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Billionaire Lukas Walton’s family office accelerates impact-investing push

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Lucas Walton

Builders Vision, the investing and philanthropy platform of billionaire Lukas Walton, has shifted its $1 billion endowment into what it calls “impact investments,” leading a broader shift in family offices to connect their investing and giving.

Chicago-based Builders Vision will announce today that its Builders Initiative Foundation has moved 90% of its endowment into “mission-related” investments — investments in keeping with Builder’s broader goals of sustainability and equity. Most foundations have 20% or less of their endowments in ESG or impact investments, so the 90% level sets a new benchmark for family offices and foundations.

“If we are going to make lasting change happen, we need our mission to show up in everything we do – especially in how we commit our resources,” said Lukas Walton, the grandson of Walmart founder Sam Walton. “That’s why we are investing our endowment in companies, organizations and strategies that prioritize sustainable and equitable solutions.”

(PRO subscribers can view an exclusive interview with Walton on this news and his overall investing strategy here.)

Walton, 36, is at the forefront of a rapid generational shift in family offices, as inheritors and entrepreneurs in their 30s and 40s use their fortunes to drive social change. For decades, family offices split their philanthropy and investing — making money on one side and giving it away on the other. The new generation wants their investments to pursue the same solutions as their giving, fusing “profits with purpose.”

“We believe profit and purpose are not at odds, quite the opposite,” said Matt Knott, Builders Vision’s President and COO and a former executive at PepsiCo. “Purpose-driven businesses will be competitively advantaged going forward. The brands and companies that people feel good about will have competitive advantage.”

Billions for social change

Even as ESG investing faces a backlash and criticism of “greenwashing,” the rise of impact investing among family offices is accelerating. A Credit Suisse survey of family offices found that nearly half of family offices surveyed plan to increase their sustainable investing over the next 2-3 years. As more family wealth passes down to younger generations, and more tech wealth is created by young founders, family offices are pouring billions into start-ups, stocks and private equity aimed at social change.

“This next generation is unstoppable,” said James Gifford, head of Sustainable and Impact Advisory and Thought Leadership at Credit Suisse. “They are bringing out the best of free markets and of social innovation.”

Adds Knott, the Builders Vision president: “This new generation of family offices want to drive impact, they want to make a difference with the wealth they’re inheriting.”

Builders Vision, which has more than $4 billion in assets, includes a direct investing arm, asset management unit and philanthropy. All are aimed at three main issues: food, ocean health and energy transition. Builders Vision has assembled teams of in-house experts to fund the highest impact ideas and share them across the philanthropy, start-up and investing worlds. The Builder’s Initiative Foundation is part of the philanthropy arm of Builders Vision, which has multiple funds and pools of capital, each with their own targets and investing missions.

Philanthropy, Walton says, can’t solve the world’s biggest problems, even with government help. The big technological innovations needed in energy, agriculture and the environment will likely come from entrepreneurs. At the same time, many impact-related start-ups are too risky for traditional venture capital firms and angel investors. Walton and his team say that Builders Vision and other large family offices are uniquely positioned to fund companies and non-profits across the risk spectrum.

NGO to IPO

“We want to provide the capital solution from NGO to IPO,” said Sanjeev Krishnan, chief investment officer of S2G Ventures, the Builders Vision venture capital fund.

For instance, the oceans team at the Builders Initiative used an LLC to invest in a small start-up called Matter, a U.K.-based company developing tech solutions for capturing, harvesting and recycling microplastics. As it grew, it became an attractive venture capital investment, leading Builders’ VC arm, S2G, to recently invest seven figures.

S2G, with about $2 billion in capital, has funded 80 companies and was an early investor in SweetGreen and Beyond Meat. Its portfolio includes everything from Farmer Focus, which partners with family farms to raise organic chicken, to Common Energy, which funds community solar projects.

While Krishnan declined to give specific returns, S2G ranks in the top quartile of VC firms, according to Cambridge Associates benchmarks.

With its 90% endowment shift into mission-related investments, even the Builders Initiative Foundation endowment — which funds the philanthropy— is now focused on positive social and environmental impact. Noelle Laing, chief investment officer of Builders Initiative, said the real-return target is still 5% net of fees, which is standard for endowments.

“We think you can achieve market rates of return while integrating ESG factors and integrating an impact lens into our strategies,” Laing said. “We think it’s just smarter investing.”

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Economy

S&P/TSX composite down more than 200 points, U.S. stock markets also fall

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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.

The S&P/TSX composite index was down 239.24 points at 22,749.04.

In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.

The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.

The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.

The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.

This report by The Canadian Press was first published Sept. 6, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

S&P/TSX composite up more than 150 points, U.S. stock markets also higher

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TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.

The S&P/TSX composite index was up 171.41 points at 23,298.39.

In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.

The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.

The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.

The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.

This report by The Canadian Press was first published Aug. 29, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Investment

Crypto Market Bloodbath Amid Broader Economic Concerns

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Breaking Business News Canada

The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.

The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.

Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.

The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.

Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.

Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.

Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.

Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.

The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.

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