation for the planet and society.
- Contributing corporates can share impacts with their clients. In doing so, it directly supports their Corporate Social Responsibility through tangible projects on the ground.
- A micro-levies programme is a good way to engage customers into projects that deliver social and environmental impacts they can associate with.
For impact investors, using micro-levies helps blend not-for-profit money with private capital in a view to de-risk the latter. Micro-levies can help scale-up blended finance and make impact investing more attractive for private investors. This is because micro-levies act as a financial leverage for them, something unique to impact investing.
What makes Water Unite Impact unique in its sector?
Water Unite is unique in leading an impact investing effort based on micro-levies. It partners with large retailers to collect levies and then use them to invest into innovation in water, sanitation and circular economy. So far, money collected from micro-levies has been deployed into waste-to-energy, plastic recycling, access to drinking water and clean toilets for low-income people (among the 1bn+ humans with no easy access to clean water and toilets).
For customers, it is great to know that they can indirectly contribute to redefining the business models of water, sanitation and circular economy through paying a micro-levy when buying products. We believe in the concept of “engaged customers” who contribute to a better world when buying goods rather than the opposite.
Recently, Water Unite had an exciting announcement with Mr Green Africa - can you tell us more about their circular economy innovations?
In the case of Mr Green Africa, they help large FMCG companies like Unilever, Colgate and Nivea to reduce the amount of virgin plastics in PET packaging. Leaders in the FMCG sector have pledged to reduce virgin plastics down to 50% by 2030 to reduce carbon emissions and plastic pollution.
Doing so requires reliable partners like Mister Green Africa able to organise circular supply-chains to collect plastic trash and turn it into pure ready-use PET.
What we like about Mister Green Africa is that they have a model to collect used plastics from consumers. Trash becomes valuable and a source of income for families who can monetise returned plastics instead of just dumping it. Mister Green Africa also helps hundreds of low-income workers into formal employment and contracting in collecting and sorting plastic waste.
What do you see on the horizon for Water Unite Impact?
I expect Water Unite Impact to rally more corporate donors in our micro-levies scheme. Our fundraising model allows corporates to participate in Impact Investing to the benefit of their CSR programmes. In fact, it is a perfect way to boost CSR with tangible impacts on the ground. Also, there is a clear line of sight between consumers on the one end and beneficiaries on the other. It is both fulfilling and empowering for consumers.
We work closely with our corporate partners in sharing information on actual impacts delivered by investees. We help them claim tangible results on things like: GHG emissions avoided, number of people with access to clean water and sanitation, amount of plastic pollution avoided, access to jobs and economic opportunities for people at the bottom of the pyramid. We deliver value way beyond financial metrics in becoming active partners of companies’ societal responsibility.
¹Full bio: Cyrille started his impressive career in 1996 in project financing with GIIB International - a major UK engineering firm - and then in Corporate Finance with KPMG Financial Advisory in London. During 8 years, Cyrille contributed to around 30 corporate transactions, privatisations, IPO, distressed turnaround and fundraising.
From 2005 to 2014, Cyrille engaged in private equity investments in the Makong region where he built an investment and cross border advisory firm to help European corporations invest in Vietnam. After the Global Financial Crisis in 2008, Cyrille returned to Europe where he helped build three investment funds in Agro-forestry and biomass energy, real estate, forestry and impact investing (total AUM$ 200m).