DEG commits to Brazilian impact fund with USD150m target
Deutsche Investitions und Entwicklungsgesellschaft (DEG) is one of the investors in the Vinci Impact and Return Fund IV, contributing up to USD11.8 million to the impact fund, which has a USD150 million target.
“With our commitment we are supporting Brazilian SMEs, which are particularly important during the coronavirus pandemic. As the anchor investor in VIR IV, DEG strengthens the fund’s capital base, thereby mobilising other investors,” said Gunnar Stork, head of DEG’s Corporates/Project Finance/Funds Africa/Latin America division.
Other investors that have agreed to contribute to VIR IV include the Brazilian Development Bank (BNDES), the Inter-American Development Bank (IDB) and the French development financier PROPARCO. By the end of the first subscription round, approved commitments had already reached USD87 million.
The fund manager of VIR IV is Vinci GGN Gestão de Recursos, a Brazilian-based subsidiary of Vinci Partners Investimentos. Vinci has invested in excess of BRL4.1 billion (approximately USD1.8 billion) across 30 investments to date within diverse market cycles in recent years.
Vinci Impact and Return will continue its investment strategy of pursuing growth equity and equity-like investments in Brazil. For SMEs in Brazil, the limited supply of equity capital is an obstacle to growth, and this is where the Vinci Impact and Return Fund IV comes in, according to DEG.
The focus is on businesses in less developed regions, such as the north and north-east of the country, and enterprises managed by previously disadvantaged groups. Other important factors include positive development impact and high environmental and social standards on the part of the financed enterprises.
The fund’s sector focus includes areas currently seen as 'high importance', including education, healthcare, IT as well as healthy and environmentally friendly consumer goods. DEG has previously co-financed sustainable projects in Peru, Nigeria, Ghana, Cambodia, Asia and the Caribbean as an anchor investor.