Triodos Microfinance Fund and Triodos Fair Share Fund, funds managed by Triodos Investment Management, together with Dutch development bank, FMO and German development bank, DEG, have made a debt investment in Promerica Financial Corporation (Promerica Group). The newest addition to the portfolio solidifies Triodos Investment Management’s SME strategy in emerging markets.
The SME strategy
Central America boasts beautiful coast lines, natural forests, and an abundance of agricultural resources. It also hosts some of the poorest countries in the western hemisphere due to economic, political, and social strife. However, the countries are rebuilding and turning their attention towards the small business community to contribute to a growing economy.
David Harleman, Senior Investment Officer at Triodos Investment Management: “Small businesses are the main source of job creation in emerging markets and subsequently contribute to local development and social cohesion. In addition, a higher employment rate can lead to a better quality of life, thus creating a wider impact in the community by positively influencing the real economy. Therefore, small-medium enterprise (SME) lending is necessary to stimulating this sector and thus facilitating local entrepreneurship.
“There is a huge credit gap of formal SMEs in emerging markets, and Promerica Group contributes to filling this gap in Central America, the Caribbean and Ecuador through SME lending; Triodos Investment Management sees the strong correlation between SME lending and local development and the potential to grow it further.”
Build locally
Banpro Grupo Promerica was founded in 1991 and became the largest bank in Nicaragua, with a strong presence in the country’s commercial and agricultural sectors, serving over 350,000 customers with a full range of financial services. Over the years, Promerica Group expanded and created a holding company, Promerica Financial Corporation, which holds equity stakes in 9 institutions in the most developing nations of Central America. Presently, Promerica Group’s subsidiary banks employ over 10,000 people and serve over 1.3 million clients.
Promerica Group operates on the notion that local banks grounded in the local community have the greatest impact. Therefore, the 9 Promerica banks each have a strong local presence through local employment and customized products that address local needs. When Promerica Group begins its operations in a country, it retains local people and operates as a retail bank, but aims to grow the SME portfolio alongside retail and eventually become a full-service commercial bank.
Developing sustainable activities
The institutions in Promerica Group’s portfolio are all in different stages of development, with a majority in the mid-size and growth space, and two that are mature and among the largest in their countries. As the institutions develop, they are growing their SME portfolios and implementing environmental and social management systems and incorporating sustainability in their core activities with business clients. Currently, there are various green loans which go towards renewable energy and sustainable agriculture.
Investing to stimulate SME
Promerica Group and Triodos Investment Management share the same vision on how to stimulate the real economy. The loan provided by Triodos Investment Management will be used to capitalize and grow the smaller institutions in the portfolio to broaden their scope in the SME segment.