BIO has contributed USD 375 K to the technical assistance facility of Locfund Next, an open-ended fund aimed at providing local currency financing to MFIs in the LAC region.
Type of investment
Locfund Next is an open-ended fund with the aim to provide local currency financing to Tier II and Tier III Microfinance Institutions (MFIs) in Latin America and the Caribbean (LAC). The fund builds on the experience gained in two closed-ended predecessor debt funds, Locfund I (2007) and Locfund II (2013), in which BIO participated both as an equity and debt investor. With this new fund, the manager seeks to continue serving Microfinance Institutions in the LAC region by offering local currency loans, other financial products and technical assistance.
Locfund’s approach stands out with local currency finance being at the core of their strategy, using a well-developed currency diversification model and market knowledge instead of hedging solutions. In some cases, hedging at the requested tenor is simply not available, making Locfund one of the only players providing local currency loans.
The previous funds have played an important role in supporting financial inclusion in Latin America. BIO has a good and longstanding relationship with the sponsor, BIM, who has served as a reliable partner in the region.
Technical Assistance Facility
The facility will co-finance technical assistance projects for investees of Locfund Next in the following domains:
- Digital transformation
- Management performances
- Social, environmental and corporate governance management
- Capital Market
- Knowledge dissemination
The facility will be used to improve risk management, create sustainable financing options, gain access to the capital market and support digital transformation of the investees of Locfund Next. Locfund has a good track record in the management of technical assistance facilities.
Portfolio 2021 Q4
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Cambodia, Nicaragua, Peru, Côte d'Ivoire, Kenya