Our investment philosophy merges the financial discipline of the private sector with the vision of sustainable development. SocialAlpha-Bastion finances businesses that can build a sustainable future for all while generating attractive financial returns.
Our investment thesis relies on the unmet needs of low- and middle-income consumers in Latin America and Sub-Saharan Africa and their growing purchasing power. The prospects for financial return are enhanced by the limited bank offerings and the terms of capital available to local early- and growth-stage SMEs.
Our investment strategy focuses on Latin America and East Africa. We identify emerging and established market leaders with annual sales of USD 200K to USD 10M, and build up fund exposure progressively as they achieve financial and impact milestones, with investments ranging from USD 250K to USD 2M per company. We embed gender analysis in our diligence process and strive to work with companies on advancing gender equality at the management and beneficiary level. Portfolio companies are typically at an inflection point where AlphaMundi’s support on reporting systems, risk management, and value chain consistency can deliver substantial added value for all.
Sample Portfolio Latin America
This portfolio company is a financial institution that provides loans to university students from low- and middle-income families who lack the resources to pay for high quality higher education. Competitive advantages include formal university partnerships, financial risk mitigation through a guarantee fund financed by the universities, fast processing of loan applications, and the ability to repay a loan early without penalties. Currently structuring the third student loans securitization for up to USD 10M to be issued on Q2 2018.
Impact: The company has helped over 12,000 students access high quality tertiary education in Mexico. It currently has 7,470 students in its portfolio, and roughly 65% are the first member of their family to pursue higher education studies and 85% are accessing credit for the first time. Bcorp’s Best for the World Award 2015. 4-star rating by GIIRS in 2016. 50% of the students are women.
This firm in our portfolio provides micro-loans to low-income people located in rural, urban and urban-fringe areas of Ecuador. Competitive advantages include its penetration in rural areas, its wide-array of product offerings, and its good reputation among foreign investors due to its steady performance. Since 2015, the company has introduced alternative income streams to its business model, such as Health Insurance and Technical Assistance programs to increase field productivity and quality of life. In recent years, the company has tightened its underwriting policies and implemented stronger monitoring processes, resulting in lower Portfolio at Risk rates that the industry average.
Impact: 66% of loan portfolio is allocated to clients in rural areas, and 41% is allocated to women clients. The company also provides basic healthcare services to 99% of its client base for USD 16 per month. Additional features to basic healthcare coverage include treatment of chronic illnesses and a microinsurance product to cover for weather catastrophes. Social Rating of BB (stable) and a recently-upgrade to its Microfinance Institutional Rating to BBB+ (stable).
Founded in 1990, this cocoa cooperative provides technical assistance to its members in order to help them increase their productivity and connect them to local and international markets. The company sells conventional, organic, fair-trade and UTZ cocoa beans. Once beans are harvested, the cooperative offers warehouse facilities to store and dry the cocoa beans of its members.
Impact: The cooperative currently has 215 members, all of whom are low-income smallholder farmers with less than 5 hectares. Up to 80% of the member’s income comes from the cultivation of the cocoa beans. The company also buys cocoa beans from 700 other families that are not direct members of the cooperative but benefit from selling their produce. All in all, the company estimates that it has benefited more than 900 small-holder farmers.
This affordable mortgage provider was established in 2013 by a construction company. It provides the clay-brick technology, house engineering, and access to finance to low-income rural families so they can build their own homes. The company helps communities form Social Housing Production Units composed of the homeowners and other community members who are compensated for their work. It also provides a savings facility for both adults and children.
Impact: To date, the company has directly benefited 270 families and more than 1,000 people. 40% of loans are taken up by women.
Sample Portfolio East Africa
Established in 2015, this portfolio company owns two coconut processing operations. The company focuses on processing retail food products (oil, cream and milk) from coconuts and sources its coconut from brokers and farmers. The main focus is on bulk coconut oil processing for export and sources from specific farmers who are Fairtrade certified and produce organic coconuts.
Impact: The company provides over 1,300 farmers with a consistent offtake market with stable prices throughout the year. This has led to increased income for the farmers with 2.4x price increases. The additional income has allowed farmers to educate their children and expand into other cash crops like cashew nuts and cassava.
This Fairtrade certified portfolio company designs and produces high quality handmade products in Rwanda, Uganda and Ghana for the home décor, kitchenware, diningware, and jewelry markets in the US. They are currently working with over 3,000 artisans, producing baskets, jewelry, vases etc for large clients like Costco, FTD (Proflowers) and Ethan Allen. The company has been able to maintain its relevance (a major problem among artisan goods) by setting up an experienced in-house design team that keeps up with seasonal fashion trends. In addition, they have overcome the challenge of scale by organizing their artisans into cooperatives with clear structures (head weavers, chairlady etc).
Impact: Currently works with approximately 3,000 rural artisans (95% being women) across Sub Sahara Africa. Although past orders haven’t resulted in full-time employment for the artisans, AAA has provided part-time employment of 12 days per month on average, earning the artisan’s extra income. Based on farmer interviews we conducted, AAA purchase price is 5.7x of local market prices, in line with the company’s Fairtrade practices of paying a fair price to artisans.
Founded in 2011, this company's mission is to transform the lives of East Africans by being their clients' energy partner for life. The company has developed a range of pay-as-you-go solar energy solutions and works with clients to incorporate their products in their home, farm, school, health centre or small business. SolarNow’s primary activity is to sell and distribute high-quality modular solar photovoltaic Home Systems (“SHS”) and accessories in combination with an end-user credit facility (“PayPlan”) with the objective to make solar energy accessible and affordable. The product is sold through a network of fully owned sales branches that offer standardized, high-quality installation and after- sales services.
Impact: From inception, the company has sold over 28k units. They currently have 14K clients on their PayPlan. The company has also sold to 35 schools, 5 clinics and 284 small businesses. Estimated energy saved from YTD sales is over 115K KWh. The company employs 975 people 32% of whom are female.
The company is a business-to-business (B2B) m-commerce and last-mile distribution platform for small and medium sized vendors in African urban markets. The company enables these vendors to order their products at a lower price via their phones, pay with M-PESA, and receive their merchandise without ever needing to leave their kiosks. The company operates on a “Buy High, Sell Low” business model. To achieve that, the company buys directly from the farm (at high prices) to eliminate numerous links and inefficiencies (brokers) along the value chain and subsequently sells at low prices to vendors.
Impact: Currently, the company currently serves ~1,820 vendors weekly out of 15,000 mapped vendors. There are currently 4,330 vendors registered on the platform. The company currently sources from 2,490 farmers. As each vendor serves on average 70 customers, the company is already reaching ~141K people weekly. Its five-years goal is to reach more than 12 million end-customers.
The company functions as a utility provider offering mass scale affordable leasing solutions to off-grid communities in Sub-Saharan Africa. Solar systems ranging from 12 to 50 watts are leased to customers for monthly payments priced at the equivalent of what the family was spending on kerosene for lighting. With the solar home system units, customers can power 3-5 lights, charge their phones, a radio, and with larger systems, a television. Integration with mobile money gives customers control and flexibility of payments.
Impact: High social impact is achieved on the environment, household beneficiaries and employees. The company mainly targets the BoP market with additional room for higher income consumers. 50% of customers reside in rural areas with 75% of customers informally employed as agriculturalists or small shop owners. Since the company’s inception, over 242K customers have had access to clean and reliable energy through the solar home system units.
This award-winning social enterprise founded in Nairobi in 2000, the company has evolved from a not-for-profit beekeeping equipment supplier to a commercial FMCG company in sourcing honey, seeds, and nuts from ~5,000 smallholder farmers in Kenya, South Sudan, and Tanzania. The company produces honey and a range of nutritious snacks. Honey Care purchases raw honey, nuts and seeds from smallholder farmers or cooperatives and then processes and packages the honey and snacks in house. Most of their sales are through domestic retail outlets. Honey has numerous nutritional benefits and is a healthy snack for children living in extreme poverty.
Impact: Since inception, the company has purchased from 5,000+ farmers, 42% of whom are female. The company prioritizes rural development and responsible sourcing and is the only honey company that can trace honey to individual farmers.