LIMA – IDB Invest, in partnership with BlueOrchard and Global Affairs Canada, launched the first private debt fund with a gender, diversity and inclusion (GDI) investment focus in Latin America and the Caribbean. Announced in Lima this week, the fund has a target of $200 million and is part of a larger impact investing strategy to accelerate the financial inclusion of women, indigenous groups, afro-descendants, migrants, and other underserved groups in the region through a blended finance approach.

The new fund includes $100 million raised from public investors as well as investment funds managing institutional family offices and pension funds. The aim of the fund is to close financing gaps for micro, small and medium enterprises (MSMEs) in the region, using blended financing with investments from both the public and the private sectors. It will focus on three pillars including increasing inclusive solutions offered by financial institutions in the region, promoting GDI practices among financial institutions, and collecting and evaluating relevant GDI data to increase impact measurement.

In Latin America and the Caribbean, the financing gap for women-led enterprises and women-owned micro businesses in the region is nearly $100 billion. Additionally, 70% of the population is unbanked, indigenous households make up 17% of the population living in extreme poverty, and afro-descendent women are 2.5 times more likely to be chronically poor than whites. There is a continued dependency on public funds to address this challenge, and an increasing opportunity for private investments to participate.

“The impact and profitability of investing with a gender, diversity and inclusion lens is becoming increasingly known, yet there still remain significant financing gaps for women entrepreneurs, indigenous groups, afro-descendants, migrants, and other underserved groups in Latin America and the Caribbean,” said Gema Sacristan, IDB Invest’s Chief Investment Officer. “At IDB Invest, financial inclusion is a priority for us. Together with banks and other financial intermediaries, we are committed to advancing this objective to support gender equality, diversity and inclusion, and financial well-being of vulnerable populations.”

The fund’s investment guidelines in terms of race and ethnicity eligibility criteria were among the key aspects of its structuring and ensure that the identification of underserved groups is based on lessons learned by IDB Invest on the best way to identify indigenous peoples and afro-descendant populations. In addition to financing, a technical assistance facility will support market building activities and projects.

“We have been committed to inclusion for more than 20 years and have been present in Latin America and the Caribbean for more than 15 years. With this important Gender, Diversity, and Inclusion strategy, thanks to our strong partners, we can take a big step forward towards greater equality and unleash the potential of entrepreneurship for underserved groups,” said BlueOrchard’s CEO, Philipp Mueller.

The objective of the impact strategy is to advance sustainable investment, as defined within Article 9 of the SFDR regulation and addresses the United Nations Sustainable Development Goals (SDGs).

“The Government of Canada is committed to supporting new partnerships and ways to finance and drive development, particularly for excluded populations. It’s imperative that we mobilize public and private investment – and especially innovative sources of financing – for greater social, economic, and environmental impact. Canadian investments are helping to build new markets for private investment, especially with a gender lens,” said Louis Marcotte, Ambassador of Canada for Peru and Bolivia.

About IDB Invest

IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of $16.33 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.

About BlueOrchard Finance Ltd

BlueOrchard is a leading global impact investment manager and member of the Schroders Group. As a pioneering impact investor, the firm is dedicated to generating lasting positive impact for communities and the environment, while aiming at providing attractive returns to investors. BlueOrchard was founded in 2001, by initiative of the UN, as the first commercial manager of microfinance debt investments worldwide. Today, the firm offers impact investment solutions across asset classes, connecting millions of entrepreneurs in emerging and frontier markets with investors with the aim to make impact investment solutions accessible to all and to advance the conscious use of capital. Being a professional investment manager and expert in innovative blended finance mandates, BlueOrchard has a sophisticated international investor base and is a trusted partner of leading global development finance institutions. To date, BlueOrchard has invested over USD 10 billion across more than 105 countries. 260 million underserved people and MSMEs in emerging and frontier markets received access to financial and related services with the support of BlueOrchard as of December 2022. For additional information, please visit: blueorchard.com.

About GAC

Global Affairs Canada (GAC) defines, shapes and advances Canada’s interests and values in a complex global environment. They manage diplomatic relations, promote international trade and provide consular assistance. GAC also leads international development, humanitarian, and peace and security assistance efforts, and contributes to national security and the development of international law.