Impact investing. That’s the buzzword for targeting money at investments that can drive social and environmental change, as well as make a profit. While the broader socially responsible investing movement seeks to avoid doing harm — no tobacco, fossil fuel, or gun stocks, for example — impact investors want to initiate and accelerate change.
Think Bono, the lead singer of Irish rockers U2, who told CNBC in January that capitalism is “a wild beast, and if not tamed, can and has chewed up a lot of lives.” Bono gave that interview at the World Economic Forum in Davos, Switzerland, along with Bill McGlashan, with whom he cofounded the TPG Rise Fund. They opened the fund in 2017 with $2 billion, which made it the biggest impact investing fund by assets.
Yes, that’s the same Bill McGlashan who was charged this week in the nationwide college admission bribery scandal.
While impact investing has been around since about 2007, McGlashan took it to the next level with the Rise Fund, attracting big institutions as investors and creating a board that includes luminaries like John Kerry and Laurene Powell Jobs.
In other words, the master of the ethical investing universe is one of the alleged perps in the mother of all admissions scams.
“I was a bit taken aback that the founder of the Rise Fund was one of the parents named (and recorded) in the admissions scandal,” said one investor in the private fund, who asked not to be identified. “He is the king of socially responsible, ethical investing, but like most of these folks . . . it’s ‘Do as I say, not as I do.’ ”
Here's a feel for the kind of investments made by the Rise Fund, which has performed well, according to the investor. Brava is the maker of a “smart” oven that dramatically reduces energy use. Lead School is an Indian company that provides a “school in a box” designed for underserved communities. And Cellulant is a Kenyan company that provides digital payment services.
McGlashan joined TPG, a big private equity firm, in 2004, and he made his name and a ton of money by investing in fast-growing companies like Uber and Airbnb. His TPG Growth Fund became a powerful force in Silicon Valley.
But McGlashan has spent the past few years focused on the Rise Fund. He was in the process of raising $3 billion for a sequel fund — until the admissions scandal broke. McGlashan is accused of paying $300,000 to have his son’s ACT admission test score doctored by a crooked proctor, and to have a fake athletic profile created for submission to the University of Southern California.
TPG, which oversees $103 billion in assets, told me that it fired McGlashan Thursday, after earlier putting him on indefinite leave. McGlashan, according to The New York Times, says he resigned before he was terminated.
Bloomberg reports that McGlashan, in a note to board members Thursday, said he’s “deeply sorry this very difficult situation may interfere with the work to which I have devoted my life.” He added that “there are aspects of the story that have yet to emerge that I wish I could share.”
McGlashan is a “key man” for the Rise Fund, but his firing/resignation doesn’t trigger provisions that would allow investors to ask for their money back. However, TPG will allow investors who committed to the Rise Fund II to withdraw if they want to.
In January, McGlashan and Bono unveiled Y Analytics, a firm that will use metrics for assessing the impact of impact investing.
“Impact historically was more of a good intention,” McGlashan told CNBC. But Y Analytics aims to hold the Rise Fund and other investors accountable “every day with every deal, in a way that allows us to, with substance, actually measure the output,” he added.
McGlashan was all about positive returns on ethical investments. It's too bad he set ethics aside when it came to investing in his son's education.