BlueOrchard launches Impact Credit Fund

15 November 2023

  • The BlueOrchard Impact Credit Fund (“BOIC” or “the Fund”) complements BlueOrchard´s existing offering in financial inclusion.
  • Building on an extensive network and expertise in the fastest-growing regions and the significant capital needs in emerging markets, the strategy offers institutional investors the opportunity to invest in a multi-credit portfolio that seeks an attractive risk-adjusted return and offers diversification benefits.
  • As an SFDR Article 9 fund, BOIC aims at contributing to social inclusion and reduced inequalities by capturing “3D” megatrends in emerging markets: demographics, digitalization, and decarbonisation.

The Fund’s investment scope encompasses a range of critical sectors that support social and environmental development, such as SME lending, digital payment solutions, renewable energy, and energy efficiency as well as climate adaptation solutions, amongst others. It is open to qualifying investors (subject to local regulation) through a range of share classes denominated in different currencies.

The Fund focuses on investing in a diverse portfolio of smaller financial institutions that play a crucial role in social and environmental development. Building on BlueOrchard’s outstanding investment platform in financial inclusion, it will also engage in direct lending to medium-sized businesses that are significant players in their respective market segments, hereby helping to build and enhance the re-financing market for SMEs. To achieve this, the Fund leverages BlueOrchard’s extensive network and well-established relationships with local banks, development financial institutions, specialized investment funds or other professional private debt investors.

“We see three megatrends shaping fast-growing emerging markets today: demographics, digitalisation and decarbonisation. These developments are accompanied by significant capital needs and investment opportunities, which our regional teams are seeing first-hand. We are excited to have launched an investment strategy that captures these opportunities, fills a gap in terms of both funding and impact, and complements our investment platform,” commented Philipp Mueller, CEO at BlueOrchard.

“Our team of experienced portfolio managers, impact managers, and investment officers follow a rigorous and structured investment process, drawing on our 20+ year track record in financial inclusion to ensure effective investment strategies. we are proud of our team’s expertise and look forward to continuing to provide our investors with impact investment solutions tailored to their risk/return appetite,” commented Michael Wehrle, Head of Investment Solutions at BlueOrchard.

Capturing “3D” megatrends in emerging markets

We see three major megatrends in emerging markets: the pivotal role of micro, small, and mid-sized enterprises (MSMEs) in driving growth, the increasing digitalization of financial services, and the growing opportunities in green financing. Our Fund is specifically designed to capture and capitalize on these megatrends.

Demographics: Access to financial services drives business growth

Access to financial services is vital for the growth of businesses. Currently, there is a significant financing gap for MSMEs, estimated to be around USD 5 trillion according to the World Bank. This data reveals that more than 130 million registered MSMEs, approximately 40% of the total, have unmet financing needs. Additionally, around 1.7 billion people worldwide do not have bank accounts, depriving them of payment services, credit, and savings. Our Fund addresses this gap by investing in financial institutions that provide loans to MSMEs and by directly investing in companies.

Digitalization: Growing demand for digital financial services

The demand for digital financial services is on the rise due to population and economic growth. Emerging markets have witnessed a significant adoption of digital banking and an increasing utilization of fintech apps and e-wallets. By 2025, the use of digital finance could potentially increase the GDP of emerging markets by 6%.

Decarbonisation: Green finance as a rapidly growing market

Emerging economies have a significant role to play in the global fight against climate change, particularly in the field of green finance. The potential for green finance in emerging markets is substantial. For example, green buildings alone present a USD 24.7 trillion investment opportunity by 2030 across emerging market cities. By focusing on green finance, our Fund contributes to sustainable development and addresses the challenges posed by climate change.

Source: Blue Orchard
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