As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development and has a 50-year proven track-record of empowering people to employ their skills and improve their quality of life.
These months we focus on business continuity in the wake of the COVID-19 pandemic. It is precisely now, during these times of crisis, that it is important to continue to invest in developing economies that are expected to be hit hard by the pandemic. While local governments are working hard to minimize the impact on their people and economies, we are needed now more than ever. Hence, we continue to empower entrepreneurs in developing economies to build a better world and boost resilience to withstand the pandemic.
Mid-sized universal bank in Paraguay
FMO signed a senior unsecured USD 40 mln loan facility with long-standing client Sudameris Bank in Paraguay. The bank serves primarily commercial clients with 61% of its portfolio directed to corporate clients and 33% to SMEs. The bank's portfolio is relatively diversified by sectors with the most relevant being industry, agriculture, commerce and cattle. FMO's funding will be used by Sudameris to provide loans to SMEs and corporate sub-borrowers for general purposes and at least 30% of the loan will be directed to finance green investments in line with FMO's green lending criteria aimed at energy efficiency and renewable energy.
Sudameris is a founding member of the Paraguayan sustainable finance roundtable 'Mesa de Finanzas Sostenibles'. The bank's advanced environmental and social practices and its focus on commercial clients make it an ideal partner for FMO to support and promote green investments in Paraguay. This becomes highly relevant in the context of the COVID-19 crisis. Sudameris aims to continue supporting its clients with financing for working capital and investments at a time when funding has become scarce across financial markets.
Vistaar Financial Services
Non-banking financial institution in India
FMO has signed a USD 30 mln term facility with Vistaar Financial Services, a Non-Bank Financial Institution from Bangalore, India. Established in 2010, Vistaar offers loans to predominantly small businesses in rural and semi-urban areas, for expanding working capital capacities. These companies find themselves in the ‘missing middle’ segment (too small to be served by the banks but too large to be served by the pure microfinance institutions), and require specific credit analysis, for which Vistaar has a competitive advantage. The FMO facility will be used for on-lending to micro and SME businesses, thus supporting this segment during the current economic headwinds prevailing in India, which has been hit hard by the outbreak of COVID-19.
Gajam India Pvt Ltd (operating under the brand name Dharma Life)
Social impact enterprise in India
FMO announced a loan agreement of EUR 1.2 mln to Dharma Life, an organization dedicated to poverty alleviation through rural women entrepreneurship in India. The transaction is enabled by the Access to Energy Fund, which FMO manages on behalf of the Dutch government. Dharma Life will use our loan to boost the sales of solar lights and clean cooking techniques through its entrepreneur network and partner microfinance institutions. Read the full press release.
Fortio Co Ltd
COVID Support Financing Facility
FMO committed USD 6 mln as an investment in Fortio Co. Ltd. (Fortio) which intends to support portfolio companies of Falcon House Partners Indonesia Fund I that are affected by the COVID-19 pandemic. Fortio is a special purpose vehicle used as part of a COVID Liquidity Injection Plan (CLIP). CLIP is a product created by German development bank DEG that combines downside protection secured by exit proceeds from underlying portfolio companies, the base return and upside potential. As such, the structure functions similarly to a quasi-annex fund or preferred equity facility to the Fund. Portfolio companies of the fund are mostly concentrated in consumer and healthcare sectors, with investees in food and beverages, and retail industries more heavily hit by the COVID pandemic. This financing facility allows preserving investment return for FMO’s investment in the fund, keeping thousands of jobs in affected portfolio companies and saving the investees that will continue to positively contribute to the Indonesian economy.
EDFI Management Company
Network organization of the European Development Finance Institutions
EDFI Management Company is a specialized asset management company and a subsidiary of the Association of European Development Finance Institutions (EDFI). The public mission of EDFI MC is to support market development in low- and middle-income countries and to contribute to the Sustainable Development Goals. EDFI MC focuses on business models, technologies and geographies where European DFI members are not able to operate at the desired scale given their resources and investment criteria. It accepts higher transaction costs and greater risks to enable other investors to deploy capital that they could not have invested otherwise. This investment strengthens EDFI MC’s shareholder base thereby increasing the likelihood of EDFI MC becoming an eligible party to manage financial instruments on behalf of EC.