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Emerging Market Private Debt

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Impact Capital Partner’s Overview

FOR INSTITUTIONAL INVESTORS ONLY – This is a female-founded Fund Manager who seeks to generate competitive financial returns PLUS positive economic, social and/or environmental impact by providing financing to Small and Medium Enterprises (“SMEs”) in very select high-growth developing economies with stable political climates and reliable legal systems.

Why? – The Importance of SMEs

SMEs play a major role in the world economy, particularly in developing economies, where micro-enterprises and small-scale enterprises account for the majority of firms and a large share of employment and, accordingly, are believed  to be the “engines” of job growth.

The Problem – Access to affordable capital

SMEs are at a natural disadvantage to larger firms in accessing debt finance, due to various factors such as: 

  • asymmetric information
  • higher transaction costs
  • under-collateralization
  • limited credit history
  • and/or lack of skills to produce sophisticated financial statements

Additionally, in many developing countries, the global economic and financial crisis in 2007-2008 exacerbated the financial constraints experienced by SMEs.

The Opportunity – A compelling supply-demand mismatch

The Manger believes the underserved nature of such a large segment of the global economy, coupled with a strong demand for capital from the SMEs themselves, has created significant opportunity for investment. Because of the current investing environment, they believe that SMEs can offer attractive investment terms in the form of…

  • current cash yield
  • deferred interest and equity warrants
  • Plus more attractive security features in the form of loan covenants and quality collateral. 
  • Additionally, as compared to larger companies, SMEs often have simpler capital structures and carry less debt, thus aiding the structuring and negotiation process and allowing for greater flexibility in structuring favorable transactions. 

The Approach – Boots-on-the-Ground Investment Partner Model

The Manager’s unique boots-on-the-ground Investment Partner model is the primary differentiator, providing investors with…

  • lower risk access to the private investment opportunities available in developing economies
  • boots-on-the-ground to mitigate idiosyncratic local market risk
  • “double” underwriting to ensure adherence to risk standards and specific client mandates
  • emerging market exposure without the volatility of public markets 
  • comprehensive diversification such that no single macro-economic factor significantly affects the portfolio

The Fund Manger believes the investment opportunity to provide growth-stage financing to SMEs is significant, and with their Investment Partner model, the ability to scale is equally significant. They currently utilize 12 Investment Partners but they have the ability to add partners as opportunities arise in other countries and/or regions. In accordance with a risk management philosophy which emphasizes a comprehensive approach to investing and asset management, Investment Partners’ strategies are tailored to the characteristics of private financing of SMEs in developing economies. This strategy brings the benefits and diversification of a fund-of-funds, but, with greater ongoing oversight, customized investments and without the additional layer of fees.

Impact Performance Goals

100% of their loans and/or invested companies meet top-down Environmental, Social & Governance (ESG) screens and key benchmarks, including…

  • Aligned with the UN’s Sustainable Development Goals
  • Conform to the IFC Exclusion List
  • Meet local and international laws and respective practices
  • In compliance with local environmental, labor, health, safety and business laws
  • Represent in writing their company’s ongoing commitment to ESG practices
    • Environmental practices such as: energy savings, waste reduction and water conservation
    • Social policies for fair hiring, compensation, maternity leave, community service and corporate donations

Plus, 100% of their borrowers commit to identify and track various bottom-up impact metrics, as defined by the GIIN’s Impact Reporting and Investment Standards (IRIS) metrics that all track to at least one of the United Nations Sustainable Development Goals (UN SDGs)

UN Sustainable Development Goals

As of 9/30/20, this manager’s borrower companies have historically mapped to 14 of the 17 SDGs, including:

  • SDG 1: No Poverty
  • SDG 2: Zero Hunger
  • SDG 3: Good Health & Well-Being
  • SDG 4: Quality Education
  • SDG 5: Gender Equality
  • SDG 7: Affordable & Clean Energy
  • SDG 8: Decent Work & Economic Growth
  • SDG 9: Industry, Innovation & Infrastructure
  • SDG 10: Reduced Inequalities
  • SDG 11: Sustainable City & Communities
  • SDG 12: Responsible Consumption & Production
  • SDG 14: Life Below Water
  • SDG 15: Life on Land
  • SDG 17: Partnerships

The Track Record

Since launching their strategy in June 2013, and as of 9/30/20*, they have… 

  • deployed over $1.38B in private debt (including trade finance & term loans)
  • In 4 regions around the globe
  • in 37 developing economies
  • to 96 SMEs 
  • supporting 42,228 permanent jobs 
  • with zero default losses
0 B
Financed*
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Developing Economies*
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Borrowers*
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Jobs Supported*

Transaction Details*

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Additional Resources

  • Manager Name & Website – Upon Request
  • Pitch Deck – Upon Request
  • Term Sheet – Upon Request
  • Full Access to Data Room – Upon Request
  • 2019 Sustainability & Impact Report – Upon Request
  • Manager’s Network of Boots-On-The-Ground Investment Partners – Upon Request

About Impact Capital Partners

At Impact Capital Partners, our mission is to connect institutional capital with the growing impact investment market to address the world’s most pressing challenges. By utilizing impact investments, institutional investors are able to generate positive, measurable social and environmental impact alongside a financial return. We are constantly finding new impact investment opportunities in both emerging and developed markets, targeting market-rate returns. Schedule a call with us HERE if you’re interested in learning more about our impact opportunities.

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Disclaimers

1 Prospective investments that are sourced through a Foreign entity or Broker-Dealer (“FBD”) are offered to U.S. Institutional Investors through an engagement with Pinnacle Capital Securities, LLC (“Pinnacle”), member FINRA / SIPC, who is authorized to chaperone the FBDs under SEC Rule 15a-6.

2 All listed investment opportunities are intended for INSTITUTIONAL INVESTORS ONLY.

3 All listed investment opportunities may or may not be profitable. They are speculative investments and, as such, involve a high degree of risk. Nothing contained above shall constitute a recommendation or endorsement to buy or sell any security or other financial instrument.

4 For Funded Opportunities, there is no guarantee that future investments will be similar.

5 Investment in a non-listed LLC involves significant risks including but not limited to: ownership is restricted; no secondary market; limitation on liquidity, transfer and redemption of ownership interest; distributions made may not come from income and, if so, will reduce the returns, are not guaranteed and are subject to management discretion.

6 Impact Capital Partners is dependent upon its Fund Mangers and FBDs to select investments and conduct operations.

7 Total facility amounts represent the proposed amounts that would be available to the borrower under an agreement. This amount may change over time.

8 Interest rates include contractual rates and accrued fees where applicable and are gross of fund fees and expenses. This metric is not a measure of investment performance nor is it necessarily indicative of distributions that the Fund Manager may provide to investors.

9 All industry updates are provided to Impact Capital Partner by their Fund Managers and FBDs.

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