MICROCAPITAL BRIEF: BlueOrchard Raises $207m in Equity for COVID-19 Emerging and Frontier Markets MSME Support Fund - Adding IDB, Visa Foundation as Investors

BlueOrchard Impact Investment Managers, a member of the UK-based Schroders Group, recently announced it raised USD 207 million in the second close of its COVID-19 Emerging and Frontier Markets MSME Support Fund, which is intended to counter “the economic consequences of the COVID-19 pandemic” among micro-, small and medium-sized enterprises (MSMEs) in low- and middle-income countries. The new investors in the funding round include IDB Invest, a member of the Inter-American Development Bank (IDB) Group, which committed USD 35 million, and the US-based Visa Foundation, which committed an undisclosed sum.

Previous investors in the COVID-19 Fund that participated again in this round include Schroders Group, a private asset manager; Financial Sector Deepening (FSD) Africa Investments, a Kenya-based nonprofit seeking to reduce poverty in sub-Saharan Africa; the Japan International Cooperation Agency (JICA), a unit of the Japanese government; and development finance institutions of the German, UK and US governments. In addition, Switzerland’s State Secretariat for Economic Affairs (SECO) donated an unspecified amount of funds to the effort for technical assistance. The COVID-19 Fund had invested in a total of 14 institutions in 13 countries in Africa, Eurasia and Latin America as of early 2021.

IDB Invest CEO James Scriven stated, “Our partnership will increase the availability of private debt financing for [MSMEs]…, restoring credit worthiness and increasing the supply of emergency financing for MSMEs that seek to mitigate the severe impacts of COVID-19 on jobs and value chains.”

BlueOrchard launched the COVID-19 Fund in 2020 to fund lenders serving MSMEs in developing countries that have been disrupted by the COVID-19 pandemic. The target size of the fund is USD 350 million, and its goal is “to finance 20 institutions, serve 3 million microentrepreneurs and maintain 60 million jobs per each USD 100 million” raised.

BlueOrchard was founded in 2001 and had seven active funds as of 2020. The firm has invested approximately USD 8 billion in 562 microfinance institutions and other impact-oriented organizations in 90 emerging markets since its inception through December 2020. This includes USD 1 billion deployed in education and health as of 2020.

IDB Invest is the trade name of the Inter-American Investment Corporation. The organization focuses on promoting economic development in Latin America and the Caribbean through projects in agriculture, financial inclusion, sustainable energy and transportation. It is owned by 47 member countries. As of June 2020, IDB Invest had USD 13 billion in assets under management, deployed via 385 clients in 25 countries.

Established in 1958, IDB Group is focused on promoting “environmentally friendly” economic development via improved health, education and infrastructure in Latin America and the Caribbean. During 2019, IDB Group reports having issued USD 13 billion in loans and grants, resulting in year-end assets of USD 136 billion.

The Visa Foundation, which serves as the “philanthropic arm” of US-based payments firm Visa, seeks to assist small and medium-sized enterprises (SMEs) in financially underserved areas. During the year ending September 2019, the foundation disbursed USD 12.4 million. As of 2020, Visa has USD 81 billion in total assets.

By Harriet Ritchie, Research Associate

Sources and Additional Resources

BlueOrchard press release
https://www.blueorchard.com/second-closing-of-blueorchards-covid-19-support-fund-completed-at-over-usd-200m/

IDB Invest press release
https://www.idbinvest.org/en/news-media/idb-invest-blueorchard-help-msme-financing-mitigate-pandemic-and-support-economic-recovery

BlueOrchard homepage
https://www.blueorchard.com

BlueOrchard Impact Report 2019-2020
https://www.blueorchard.com/wp-content/uploads/BlueOrchard-Impact_Report_2019-2020.pdf

IDB Invest homepage
https://idbinvest.org/

IDB Group homepage
https://www.iadb.org/

Visa 2020 annual report
https://s26.q4cdn.com/639886258/files/doc_downloads/Visa-Inc.-Fiscal-2020-Annual-Report.pdf

Visa Foundation webpage
https://usa.visa.com/about-visa/philanthropy/visa-foundation.html

Visa Foundation 2019 financial statement
https://apps.irs.gov/pub/epostcard/cor/814503596_201909_990PR_2020101317370150.pdf

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