One of the key developments in the rise of socially impactful business this year has been the acceleration of interest in impact investing from the mainstream which has huge ramifications for purpose-driven companies seeking patient yet engaged capital that is aligned with their financial and social goals.
The announcement from Blackrock, the world’s largest asset manager with $6.3 trillion under management, that it would seek to obtain social impact achievements alongside financial goals is still sending a huge ripple effect through the financial services industry. Spearheaded by head of sustainable and responsible investment strategy, Mayram Omi, UK-based Legal and General, Europe’s second-largest fund manager with a $1.3 trillion fund, announced that it would get tough on companies not doing enough to tackle climate change, even going so far as to exclude them from its Future World funds. And Goldman Sachs has announced the creation of a fund based on Paul Tudor-Jones’ Just Capital, which tracks a basket of companies on the basis of criteria like sustainability, treatment of workers and impact on communities.
These now join some of the most interesting and innovative players in the social impact investing space who have been tackling this problem from multiple angles. There’s Atlantic Philanthropies (started by Chuck Feeney ‘The Billionaire Who Gave Away Everything’) which have invested $8 billion in causes that advance opportunity and promote dignity. Acumen is a non-profit investment fund which focuses on small to medium enterprises, serving low-income communities, primarily in Sub-Saharan Africa and South Asia; they describe themselves as ‘Patient Capital that dares to go where markets have failed and aid has fallen short.’ Arlan Hamilton and her team at Backstage Capital are raising a new $36 million ‘About Damn Time’ Fund exclusively for black female founders. And former Facebook exec Chamath Palihapitya cofounded Social Capital, which is described as ‘a partnership of philanthropists, technologists and capitalists utilizing venture capital as a force to create value and change on a global scale.’
But one of the most overlooked areas has been how to direct capital to some of the places that are most in need of it: small- to mid-cap businesses in developing markets which can accelerate crucial investments in infrastructure, sanitation, clean energy, green tech and more.
BankerBay, a dealflow platform, which focuses on uniting corporations in 145 countries with investors from private equity funds and corporates around the world, may provide an innovative solution. Its platform currently holds a quarter of a trillion dollars of deals, and in 2017 alone $11 billion worth of BankerBay deals successfully found capital – a total of 517 deals across 44 countries. The platform contains a range of investment opportunities from Private Equity and M&A to Real Estate and Project Finance. The average deal size ranges from $5 million in frontier and emerging markets to a typical size of $35-$40 million in developed economies. The platform currently has 26,000 users including corporates like Kellogg’s, Phillips and BASF, Accounting/Consulting firms like PWC and KPMG, Private Equity funds like Carlyle, TA Associates and even Sovereign Wealth Funds like Singapore’s GIC.
BankerBay is led by New York City-based Founder and CEO Romesh Jayawickrama, a 20-year veteran of the investment banking industry. Born in Sri Lanka and raised in England, his journey through the investment banking world – he held positions at CLSA, Nomura and ING – always had a focus on his passion point of developing markets, partly fuelled by the huge opportunities for transformative change and the desire to find ways to help direct capital to the places where it could help the most people.
“I’ve always been passionate about fairness, about making sure the small guys get the same fair shot as the big guys. My years in investment banking showed me just how inefficient the current system is: It’s an 18th-century system based on relationships and private networks when it should be based on a 21st-century model of transparency and the free flow of information. How much money you are able to raise shouldn’t be linked to where you went to school or who you play golf with.”
BankerBay is the manifestation of that idea: that ‘Capital Without Borders’ could flow to the businesses around the world that had enormous potential to solve problems like sanitation, water and manufacturing infrastructure, that in turn could unleash jobs, growth and decent living wages.
“We believe that capital should not be ring-fenced by the minority against the majority. There is more than enough capital already available to solve a lot of the world’s problems, but information asymmetry has been so great that worthy destinations are often never found. The issue we are trying to solve is being the bridge between well-run local corporates who need capital to scale – and the international investors who have the capital but can’t efficiently access all the appropriate opportunities for their needs, due to their narrow traditional network,” says Jayawickrama.
BankerBay’s proprietary algorithms are backed up by a team of experienced human analysts with backgrounds in investment banking who are able to vet incoming proposals and evaluate them before pushing them through the platform. Then the technology engine revs with sets of complex machine-learning algorithms matching thousands of deals with thousands of investors across the world, in milliseconds. So far users of the platform have been pretty impressed.
“BankerBay is not a bulletin board for deals from anybody or visible to everybody. Propositions on BankerBay are checked, improved, tailored and are precisely targeted. This is Alibaba for international M&A,” says Michel Renirie, founder of Renirie Advisory, Netherlands, a boutique advisory firm in the Netherlands. Sarah Li, M&A director of Northeast Securities Co., Ltd. a listed, top-tier financing and financial advisory services provider that is headquartered in China with a market cap in excess of $2 billion, says, “BankerBay is a disruptive and efficient online deal-matching platform. Unlike traditional face-to-face investment banking businesses, it is easier and faster to find preliminary matching deals and get connected with buyers worldwide, without actually meeting someone. This kind of deal-sourcing channel decreases the employers’ participation rate and ineffective communication, and dramatically increases the success rate.”
“We have been using BankerBay for the past year and a half and have seen an exceptional quality of deal flow with successful introductions and closure. The platform is easy to use and extremely intuitive. BankerBay’s team of analysts is also responsive and quick to address our queries,” says Carl Mauger, CFA M&A Manager-HQ Veolia, a Fortune 500 company and a global leader in the environmental services industry with over $30 billion in revenue in 2017.
One functionality Jayawickrama and his team are exploring is searching via UN Sustainable Development Goals which would enormously simplify the process of allowing investors to search for deals which match their social and development agendas. Jayawickrama says, “It’s really about economic justice – and about how to level the playing field so that all companies globally can have equal representation, equal opportunity, equal access to capital and therefore the equal chance to grow and flourish. I truly believe investment banking can save the world…if we re-invent it.”