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New Global Partnerships Fund to expand financing for impact businesses in Latin America

Mar 24, 2016

The Multilateral Investment Fund (MIF), member of the Inter-American Development Bank (IDB), has recently approved a US$3 million reimbursable financing and a non-reimbursable component of US$100,000 for a project that will contribute to creating the Global Partnerships Social Impact Fund (GPSI), an impact-led investment vehicle that will provide debt financing to 35 impact businesses in Latin America. Commonly referred to as “impact businesses”, these organizations benefit poor and vulnerable populations by either increasing their access to essential products or services such as microfinance, affordable healthcare or green technologies, or by generating income opportunities through employment or agricultural value chains.

Impact investing is increasingly recognized as an effective and powerful tool to help address social issues and bring about economic opportunities through market-based solutions. Impact investors seek to generate a positive social or environmental impact in addition to a financial return by channeling financing to businesses meeting three main criteria: financial and commercial viability; clear intention to achieve social or environmental benefits; and accountability on both social impact and financial outcomes. Today, Latin America and the Caribbean is considered to be the region with the largest share of impact businesses and one of the most dynamic impact investing markets. In 2014, LAC captured more than USD 2bn in impact investment commitments. However, according to GIIN and JP Morgan, in spite of its recent dynamism, the impact investing market in LAC is still incipient and at least ten years from reaching its full potential. Many businesses attempting to initiate or grow a socially driven model face a host of challenges involving financing, execution and ecosystems.

In this context, the GPSI intends to increase the supply of financing to impact businesses. The Fund will make loans to profitable businesses engaged in a diversity of impact areas, including microfinance with integrated health services, access to agricultural financing with technical assistance, and green technologies. Businesses will include microfinance institutions, cooperatives and other social businesses that deliver essential goods and services to poor and low-income populations. A significant share of the portfolio will be concentrated in financial intermediaries integrating social services and products into their business models, also known as microfinance plus.

The Fund will be managed by Global Partnerships (GP), an experienced fund manager headquartered in the U.S. with offices in Latin America. It will seek a total capitalization of USD 50 million, which will be deployed across a multi-sector and multi-country impact portfolio. The Fund will operate in Latin America and the Caribbean (LAC) as well as Sub-Saharan Africa (SSA), with LAC expected to receive about 70% of the investments.


About Global Partnerships


Global Partnerships is a fund management company based in the U.S. with a mission to alleviate poverty using sustainable approaches derived from the private sector. Founded in 1994, GP invests in and develops sustainable solutions to address poverty in LAC in areas such as microcredit, basic health care, business education, small-holder farming and green technologies. To date, the company has successfully deployed and managed five investment vehicles, reaching 54 partners and investing nearly 170 million. Learn more at www.globalpartnerships.org

About the MIF

The Multilateral Investment Fund is the innovation lab for the Inter-American Development Bank Group. It conducts high-risk experiments to test new models for engaging and inspiring the private sector to solve economic development problems in Latin America and the Caribbean. The MIF addresses poverty and vulnerability by focusing on emerging businesses and smallholder farmers with the capacity to grow and create economic opportunities. Learn more at www.fomin.org
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