news - FMO commits to the Women Entrepreneurs Debt Fund

FMO committed to become a strategic partner and invest US$30 million in the Women Entrepreneurs Debt Fund, managed by IFC Asset Management Company. The fund is part of the overall Women Entrepreneurs Opportunity Facility that was launched in March 2014 by IFC and Goldman Sachs Foundation.

Gender finance is becoming an increasingly important priority of impact investors and policymakers globally, and is showing to be a high potential market opportunity. This transaction offers FMO to participate in the first of its kind debt fund and act as strategic partner and anchor investor, while being represented on the advisory board of the fund. Moreover, FMO is well positioned to optimize knowledge transfer and support advisory projects on the gender financing topic with a wider range of stakeholders.

The fund

The total targeted Fund size amounts to US$150 million. Last week’s first close amounted to USD$90 million, of which IFC, AP2 and FMO each contributed US$30 million. The Fund will provide senior loans to local financial institutions globally across emerging markets, to be on-lent to women owned SMEs (WSMEs). There is a set of defined “Impact Indicators” which should be met when selecting potential investments by the fund ensuring that development impact and truly reaching WSMEs in the markets where it is most needed is secured.

Market

It is estimated that as many as 70% of women-owned SMEs in the formal sector in developing countries are unserved or underserved by financial institutions. The credit gap for women entrepreneurs is estimated at US$287 billion. There are attractive opportunities for gender-based funders to help financial institutions focus on the WSME segments and develop sustainable strategies to address this significant market gap. This is deemed an attractive business segment for FMO.