IDB Invest, BlueOrchard Help MSME Financing to Mitigate Pandemic and Support Economic Recovery
IDB Invest, a member of the IDB Group, has provided a $35 million equity investment to the BlueOrchard Covid-19 Emerging and Frontier Markets MSME Support Fund SCSp SICAV-RAIF, a move that seeks to mitigate the effects the pandemic and support economic recovery.
With a target size of $350 million and $166 million at first closing, the Fund is mobilizing development finance institutions (DFIs) and global institutional investors’ capital at scale to provide much needed funding to micro, small and medium-sized enterprises (MSME) through banks and non-bank financial institutions (FI) across emerging markets.
The Fund is based in Luxembourg and will be managed by BlueOrchard Finance Ltd, a leading global impact investment manager with more than 20 years of experience and track record in microfinance and financial inclusion. This is a unique opportunity to partner with a global leader in financial inclusion in EMs with an extensive footprint and client base in Latin America and the Caribbean (LAC).
The Fund is increasing the availability of private debt financing in LAC for MSME FIs with a strong MSME focus, to restore their lending capacity and ultimately to increase the supply of finance for MSMEs that seek emergency funding to mitigate the severe impact of the COVID-19 crisis, such as job losses, foreclosures, and disruptions in the value and supply chains.
The Fund is expected to serve three million microentrepreneurs and maintain 60 million jobs per each $100 million invested. To mobilize capital at scale, the Fund has been designed as a blended finance vehicle with a capital structure to provide credit enhancement in the form of a first loss tranche as well as different investment options with different associated levels of risk and return profile to cater the different investors’ risk appetite objectives.
IDB Invest’s gender, diversity and inclusion (GD&I) advisory services will work with BlueOrchard to further increase the understanding of GD&I best practices and the application of the Women Empowerment Principles gender gap analysis tool (WEP) to MSME FIs in LAC, to create awareness and identify opportunities to improve gender equality in the FI’s operations and product mix. In addition, IDB Invest will join the Fund’s Advisory Committee. Furthermore, IDB Invest and BlueOrchard have agreed on an E&S Action Plan for which the Fund is developing an environmental and social management system (ESMS) in line with IDB Invest’s standards.
This transaction contributes to five United Nations Sustainable Development Goals (SDGs): No poverty (SDG 1), Gender Equality (SDG 5), Decent work and economic growth (SDG 8), Reduced inequalities (SDG 10) and Responsible consumption and production (SDG 12).
About IDB Invest
IDB Invest, a member of the IDB 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 $13.1 billion in asset management and 385 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.
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 to provide 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 more than U$8 billion across more than 90 countries. Over 215 million poor and vulnerable people in emerging and frontier markets received access to financial and related services with the support of BlueOrchard as of December 2020. For additional information, please visit: www.blueorchard.com