SME Financing in Emerging Markets
IIV Sustainable SME Debt Fund EM - Finance for Future
The Missing Middle
Microfinance is often the key to success for microentrepreneurs in developing and emerging countries. But what happens when these businesses grow into small and medium-sized enterprises? As their financial requirements are too large for microfinance institutions and too small for traditional commercial banks, there is often a lack of follow-up financing. As a result, these businesses fall through the middle when it comes to financing, which is why they are also known as the "missing middle."
The IIV Sustainable SME Debt Fund EM - Finance for Future invests in unsecuritized loan receivables from selected local financial institutions in developing and emerging countries that focus on financing small and medium-sized enterprises (SMEs for short). By investing in the fund, you could make a comprehensive contribution to the Sustainable Development Goals (SDGs) of the United Nations - primarily SDG 8, 9 and 10.
SME – the economic backbone
600 million new jobs must be created in developing and emerging countries by 2030 in order to feed the growing population. SMEs play an important role in this as the economic backbone of society. They create jobs and help people achieve greater prosperity. However, according to the World Bank, they lack financing capital of around $4.5 trillion. In developing and emerging countries, 44 percent of all SMEs – that's nine million companies after all – have inadequate access to the capital market. This is where our idea comes in: The fund contributes to closing this financing gap in those countries. This is to be achieved by refinancing financial institutions that grant loans to SMEs.
Criteria for granting loans
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We thoroughly screen the selected financial institutions for ESG factors and financial indicators. |
In selecting SMEs, qualitative criteria of SDGs 8, 9 and 10 and also quantitative criteria are taken into account. |
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Fund Facts
The Fund is classified as a sustainable financial product under Article 9 of the EU Sustainable Finance Disclosure Regulation.
| Fund domicile | Germany |
| Legal fund type (KAGB) |
Special fund/open-ended special AIF with fixed investment rules |
| Base currency | US-Dollar |
| Share Class Currency | Euro |
| Investment Instruments |
Unsecuritized loan receivables |
| WKN/ISIN | A3C548 / DE000A3C54891 |
| Minimum investment | 200,000 EUR |
| Distribution type | Distributing |
| Launch Date | July 1, 2022 |
| Issue of Shares | Last day of each month |
| Redemption of shares | Period of 12 months before the end of the fiscal year. In the event of unit redemption before the end of 36 months from the date of a unit purchase, a redemption fee of 2.5% of the unit value will be charged. The redemption fee is due to the special AIF. |
| Management fee | 0,5 % p. a.1 |
| Capital management company | HANSAINVEST Hanseatische Investmentgesellschaft GmbH |
| Fund Manager | Invest in Visions GmbH |
| Custodian | Donner & Reuschel AG |
1 This seed share class is to be closed at a volume of EUR 100 million or after three years at the latest. Further inflows of funds will then take place in a newly launched share class.
Fund Documents
You need a token to access the fund documents. Please contact Michael Zink.
Key Investor Document (in German)
Example of a possible SME borrower
Santiago Daniel Larrea Galarraga from Ecuador acquired a franchise license in 2018 to operate one of the most popular seafood restaurants, Los Cebiches de la Rumiñahui. The business provides employment for 16 people and impacts the standard of living of 59 family members.
In 2021, the Corona pandemic hit the restaurant industry particularly hard.
Thanks to the $60,000 loan from the Alianza del Valle financial institution, Santiago Larrea was able to maintain his business, continue to provide employment for his employees, and send a positive message of strength to the community.
Mr. Larrea is grateful for Alianza del Valle's quick response and is convinced that this is only the beginning of a long-term collaboration.
About Alianza del Valle
Alianza del Valle is a savings and credit cooperative that provides quality financial products and services. It is one of the largest cooperatives in Ecuador. Alianza del Valle has been in the market for 49 years and already has eleven branches in Ecuador.
We have been working with Alianza del Valle since October 2021, investing $15 million in unsecuritized loan receivables through the IIV Mikrofinanzfonds.
Chances |
Risks |
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· Low correlation to other asset classes |
· Country and contraction risks |
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· Low volatility |
· Credit and interest rate risks |
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· Portfolio diversification |
· Limited liquidity |
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· Social return |
· Currency risks |
For further information on the fund, Edda Schröder, Founder and Managing Director, and Michael Zink, Chief Customer Officer, look forward to hearing from you.