Andes Plus Fund I, with an initial capital of US $20 million, will benefit SMEs in Colombia and Peru with resources from a Dutch development fund and two European family offices. It was launched in November 2020 with an initial focus on the two Andean countries and the possibility of expanding to other markets in the region. This investment is aimed at inclusive companies and their value chains that work with underserved, vulnerable, or low-income communities, helping to improve these populations’ income and quality of life. Companies must be committed to gender equality and promote equal opportunities.
According to Jaime Ramírez, managing partner of Andes Impact Partners (AIP), “this fund has an impact investment approach based on mezzanine debt instruments to support companies that are selling a minimum of US $1 million a year and whose business model creates income opportunities for vulnerable communities.”
The fund specifically targets companies that work in the sustainable agribusiness, lightweight manufacturing, and artisanal manufacturing sectors, as well as companies with technological solutions that help vulnerable or low-income communities increase their income or generate cost savings.
The goal is to close social gaps and create financial opportunities for companies that are committed to the growth and development of populations around them,” adds the fund manager.
Andes Impact Partners hopes to benefit between 12 and 20 companies with this new fund in Colombia and Peru.
For Flavia Santoro, president of ProColombia, the entity that accompanies the fund’s operations in the country, “this is the type of efficient investment that promotes the opportunities and inclusion we are seeking and promoting for the reactivation of our small and medium-sized companies. This is crucial to create employment and opportunities for the regional development throughout Colombia.”
Among the criteria to apply for and benefit from Andes Plus Fund I growth capital, companies must be in their growth stage, have sales of at least US $1 million per year, generate positive operating income, and require expansion capital with which, in addition to increasing sales, they would also create greater income opportunities for the communities they impact. Companies must directly impact a minimum of 500 people from vulnerable communities that participate in their operation as workers, product or service suppliers, distributors, or consumers. In addition, companies should practice gender equality principles in their policies and processes.
The fund will invest in mezzanine debt, a long-term (5-8 years), flexible financial instrument that adjusts to the companies’ cash generation profile and is repaid from their cash flows. Mezzanine debt does not imply ownership or control capital, nor is a “traditional” bank debt that requires high levels of collateral. It can provide grace periods and be structured with a fixed and variable return component that is subject to the expansion plan’s success. This means the fund shares the companies’ risk, or in other words, the fund will increase its return if the growth plan is successful.
Companies from all over the country that meet the above criteria may apply to be beneficiaries of the fund.
According to Ramírez, Andes Impact Partners is looking to increase the fund’s capital from US $20 million to US $50 million, which would allow it to expand its reach into other countries in the region and more companies. For more information, visit https://es.andesimpact.