Featured: Growth Markets

Latin America’s impact ecosystem, built over decades, is primed for takeoff. ImpactAlpha Latin America launches today to amplify the robust Latin American ecosystem of asset owners, fund managers, entrepreneurial support and policy expertise that has grown up in the past decade as impact assets under management and venture capital and other investments in the region have surged. Also key:blended financing that leverages public funding to crowd in private capital for Latin American efforts to address Sustainable Development Goals such as poverty reduction, climate resilience and access to clean energy and quality health care. That impact investing ecosystem will be on display this week at the Latin America Impact Investing Forum, known as the FLII, the region’s annual confab in Merída, Mexico. Top of the agenda: Nature-based solutions, AI for good and European investments in Latin America’s progress. “The problems and solutions are here in the Global South,” says FLII’s Carolina Puerta, even if financial resources are concentrated in the Global North. 

Dealflow: Inclusive Fintech

Blue like an Orange provides $18 million in financing to Mexican lender Fuentebuena. Monterrey-based Fuentebuena works with more than 150 municipalities in Mexico to provide payroll loans to unbanked and underbanked city workers. Through a separate product line, the lender offers lease-to-own financing for ride-sharing vehicles that run on natural gas, as opposed to crude oil-derived gasoline and diesel. Blue like an Orange provided $18 million in debt financing to support the expansion of Fuentebuena’s worker loan and vehicle leasing books. The company has deployed over 2.75 billion Mexican pesos (around $160 million) to more than 130,000 borrowers. Fuentebuena promotes “positive social impact in Mexico by increasing access to finance and promoting self-employment opportunities for underserved populations,” said Rashad Kaldany of Blue like an Orange.

Three Impact Voices: Flexible and Blended Capital

Designing catalytic loan products for impact companies in Latin America. Mexico City-based CO_Capital began in 2019 offering off-the-shelf long-term credit, including revenue-based financing, to stable enterprises looking to scale. The investment firm soon found that long-term loans did not fit the needs of early-stage enterprises, and revenue-based financing was too complex. The redesigned strategy, detailed by CO_Capital’s Alberto Gómez-Obregón in a guest post, includes term loans with a mezzanine-like risk tolerance and flexible terms, such as an interest-only grace period. A “first loss” guarantee from the US International Development Finance Corp. allows CO_Capital to take on risk while protecting LP capital. “We do not have to worry about exits,” says Gómez-Obregón, “and we can reach ‘real-economy’ companies,” including cooperatives.

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