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Resources created and curated to support the growth of impact investing, for those new to the field and for experienced practitioners.

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ImpactAssets 50: A Global Landscape of Impact Investment Fund Managers
The ImpactAssets 50 (IA 50) is the first open-source, publicly published database of experienced private debt and equity impact investment fund managers.
https://www.impactassets.org/impactassets-50

ImpactAssets 50

An Annual Showcase of Impact Investment Fund Managers

HCAP Partners

Total Assets Under Management: $100 – 249MM
Asset Class: Private Debt - Absolute Return / Notes, Private Equity
Geographic Focus:
Impact Investment Focus:
Clean Technology
Nutrition, Health and Wellness
Affordable Housing and Community Development
Fair Trade
Education and Charter Schools
Natural Resources and Conservation
Water and Sanitation
Media, Technology and Mobile
Sustainable Agriculture
Small and Medium Business Development
Microfinance/Low-Income Financial Services/Micro-insurance
Global Health

Firm Overview

Category: (None)
Founded in 2000, HCAP Partners (HCAP) is a private equity firm focused on the lower middle market.  HCAP seeks to generate above market rate returns while facilitating a positive impact in underserved businesses, their employees and their communities. HCAP is currently operating two limited partnerships and is investing its latest institutional fund, HCAP Partners III, L.P.. HCAP invests in established lower middle market businesses generating between $10-100min revenues across a selected group of industries. Investments are typically structured as mezzanine debt and preferred equity securities and are used to finance growth, acquisitions, buyouts and recapitalizations ranging between $2m-10m. HCAP's impact creation is operationally focused and based around creating high quality jobs using a framework called "The Gainful Jobs Approach". HCAP measures job quality standards at time of investment and works with portfolio company leadership to build and implement strategic roadmaps with the intent of improving job quality.
Firm Headquarters: US & Canada
Years of Operation: More than 10 years
Total Assets Under Management:
$100 – 249MM
Total Number of Investors: More than 25
% of Capital from Top 3 Investors: Less than 25%
Investment Thesis:
HCAP's investment strategy focuses on building a diversified portfolio across a number of key sectors including manufacturing, healthcare, business services and IT services / software taking into consideration company size, historical and projected performance and transaction structure.  HCAP intends to invest the majority of its capital in companies underserved by traditional capital sources, including those companies located in low and moderate income areas (LMIAs) and companies employing individuals residing in LMI areas or earning LMI wages. HCAP seeks to invest into small businesses with $10m to $100m in revenue, $1-5m in EBITDA, and $2-10m in capital requirements. Investments will typically be structured in the form of loans and under certain circumstances, HCAP will consider making opportunistic structured equity investments of up to approximately 25% of deployed capital. Funds will generally be used for growth oriented working capital, recapitalizations, acquisition of another company, or capital investment.
 
Investment Overview:
(None)

Investment Example

In 2015, HCAP provided mezzanine financing to Noribachi, a leading custom manufacturer of LED lights for high output commercial and industrial applications, based in an LMI area in Los Angeles. Noribachi's innovative LED technology is a more cost-effective and efficient technology providing savings of 60-70% in power consumption versus traditional lightbulbs. HCAP's investment supported Noribachi's growth driven by an increase in sales of custom LED products and introduction of innovative product lines. In 2015, Noribachi reported 100% revenue growth and created over 70 jobs, increasing its workforce to over 140 employees. Noribachi is one of the few manufacturing companies to provide all employees with stock options and recently implemented a $15/hr minimum wage, significantly ahead of the 2022 date set by the California legislature. Noribachi has also implemented an artisanal training program for its assembly floor workers to provide employees with opportunities for skills development and a path for advancement.

Leadership and Team

Cumulative Leadership Experience in Investing:
More than 30 years
Cumulative Impact Experience of Top Three Firm Leaders:
More than 30 years
Morgan Miller – Managing Partner More Info

Morgan Miller is a co-founder of HCAP Partners and has served as a Managing Partner since the firm’s founding in 2000. Over the past 25 years he has worked in mezzanine lending, equity investing, international banking and capital markets,financial management, strategic planning, finding solutions to troubled assets and has served on boards of various growing companies. His positions include senior vice president and regional manager for Rancho Santa Fe National Bank, and senior vice president responsible for strategic planning for Great American Bank, a $15 billion savings bank. He also worked for 10 years in international banking where he was Senior Credit and Marketing Officer responsible for all lending for Bank of America operations in Puerto Rico and the U.S. Virgin Islands. Miller has extensive workout experience and has been responsible for restructuring over $200 million in problem loans. He has been a consultant to various businesses in southern California including serving as CFO for a wireless technology company and a direct marketing life insurance company.

Tim Bubnack – Managing Partner More Info

Tim Bubnack joined HCAP Partners in June 2007 and has more than 17 years of lending, technology investment and financial experience. Prior to joining HCAP, Tim spent five years with Silicon Valley Bank as Managing Director of commercial banking activities in the San Diego region where he managed early stage and middle market banking relationships in the technology, communications and biomedical industries. Prior to joining Silicon Valley Bank in 2002, he served in senior executive positions at Comerica Ventures, Inc. and Comerica Capital Advisors where he was responsible for identifying and assessing direct equity investments and investments in venture funds. Tim also made loans in partnership with the Technology and Life Science Division of Comerica Bank. At Comerica Bank he was part of the founding team of the company's Southern California Emerging Growth Division.

Frank Mora – Partner More Info

Frank joined HCAP Partners in February 2013, and is responsible for originating, structuring, closing and monitoring portfolio investments. Prior to joining HCAP Partners, Frank was with DBI Capital, a Southern California based lower middle market private equity buyout group. Frank joined DBI in 2006 where he was responsible for sourcing and structuring investment transactions, including co-investments into two Huntington portfolio companies. Before joining DBI, Frank was a Vice President in the Fixed Income Capital Markets team at Citigroup specializing in Private Placements. Prior to joining Citigroup, he was an officer in the Venture Capital team within the Economic Development Bank for Puerto Rico.

Hope Mago – Principal More Info

Hope joined HCAP Partners in May 2009. Hope participates in the origination and analysis of new investment opportunities, investment due diligence, deal underwriting, and investment monitoring. Prior to joining HCAP Partners, Hope worked as an Analyst at the Reserve Bank of Zimbabwe where he was involved in economic policy formulation, lending due diligence for export ventures receiving funding through the Export Support Facility under the Exchange Control Division. Before that he spent a year interning at First Mutual Limited, the second-largest life insurance and money manager in Zimbabwe.

Nicolas Lopez – Principal More Info

Nicolas joined HCAP Partners in June 2013, and is responsible for originating, structuring, closing and monitoring portfolio investments. Prior to joining HCAP Partners, Nicolas was with Best Buy, Inc. in their corporate development group. Nicolas joined Best Buy in 2010 where he helped identify, evaluate and support early stage investment opportunities. He was also very involved with strategic initiatives at Best Buy, working with various cross-functional business groups to drive shareholder value. Before joining Best Buy, Nicolas worked in investment banking and investment management.

Percentage of Investment Professionals who are Women and/or Under-Represented Groups in Firm's Geographic Focus:
More than 50%
Percentage of Board Members who are Women and/or Under-Represented Groups in Firm's Geographic Focus:
More than 50%

Financial Performance

Target Financial Returns Relative to Benchmark:
Above Market Rates
Actual Performance Relative to Target Financial Returns in the Past Three Years:
In line with initial target returns
Financial Reporting Frequency to Investors or Donors
Quarterly

Impact Performance

Percentage of Total Assets Under
Management that are Impact Investments:
75% – 99%
Primary Impact Outcomes:
Alleviating poverty
Creating jobs
Increasing access to education and improving educational outcomes
Increasing access to financial services
Increasing access to healthcare services and improving health
Value-added Services Offered:
Access to markets
Business and legal training

Investments systematically include social and environmental sustainability practices in the due diligence process:
HCAP seeks to provide capital to underserved businesses that (i) tend to employ low-to-moderate income and ethnic minority employees (ii) are located in LMI zones and/or (iii) owned and operated by ethnic minorities. Since inception, 70% and 84% of capital invested in HC II and HC III, respectively, have been in underserved businesses illustrating our commitment to source and invest in deals which align with our impact focus.  In addition confirming value alignment with management teams during the diligence process, HCAP also conducts a detailed analysis of workplace practices of prospective investments. HCAP also includes language in its term sheets around participation in our impact initiatives to further align our impact focus with our invested capital.

Impact Tracking and Monitoring

Impact is Tracked:
Yes
Social and/or Environmental Impact is Reported to Investors and Donors:
Yes - on regular basis (annual or quarterly)
Third Party Validations:
Participant on steering committees or leadership roles within impact industry associations
Publisher or contributor to industry white paper or other research in impact investing

Learn More

Key Contact Name: Bhairvee Shavdia
Phone: (858) 259-7654
Mailing Address:
3636 Nobel Drive, Suite 401, San Diego, CA 92122

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Impact investments are investments made into organizations and funds that generate measurable social and environmental impact as well as financial returns.