IMP Matrix Rating: C4
What: AlphaMundi Social Alpha - Bastion is a private debt fund providing loans to growing SMEs in Africa and Latin America. It adopts an explicit gender lens across all of its investments by focusing on three dimensions: 1) increasing women’s access to capital, 2) promoting the provision of products and services aimed at women, and 3) promoting gender equity in the workplace. Borrowers include companies in the microfinance, affordable education, fair trade agriculture and renewable energy sectors.
Who: The fund primary benefits are entrepreneurs, employees, and the financed companies’ suppliers in the target geographies. By investing in businesses where growth is in lockstep with positive impact, Alphamundi also benefits the environment, especially through its agriculture and energy access investments.
How Much Impact: Highlights of their latest impact report reveal that positive outcomes included: broad growth in employment at companies employed in the food and ag sector (increasing by 3,000 and reaching now 17,000 supplier farmers serving AlphaMundi financed companies); an additional 120,000 solar home systems were installed by the portfolio’s off-grid solar companies, reducing CO2 emissions by over 200,000 tons; 82% low income-students accessed financing for higher education for the first time, for a total of 6,352 pupils.
Our Contribution: We provided capital to the fund at a critical time when it had been trying to increase AUM to increase its impact by triggering conditional commitments by larger institutional investors. In 2019, we also co-invested alongside the fund in Peru’s cocoa cooperative Tocache, which adopts regenerative agriculture practices such as agroforestry, selling high quality cocoa to European buyers who are happy to pay healthy premia for its unique characteristics both in terms of taste as well as sustainability. In 2022, we co-invested in Colombian fintech R5, which is helping individuals and small businesses access credit at reasonable rates.
Impact Risk: The main risk for this vehicle is that it does not reach the size to provide competitive returns: conducting loan underwriting due diligence for such small and remote companies requires equity-level scrutiny and ensuring there is a hands-on approach (which AlphaMundi does via its technical assistance provision via its Foundation): all of this is expensive! Therefore we are still hoping more investors see the impact potential of this unique strategy and that the fund’s AUM increase in the coming years.
Sample Investment: Cooperativa Agroindustrial Tocache, Peru, a cocoa producer.