The Cardano-FMO SME Finance Fund provides capital to financial institutions in developing and emerging economies with a clear objective to improve access to finance for small- and medium-sized enterprises (SMEs). Investments are characterized by market-rate returns and a focus on creating development impact.
Introduction
The SME sector is relatively underdeveloped in most developing and emerging economies. One of the most important factors that constrain further development of SMEs is limited access to finance. According to a 2010 McKinsey report, 70% of SMEs in emerging markets are still underserved, resulting in an estimated global funding gap of US$ 700-850 billion. This unmet demand for capital creates an attractive opportunity to invest in the expansion of SME portfolios in developing and emerging economies and add value to local economies.
The Fund
The Cardano-FMO SME Finance Fund is FMO’s response to this opportunity. The Fund aims at channeling institutional investment capital to the SME sector in developing and emerging countries globally. It provides debt funding to local financial institutions with a focus on SMEs. The fund aims to build a well-diversified responsible portfolio with exposure to at least 40 investments. The annualized gross return of the fund is targeted at EURIBOR +3-6% on a net basis. The fund had its final close in 2015 at EUR 153 mln. Read the press release here.
Partners
This fund is a joint-venture by FMO and Cardano (formerly ACTIAM). Cardano creates value for clients, investees and society by developing, promoting and/or distributing impact investment solutions.