Anchor investors Microsoft, Truist tap firms to invest in MDI and CDFI banks
WASHINGTONElizabeth Park Capital Management (Elizabeth Park) and Calvert Impact announced they are teaming up on an investment fund to invest in mission-driven U.S. banks. The Mission Driven Bank Fund (the Fund) will be established to support Minority Depository Institutions (MDI) and Community Development Financial Institution (CDFI) banks through direct investment, market development and other technical support services. The Fund seeks to improve bank sustainability, promote an equitable economy, and address chronic racial gaps in access to financial services.
The Fund will focus on the approximately 300 mission-driven banks across the country that are essential in expanding access to credit in traditionally unbanked and rural communities and communities of color. MDI and CDFI banks drive access to wealth and income-building opportunities, such as owning a home, expanding a small business, or buying land, for people and families that have otherwise been underserved by the financial system.
The Fund’s anchor investors, Microsoft and Truist, selected the two firms in a competitive process. The lead firms have partnered with subadvisors Strategic Value Bank Partners and West Potomac Capital LLC, who have significant experience in financial services investing in both public and private markets, including investing in, and serving on boards of, MDI and CDFI banks. All four firms expect to serve as expert resources to portfolio companies, providing operational and technical assistance to address financial and non-financial barriers to growth.
Microsoft director of Impact Investments, Joel Combs, who was involved in the selection process, emphasized the complementary background of the two co-managers. “With impact investing, Microsoft looks to innovate, act as a catalyst, and partner to create positive change. Elizabeth Park brings specialized knowledge of regulated financial institutions, while Calvert Impact has a track record of driving impact in underserved markets through creative solutions and bringing other investors along,” Combs said. “With West Potomac Capital LLC and Strategic Value Bank Partners as sub-advisors, this truly was a case of the sum adding up to more than the parts.”
“We’re excited by the mission of this fund and this team we are working with,” said Truist’s head of corporate development and Truist Ventures, Tarun Mehta. “This is an opportunity to help MDI and CDFI banks accelerate their mission and fulfill Truist’s purpose to inspire and build better lives and communities. We look forward to partnering with other institutions that share our vision for a more inclusive and equitable financial system.”
In addition to the anchor investors, Warner Bros. Discovery has committed to the Fund, bringing the total initial commitments to $120 million, a significant milestone towards a goal of $500 million to $1 billion.
The Federal Deposit Insurance Corporation (FDIC) encouraged the establishment of the Fund.
"The FDIC is pleased that Microsoft and Truist have selected managers for the Mission-Driven Bank Fund to provide capital investment for Minority Depository Institutions and CDFI banks,” said Betty Rudolph, Director of the Office of Minority and Community Development Banking at the FDIC. ”These institutions play a vital role in their communities, offering small businesses and families access to critically needed financial products and services.”
According to Elizabeth Park President Fred Cummings, the Fund will invest across the capital structure. “The capital flexibility will match the needs with capital to create lasting improvement, a core differentiator versus a private fund’s narrow investment mandate or aggressive ROI targets,” said Cummings.
“Access to high-quality, affordable financial products is fundamental to the economic development of every community in the United States. Mission-driven banks serve those who have historically lacked access to credit and financial services, so strengthening them strengthens communities,” said Jennifer Pryce, president and CEO of Calvert Impact. “We’re honored to be selected by leading companies that recognize the problem and are stepping up to do something about it.”
Established in 2008, Elizabeth Park Capital Management is an institutional-focused, independent, and privately held alternative asset manager managing long/short equity, long-only, and bespoke products focusing on U.S. banks. EPCM uses propriety models, processes, and framework to analyze banks and construct investment portfolios. The firm supports community bank technology investment through a partnership with Strandview Capital and the Btech Consortium Fund. More at elizabethparkcm.com.
About Calvert Impact
Calvert Impact is a global nonprofit investment firm that helps investors and financial professionals invest in solutions that people and the planet need. During its 25+ year history, Calvert Impact has mobilized over $4 billion to grow local community and green finance organizations through its flagship Community Investment Note™ and structuring services. Calvert Impact uses its unique position to bring the capital markets and communities closer together. More at calvertimpact.org.
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