Bank has allocated 43% of R$542m raised last year in two technology companies
08/24/2022
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/R/d/MoZaGLSCSyg30RZrwuAg/170822patricia21.jpg)
Patricia Genelhu — Foto: Silvia Zamboni/Valor
A year after raising R$542 million for its first impact-investing fund, BTG Pactual has allocated 43% of its funds to two technology companies: Alliare (agribusiness) and Gran Cursos Online (education). Now, in order to invest the remainder, the bank has on the radar the health sector and projects linked to waste management and circular economy, including the development of sustainable materials for the packaging chain. Projects focused on energy efficiency, drinking water, and basic sanitation are also eligible.
According to the commitment made when it raised the funds, the bank has until 2024 to invest them. “We are optimistic about the pace of allocation and we believe it will happen before the end of the three-year term,” said Patricia Genelhú, head of sustainable and impact investments at BTG. The fund expects to return the capital to investors by mid-2028 – with profit.
Ms. Genelhú said that the entire investment rationale replicates what BTG Pactual’s asset-management business seeks with its conventional private-equity funds, and with the same consistency in terms of performance. The target return is 20% above Brazil’s official inflation index IPCA. “The difference is that it brings the best sustainability practices in the projects that receive investments, monitors the strength of the agenda in the companies, and looks at maximizing the impact.”
The distribution of the shares was concentrated on pension funds, with 39 investors in the A class. This is an audience that has looked more closely at ESG. Yet, the fund has also attracted high-net-worth families and a chunk of high-income retail. With checks starting at R$100,000 for the B share class, it has built a base of 716 individual investors.
Founded in 2013, Gran Cursos Online is a provider of preparatory programs for public hiring tests, professional exams (such as those applied by the Brazilian Bar Association and the Federal Accounting Council for new lawyers and accountants) and graduate programs. According to BTG, the investment in the company is justified by the promotion of inclusive, equitable and quality education, which contributes to reducing poverty and fostering employment. In April, the company acquired the UniBagozzi university to expand in distance education. In higher education, the goal is to reach 1 million students by 2026.
In the annual report of the impact fund, the management team mentions that the company pioneered the subscription model in the market of preparatory courses for public hiring tests with affordable prices. Since the capital injection, there has been a 38% increase in the base, with 476,000 paying students, and 71,000 enrolled in free programs on the platform. Considering people that passed public hiring tests this year, 26.5% studied with Gran Cursos, 72% of which coming from public schools. A share of 56% are black and mixed-race people, 68% have incomes of up to two minimum wages, 62% are women, and 51% of the students came from cities with less than 200,000 inhabitants.
Aliare, the other company that received investments, has taken technology to the fields with the objective of supporting agriculture in the transition to a low-carbon economy and increasing the income of farmers. According to BTG, the company contributes to a better efficiency in the use of inputs, preservation of natural resources, and food security. The result of the merger of two groups focused on the development of software for agribusiness, the company founded in 2019 Conexa, an innovation hub to encourage the development of technology startups in the sector.
Beyond the impact fund, Ms. Genelhú said that BTG’s asset management company has been focusing on other sustainable investments, such as a dedicated debt portfolio in emerging countries, as well as a strategy of reforestation assets.
In her view, the sustainable finance market is gaining prominence, with companies interested in being recognized as issuers by ESG criteria. The challenge, she said, is to avoid “greenwashing” practices.
*By Adriana Cotias — São Paulo
Source: Valor International