ImpactAlpha Latin America | October 30, 2024

ImpactAlpha Latin America: Building Central America’s market for impact investing

Dennis Price
Puerto Quetzal, Guatemala | Photo credit: Ceri Breeze
ImpactAlpha Editor

Dennis Price

Saludos, Agents of Impact! Welcome to October’s ImpactAlpha Latin America. It was great to see Carmen Correa, Laura Ortiz, Rodrigo Villar, Justin Schwartz, Aldo Soto, Corentin Larue and so many other Latin American Agents of Impact at SOCAP24 in San Francisco. My colleague and ImpactAlpha co-founder Zuleyma Bebell will be in San Jose, Costa Rica, next week for the FLII Central America & the Caribbean. She’d love to meet up!

As always, special thanks to our ImpactAlpha Latin America partners – FLII, New Ventures, Alterna, Latimpacto, Aliança pelo Impacto, Pro Mujer, Impaqto and GSG NAB Chile. They help keep us, and you, connected to the people and places driving impact in Latin America. 

 ¡Empecemos! – Dennis Price

In this month’s newsletter:

  • Impact investing in Central America – and the Caribbean
  • Citi’s social finance strategy
  • Unlocking nature-based solutions
  • People moves, jobs opportunities and more

Putting Central America, and the Caribbean, on the impact investing map (Q&A).There wasn’t much to look at in terms of impact activity in Central America back in 2015. That’s when Daniel Buchbinder, founder of Guatemala-based business services company Alterna, approached New Ventures about launching an edition of its Latin American Impact Investment Forum in Antigua. “It started as a 250-person event,” Buchbinder recalls. With so many small countries in the region, it took some convincing to bring investors to the table. “What we’ve been doing ever since is nurturing that grain of sand we put into the ecosystem,” Buchbinder tells ImpactAlpha in a Q&A interview. “It’s been an important event for bringing investors from the world to Central America.” 

  • Centroamerica y Caribe. FLII Centroamerica kicks off its ninth edition in Costa Rica next week. A new twist: it has added “y Caribe” to the name to bring entrepreneurs, investors and ecosystem builders from the Caribbean into the fold. Buchbinder wants to replicate the work he has done with Alterna, New Ventures and other partners in putting Central America on the map for impact investing in other small and challenging markets. Haiti will be in the spotlight. “It’s complex, but there are good entrepreneurs and companies. This is an invitation and challenge to the impact ecosystem at large to put our minds together creatively to support companies making good things happen there,” says Buchbinder. 
  • Market growth. He’s optimistic because of the growth he’s witnessed in impact investing in Central America’s small and sometimes politically challenging markets. “We are seeing more activity from family offices, and more banks talking about green lending and gender lending. We’re also seeing more funds raising,” he observes. “There’s a nice combination of energy and dynamism around impact in Central America right now.”
  • Keep reading, “Putting Central America, and the Caribbean, on the impact investing map (Q&A),” by Jessica Pothering on ImpactAlpha.

Dealflow: Social Finance

With social trade loans, Citi aims to boost small business lending in Panama and El Salvador.The social finance arm of the multinational investment bank is leaning into Latin America and, this month, into Central America. Its latest deal is a $20 million social trade loan to Banesco Panama to extend financing to small and medium enterprises across Panama. The loan follows a similar, $15 million, financing for Banco Cuscatlán in El Salvador to provide credit to small businesses. Such facilities help local banks meet short-term borrowing needs while expanding finance for hard-to-reach businesses. “Latin America is a really clear focus for us,” with lower risks than other regions, Citi’s Borja Garcia Fernandez told ImpactAlpha. “There are a lot of opportunities there in terms of diversification by sector, diversification by clients and perceived risk.” The region accounted for half of the Citi unit’s global transactions last year. In 2022 and 2023, Citi’s 50 transactions in Latin America mobilized $3 billion in co-investments from impact investors such as ResponsAbility and Symbiotics, as well as the US International Development Finance Corp. and the International Finance Corp.

  • Open for business. Citi Social Finance is seeing growing demand from fixed-income impact investors. Last month, the unit closed a $50 million sustainability-linked trade loan with Banco do Brasil to grow the bank’s sustainable agribusiness portfolio and its leadership ranks of women and ethnic minorities. In July, Citi made a social commercial loan to Banco Industrial to support small businesses in Guatemala. Early this year, in the Dominican Republic, Citi structured two loans to support local trade and working capital activities at Banco Popular Dominicano and Banco Santa Cruz. Key to mobilizing more capital for the region, Fernandez says, is “explaining what is the opportunity, where is the risk and, more importantly, showing the impact.”
  • Balance sheet. Citi’s social finance arm, run by a 10-person team in London, provides trade and working capital loans from the bank’s balance sheet to financial institutions and other borrowers in 45 countries in Asia, Africa and Latin America. The group’s social goals include expanded access to education, healthcare, water, sanitation and affordable housing for low-income households. In 2020, the bank issued a $1 billion social bond to expand its mandate with additional balance sheet capital.
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Dealflow overflow. More investment news crossing our desks:

  • Impact on livelihoods. NESsT Lirio Fund expands into Brazil to invest in small enterprises that create dignified income opportunities… Rutopía, which connects sustainable tourism projects in Indigenous communities in Latin America with the global market, raised a seed round led by Elea Foundation, with participation from ATTA Impact Capital and Boosting Opportunities Fund… Starbucks backs coffee farms in Costa Rica and Guatemala.
  • Inclusive finance. Mexican fintech Albo secured a $60 million credit line from emerging markets-focused private credit fund Sixpoint Capital to enhance its credit products for consumers and SMEs… Brazil’s Asaas landed $148 million to help small businesses digitally manage their financial operations and transactions… Bamboo Capital’s Agri-Business Capital Fund invests $1 million in Colombian microfinance institution UNI2 Microcrédito SAS.
  • Sustainable AI. Scala Data Centers in São Paulo, Brazil, raised $550 million to build large-scale data centers across Mexico and South America that tap into hydropower – particularly in Brazil, which generates two-thirds of its electricity from elevated reservoirs fed by rivers and high precipitation.
  • Waste reduction. Jüsto, a vertically integrated online grocery platform in Latin America that uses AI for demand forecasting and waste reduction, raised $70 million in equity and debt from General Atlantic and HSBC México to expand primarily in Mexico.
  • Clean energy. The US Energy Department’s Loan Programs Office extended a $861 million loan guarantee to Clean Flexible Energy to finance the construction of four solar and storage projects in Puerto Rico. 

Impact Voices: Natural Capital

Unlocking billion-dollar opportunities in Latin America’s nature-based economy. Latin America’s vast forests and other ecosystems make up a carbon market that generates one-fifth of the world’s carbon credits. Investments in the region’s sunlight, wind and hydropower is estimated to grow nearly eight-fold to $31 billion in 2030, from $4 billion today. Sustainable food and land use business models that make up the bioeconomy could be worth up to $2.3 trillion per year and provide over 70 million jobs by 2030. “The region faces a unique opportunity to attract investments that drive sustainable development and minimize the negative impact on the climate and the environment,” writes Latimpacto’s Manuela Jimenez in a guest post. The time is now, says Jimenez, for investors and other actors “to engage with these transformative opportunities and contribute to a resilient and sustainable region.”

  • Green growth. Projects in these sectors often involve long lead times, higher perceived risks, and complex revenue models, making it difficult to attract traditional investments. To overcome these obstacles, blended finance has emerged as a crucial mechanism to catalyze investments in climate solutions in the region. Latimpacto is working with IDB Lab, the Green Climate Fund, Bayer Foundation, and Coca-Cola to mobilize capital for bioenterprises through the Green Catalytic Fund. With the World Resource Institute, the investor network helped create the Pan-Amazon Network on Bioeconomy to promote a sustainable locally-led bioeconomy across the Amazon with access to finance, knowledge production, and market access. Latimpacto has partnered with the Development Bank of Latin America and the Caribbean to support solutions focused on conserving and regenerating the Amazon and its related biomes.
  • Keep reading, “Unlocking billion-dollar opportunities in Latin America’s nature-based economy,” by Latimpacto’s Manuela Jimenez.

Get in the Game

🏃🏽‍♀️ On the Move

Impact measurement firm 60 Decibels has officially launched its presence in Latina America. The firm named Carla Grados Villamar and Ramiro Rejas are named co-heads of Latin America… Climate Arc launches Climate Finance Hub Brazil to upskill a diverse group of local people by producing in-depth analyses of companies’ transitions against climate goals… Sitawi launches biodiversity conservation investment blueprints.

💼 Step Up

Latimpacto is hiring a global markets and partnerships director in Bogotá… NESsT is looking for a loan officer for its Lirio Fund Andes in Lima… CREO Syndicate seeks an executive assistant to support the network’s regional president of the Americas… SVX Mexico is recruiting a director of advisory services in Mexico City… Platform for Social Impact seeks a director of communications in Puerto Rico. 

IDB Invest is hiring a climate and environment managing director… Village Capital is looking for a program and investment support contractor in Brazil… Global Partnerships seeks a director of credit in Bogota… GAWA Capital is recruiting a regional manager / senior investment officer for Latin America… International Finance Corp. seeks an investment analyst in Sao Paulo.

🤝 Meet Up

Don’t miss these upcoming impact investing events: