Bain Capital Double Impact Fund (BCDI)

overall rating:

2.5

planets

Malina Wojtylo
7/11/2021
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Bain Capital, LP is a multi-asset alternative investment firm specializing in private and public equity, credit, venture capital, and real estate. The firm manages approximately $130 B in assets under management as of 2021 and has completed more than 940 primary and add-on investments since its start in 1984. Launched in 2017, Bain Capital Double Impact (BCDI) is a unit of the firm that focuses on impact investing through the focus areas of healthcare, sustainability, education, and workplace development. BCDI was a global recipient of the Private Equity International (PEI) Impact Investment Firm of the Year Award 2020, an industry voted award, coming in first place for the award category and solidifying its impact in the realm of impact investing. 

BCDI has a relatively low number of companies under its portfolio, which leaves little room for blurred lines and low transparency about their impact. Based on BCDI’s track record, it seems that BCDI will continue during 2021 toward higher transparency and making more impactful waves in impact investing. BCDI can directly improve their environmental impact for the future by investing in more environmental impact companies to better serve climate action initiatives and further the spread of clean energy.

What it's made of:

2.5

The BCDI Fund I launched in 2017 and closed with $390 M, having invested in 14 companies. At the time, Bain Capital had approximately $75 B in assets under management. With room to grow, BCDI began small in comparison to the total value of Bain Capital’s assets. BCDI manages over $1 B assets as of December 31, 2020, with equity investments that typically range between $20 - $80M+. In 2020, BCDI worked with the companies under their portfolio to provide necessary personal protective equipment (PPE) during COVID-19 and ensure that their financial health, social and environmental impact would not be stunted from the early tribulations of COVID-19’s impact. BCDI’s target amount to raise for the BCDI Fund II was $600 M. BCDI raised $727 M, exceeding the target amount. Now on its second fund, BCDI’s growing portfolio and increase in capital will enable the fund to spend more to expand. It would be great to see more emphasis on BCDI’s growth to become a more prominent part of Bain Capital and further the fund’s impact. 

As of April 2021, BCDI’s portfolio consists of Arosa, Vegan Fast Casual, Broadstep, HealthDrive, Hand in Hand, Living Earth, PresenceLearning, Rodeo Dental & Orthodontics, Impact Fitness, Multi-Specialty HealthCare, Rural Sourcing, SpringWorks Therapeutics, Sustainable Restaurant Group, and TeachTown. In November 2020, BCDI exited Penn Foster after its initial investment made in 2019. Mandates in the sales agreement ensure that Penn Foster will sustain its commitment to impact going forward after the exit, like all other agreements BCDI makes. BCDI is transparent in their agreements with the companies they invest in, which shows great partnership.

According to BCDI’s Year in Review for 2020, BCDI had: 6 of 13 actively managed portfolio companies with B Impact Scores above 80 (the threshold to become a B Corp) and 1 newly certified B Corp (Rodeo Dental); actively managed portfolio companies with over a year of ownership increased their B Impact Assessment score by 29% on average; 100% of actively managed portfolio companies with tied management compensation to impact metrics; 8 advanced ratings across all 8 IFC Operating Principles, as verified by Bluemark. These measurements show that BCDI is committed to maintaining a well-rounded portfolio and makes sure that no company within the portfolio falls behind in measurement of its impact.

How it's made:

2.5

BCDI’s investment philosophy is to scale mission aligned companies and accelerate transformational impact. BCDI takes active ownership by creating a partnership dynamic with the management teams of the companies under its portfolio during the investment process. The investment process considers the lifecycle of the investment. BCDI’s impact investment is one for the long-term pursuit of the companies they invest in. BCDI ensures that the companies sustain their impact practices through legal agreements in the sale process and purchase agreement. After BCDI’s exit, the company’s acquirer will be evaluated on their impact track record and must be committed to preserving the impact BCDI helped to create. This is beneficial because it helps to seamlessly ensure the impact the company makes will be continued.

The companies under BCDI’s portfolio are from a wide range of industries. Companies under BCDI’s portfolio that don’t exist for the primary goal of environmental impact are encouraged to make an environmental impact with BCDI’s guidance and innovation. This shows that BCDI is open to helping make companies more sustainable regardless of the current state of their impact, which leaves room for BCDI to help companies get on the right path. However, BCDI does not have companies under its portfolio under SDG 13: Climate Action and SDG 7: Affordable and Clean Energy, even though BCDI’s sustainability mission is to reduce environmental impact and greenhouse gas emissions. For the future, BCDI’s portfolio needs to be more inclusive of environmental impact companies to make a more direct environmental impact through their investment vehicle.

Who makes it:

2

BCDI has an experienced team of investment professionals who gain insight and guidance from the Impact Advisory Council of BCDI. The investment team works directly with the management teams of the companies under BCDI’s portfolio during the investment process. The intention of the investment team is to drive value and impact at the portfolio companies. As of 2020, the BCDI investment team had 19 investment professionals; 50% of which were from underrepresented groups, 26% women, 16% Asian, 11% African American or black, 11% LGBTQ+. BCDI seems to hold themselves accountable to creating a diverse team and are transparent about their makeup, however it is apparent that the representation of certain groups such as women need to be increased in the immediate future.

Deval Patrick, former Governor of the Commonwealth of Massachusetts, is the Founding Partner of BCDI and now Senior Advisor of BCDI. Patrick is one of BCDI’s major faces. Patrick ran in the presidential election of 2020 and defended Bain Capital during his political campaign when faced with confrontation about his association with the firm, whose dirty acquisition practices such as purchasing a struggling company and selling its parts for profit has hampered its reputation. It’s tricky to navigate running a political campaign, while being associated with a firm that has some negative connotation to its name. Patrick’s association with BCDI has a positive connotation because the fund is in tune with social and environmental impact. BDCI could potentially become a more prominent part of Bain Capital’s overall identity in the future.