UK-based, nonprofit organisation Water Unite has launched a new investment vehicle, with planned capitalisation of $100-million, to provide risk-tolerant capital to small and medium-sized enterprises (SMEs) in a “missing middle” funding gap.
Water Unite Impact, managed by investment manager Wellers Impact, will invest into private sector water, sanitation and plastics recycling firms globally to address the gap in the funding landscape not currently filled by charitable foundations, microfinance institutions, commercial banks and traditional capital markets.
“It has always been part of our ethos to find new and innovative ways to fund life-changing, sustainable water poverty and plastic pollution solutions in developing nations,” said Water Unite CEO Chris Sellers.
This investment vehicle is in its pilot phase and intends to deploy its first round of investment later in 2020.
The pilot is funding the SMEs using a catalytic capital structure relying on Water Unite’s micro-levy programme contributions from international retailers as its foundation.
“Water Unite Impact’s structure will build on the funding from our 1c-a-litre micro-levy on bottled water to leverage and multiply private sector investment in vitally needed areas,” he said.
According to Water Unite’s website, the funds offer a no-cost risk mitigant to borrowers to support their growth and ability to be responsive to the needs of some of the world’s most vulnerable populations.
Currently, over 785-million people worldwide do not have access to safe water sources, more than two-billion do not have access to sanitation facilities and over 85% of the 300-million tonnes of plastic waste is not recycled.
The targeted SMEs are all addressing local problems with innovative and sustainable solutions.
“This strategy will demonstrate a creative way of enabling each dollar of funding to support more than one organisation, and to multiply social and environmental impact many times over.”
Water Unite Impact is targeting funding for SMEs that have already proven their ability to repay smaller obligations but are not yet ready to service larger loans from commercial or development finance institution sources.
It is also enabling bridging finance and public-private partnerships
“Proving this pilot scheme opens up incredible possibilities to change the lives of millions of people throughout the world by funding innovative, entrepreneurial and sustainable water, sanitation and plastic private businesses and service providers,” concluded Wellers Impact CEO Neil Sandy.