Pioneering High Performance Impact Investing

Transcription

1 HUNTINGTON CAPITAL 2013 ANNUAL IMPACT REPORT Pioneering High Performance Impact Investing HUNTINGTON CAPITAL IMPACT INVESTMENT THEMES Access to finance for underserved enterprises Job creation in underserved communities Upward career mobility for LMI employees Underserved community investment Workforce diversity Employee wealth creation / quality of workforce earnings Green technology / Clean tech 3636 Nobel Drive #401 San Diego, CA (858) Tel (858) Fax

2 2013 IMPACT REPORT Huntington Capital Snapshot Significant Footprint across the Western United States Portland, OR Offices Fully staffed offices $192 Million of committed capital under management Operating executive remote office 26 Institutional investors across two institutional Impact Funds. Owned and operated by a nine-member diverse team. Reno, NV Las Vegas, NV San Diego, CA Portfolio 25 portfolio companies across two institutional impact funds 8 full exits with significant return of capital to investors 4,168 employees across impact investment portfolio Over 13-years of successful operations for two prior funds Significant experience deploying capital into the underserved lower middle market, supporting and creating LMI jobs Selected to the ImpactAssets , our first appearance on the IA50 list Recogni-on and Awards Featured as a top performing impact investment fund in a case study titled Impact Investing 2.0: The Way Forward Insight from 12 Outstanding Funds Received its first GIIRS rating and has subsequently had the first two transactions in Fund III rated. 2 Huntington Capital achieves meaningful impact within the underserved communities in which we invest.

3 HUNTINGTON CAPITAL The Evolution of Huntington Capital as an Impact Investor Founded in 2000, Huntington Capital is a mezzanine debt and structured equity fund focused on the lower middle market with a mission to generate top quartile returns while having a positive impact on underserved businesses and their communities. The Fund s mission was developed as a result of the background of the team in building a firm that would not only provide access to capital to underserved companies, but also provide good quality jobs with employee benefits through its portfolio companies for low to moderate income employees, and providing capital to businesses located in low to moderate income communities or creating jobs in underserved communities thereby supporting a diverse workforce of LMI individuals and families. companies will be GIIRS accredited. GIIRS assessments will provide the Fund with a benchmark and feedback mechanism that we can deploy to help drive impact across the portfolio. In addition, lessons learnt around corporate governance and backing strong management teams will put Fund III in a strong position for continued success. Our focus on job growth and diversity both ethnic and gender does not only extend to portfolio companies but the Fund itself. We are excited by the new additions to our team and look forward to their contribution to the next phase of Huntington Capital as we seek to continue playing a significant role as an impact investor in the underserved lower middle market. The Fund added new team members during the course of 2013: Frank Mora joining as principal in February 2013 Nick Lopez joined as Senior Associate in June 2013 Debbie Fritzer joined as Controller in July 2013 Jen White joined as Administration Manager in October 2013 Craig Pickett joined as Associate in October 2013 The experience gained from over 13 years of successful operations across two predecessor Funds deploying capital into the underserved lower middle market has positioned the Fund well for its next phase of growth with Fund III. We believe the lessons learned in Fund I (HC I) and Fund II (HC II) are instrumental to our continued success and will be deployed more effectively in Fund III as we continuously learn from the body of knowledge being built up by thought leaders in the impact investing field. To aid in this process the Fund became GIIRS accredited and all Fund III portfolio Generating top quartile returns while having a positive impact on underserved businesses.

4 2013 IMPACT REPORT $87 million invested capital across two impact funds Investments in 25 portfolio companies across two impact funds 75% meet SBA small business guidelines these companies are often underserved by traditional capital Focus on Underserved Communities Deployed capital has played instrumental role in providing growth capital to underserved small and medium sized companies allowing them to make the necessary investments in infrastructure to grow. 50% of portfolio company locations are in Low to Moderate Income Areas. 2,626 employees live in these regions. 4 Investing in small and medium sized businesses.

5 HUNTINGTON CAPITAL Fueling Job Growth in 2013 There are 3,527 full time employees across Huntington Capital s Fund II portfolio. Since the inception of Fund II, there has been a 7% growth in the workforce across the portfolio, representing 548 jobs. During 2013, there were 138 jobs created across the Fund II portfolio. Minority workforce grew by 82 jobs (4%) 2,130 employees or 63% of workforce identifies itself as ethnic minorities Female workforce grew by 94 jobs (7%) 1,510 employees or 43% of workforce is female Employment preservation and generation in underserved communities. 5

6 2013 IMPACT REPORT Impact Investing 2.0: The Way Forward Huntington Capital has been featured as a top performing impact investment fund in a case study titled Impact Investing 2.0: The Way Forward Insight from 12 Outstanding Funds. The report was unveiled at the World Economic Forum in New York on November 7, The Impact Investor s Project is a partnership between InSight at Pacific Community Ventures, CASE at Duke University and ImpactAssets, with the goal to identify common practices driving excellent financial and social performance. With lead funding from the Omidyar Network, these organizations have been working for over two years to examine the practices of 12 outstanding impact investing funds, culled from an initial list of 350 funds worldwide. The report presents the project's findings and represents the largest public release of data on the inner workings of these impact investing funds: their origins, development, goals, leadership, investors, investees, strategies, and financial and social performance. The funds featured in the report represent over $1.3 billion of assets and a diverse cross-section of the impact investing field. The report is designed to be a resource for the broader community interested in the future of impact investing, illustrating that concurrently delivering significant social impact and financial returns that meet or exceed investor expectations is not only possible, but is being done at significant scale. 6 Delivering significant social impact and financial returns that meet or exceed investor expectations.

7 HUNTINGTON CAPITAL Commitment to GIIRS Selected for the ImpactAssets 50 Leadership and Community Building As a GIIRS Rated Fund, we are setting the standard as a leading, mission-driven fund manager, creating positive social and environmental impact in our portfolio across sector, industry and country. Our fund recognizes the importance of measuring and evaluating social and environmental performance based on credible, third-party verified standards Growing and Developing Our Portfolio Companies Tracking our social and environmental impact and the impact of our investment portfolio is an important way to understand and communicate our fund s impact on all our stakeholders. It is important for us to compare our impact over time, including the impact of our portfolio companies, and to benchmark our performance relative to other funds operating in our sector and geography. Huntington Capital has been selected for the ImpactAssets , an online resource for impact investors and their advisors. The IA 50, now in its third year, is the first publicly available database of private debt and equity impact investment fund managers. The IA 50 serves as a gateway for those interested in achieving social and/or environmental, as well as financial, returns on their investments. Fund managers included in the IA manage a combined $10.8 billion in assets within the impact investing market. The IA 50 includes a broad range of organizations spanning domestic and international geographies, sectors, asset classes and impact areas. Firms were chosen based on experience, impact, and with an eye toward reflecting the diversity of impact investment opportunities. The selection committee was chaired by ImpactAssets Chief Impact Strategist, Jed Emerson, and included experts from the CAPROCK Group, Eirene, Haas Business School, Labrador Ventures, Toniic, and UBS. We can improve our impact performance and the performance of our portfolio companies using the information we learn about our current impact, practices and policies, and think about improvements we will make in the future to enhance our overall impact. IRIS Registry Huntington Capital is now listed on the IRIS registry. IRIS metrics allow institutional investors to get visibility and additional insight into the Funds performance through a standardized set of measures that report the social, environmental and governance performance of the Fund and the underlying portfolio investments. Huntington Capital tracks over 39 IRIS Metrics. Mission-driven social and environmental impact across sector, industry and country. 7

8 2013 IMPACT REPORT Huntington Capital Fund III Huntington Capital Fund III ( HC III ) was established on the back of its successful predecessor Funds HCI and HCII which have demonstrated an ability to not only generate financial impact but social impact as well. Similar to Fund II, Fund III has committed to its investors to invest the majority of its capital in underserved businesses that primarily promote economic development and job creation. As of 12/31/13, Fund II was exceeding its goal with 80% of portfolio companies qualifying as underserved small businesses and we expect Fund III to meet its goal. In addition to our commitment in our Limited Partnership Agreement the Fund will seek to continue to deploy capital around its impact investment themes which are a core part of Huntington s mission. We are excited with the progress Fund III has made having already deployed $15 million within ten months of its formation. These three transactions display the characteristics Huntington looks for as it seeks to deploy capital including: 1. Promoting economic development in underserved communities 2. Job creation 3. Small businesses and medium sized businesses underserved by traditional capital sources 4. Located in low-and moderate-income areas or other targeted redevelopment areas 5. Companies that produce or retain permanent jobs, the majority of which are held by low- and moderate-income individuals. HC III Portfolio Companies Company Investment Date Description December 2013 January 2014 April 2014 gen-e is a leading software and IT services company delivering innovative IT process automation solutions to customers with complex, high-cost IT structures. The Company s key software product Resolve enables the automation of routine and complex IT processes. Gen-E also provides managed services in the form of annual maintenance contracts and project-based professional services Native Foods Café is the country s premiere vegan/vegetarian fast-casual restaurant, serving authentic, chef-crafted recipes, utilizing house-made and organic ingredients. Native Foods currently has 14 store locations with eight in California, one in Oregon, two in Colorado, and three in Chicago. Cubex, LLC was founded in 2008 to provide a cloud based inventory management and point of use dispensing solution in the healthcare sector. Cubex provides customers in the medical (outpatient & long term care), dental and veterinary markets with secure Point of Use POU dispensing cabinets supported by cloud based software 8 Huntington Capital is excited with the progress Fund III has made having already deployed $15M.

9 HUNTINGTON CAPITAL Huntington Capital Fund III Cont. 58 Jobs Created Across Fund III 641 Total Workers Employed $43.8M Total Revenues Restaurant IT/Software Jobs Created Number of Workers Portfolio companies well positioned for next phase of growth with Fund III. 9

10 2013 IMPACT REPORT Fund III Case Study: Native Foods Café HEALTHY DINING OPTIONS BROUGHT TO OUR COMMUNITIES Native Foods Café, a vegan/vegetarian fast-casual restaurant, is one of Huntington s newest portfolio companies, and is the fund s largest investment to date. Founded in 1994 based on Chef Tanya Petrovna s vision to share a healthy eating regimen, everything from drinks to dessert is made from scratch. The company also practices sustainable operations serving all meals on fine china and utilizing packaging products made from green materials. This investment positions Native Foods Café for aggressive growth, and enables the restaurant to bring inexpensive healthy food options to the nation. Company Attributes Strategic Growth Initiatives * 2015* 2016* 2017* 2018* Number of Operating Stores *Projections Healthy fast casual Chef crafted, scratch kitchen Everything under $ minute ticket times 2010: : 2013: : Makeover New Model and New Locations Position for Growth Accelerate Growth Exceptional guest service Promoting Healthy Communities: Native Foods hosts community days where funds are raised and then given right back to the community through local non-profit donations. In addition, the company offers free cooking demonstrations on plant based diets. Strong Growth: Native Foods Café plans to open 12 to 15 new locations this year. By 2018, the company projects that it will grow to 300+ restaurants. These new café locations will provide numerous low to moderate income jobs to people all over the nation. 10 Featured Native Foods Café Employee: Claudine, single mother of 3 Employed at Chicago Loop Location for 2+ years hours/week, earning over $20K per year

11 HUNTINGTON CAPITAL Native Foods Café Continued SIGNIFICANT JOB GROWTH IN LMI ZONES As of year-end 2013, approximately 30% of Native Foods Café stores were in low-to-moderate income LMI zones, employing: 470 part-time employees throughout the U.S. 120 of these employees are working in LMI locations (approx.) The company has already selected 15 new site locations for 2014 which will require an additional 400 part-time employees. The vast majority of these non-corporate employees will earn hourly wages, and many will likely be living in LMI communities. Given Native Foods Café plans to rollout its concept nationally, Huntington believes there exists an exciting opportunity for further job creation as many new full and part time employees are hired around the country. COMMITMENT TO SUSTAINABLE BUSINESS PRACTICES Native Foods Café evaluates significant suppliers for social and environmental impact: ENVIRONMENTAL MANAGEMENT SYSTEM INCLUDES: Policy statement documenting the organization's commitment to the environment Assessment undertaken of the environmental impact of the organization's business activities Stated objectives and targets for environmental aspects of the organization's operations Programming designed, with allocated resources, to achieve these targets Periodic compliance / auditing to evaluate programs RECYCLED/SUSTAINABLE MATERIALS & SUPPLIES USED: Recycled/sustainable input office supplies (paper, pens, notebooks, etc.) Reclaimed/reused office furniture Reusable/compostable catering supplies 50% of managerial employees are women and/or individuals from underrepresented populations.