Mexico City, Mexico, May 18th 202. The International Finance Corporation (IFC), a member of the World Bank Group, is providing MXN 1 billion (US$50 million equivalent) to Altum Capital, an operating vehicle of the Altum Fund that provides loans to non-bank financial institutions (NBFIs) and micro, small and medium size enterprises (MSMEs) in México.
This new investment will help improve access to finance for non-bank financial institutions (NBFIs) and MSMEs, and also boost the availability of climate finance, promoting sustainable growth in Mexico.
With the economic challenges of the COVID-19 pandemic, increasing access to long-term finance for MSMEs is crucial for Mexico to drive inclusive economic growth. While MSMEs comprise 99 percent of the country's businesses and provide more than 70 percent of jobs, they face an estimated finance gap of $163 billion.
Against this backdrop, IFC's support will allow AltumCP to finance MSMEs and NBFIs in Mexico, allowing them to grow and remain competitive in the rapidly evolving markets. The financing package will further enable NBFIs to on-lend to an underserved segment of the economy.
Moreover, IFC's investment will help AltumCP to enhance its operational capacity and grow its loan portfolio, especially for green lending. This is vital, given that Mexico is one of the largest emitters of greenhouse gases (GHG) globally. The country has committed to reduce its GHG emissions by 22 percent by 2030—a goal that IFC estimates could require up to US$791 billion in investments by 2030, especially in the energy efficiency, renewable energy, and transport sectors.
"Long-term local currency funding is limited in Mexico, and IFC's ability to provide this type of funding will allow us to serve the NBFI and MSME markets and address their funding needs. Additionally, IFC's support will help us engage with our borrower institutions to identify climate-related projects while training them in climate finance impact reporting and related international standards," said, Gerardo Legorreta, AltumCP's CEO.
Given that only 1.4 percent of financing in the Mexican banking sector is considered green, IFC's funding is critical to support private sector financiers such as NBFIs that can channel capital to a wider range of business activities that address climate change.
Juan Gonzalo Flores, country manager of IFC México, said: "In alignment with Mexico's development goals, IFC's investment will promote sustainability by establishing international green lending principles in Mexico's climate finance sector. Further, this funding will demonstrate the viability of green finance for NBFIs and SMEs, which will encourage other funders to replicate and further expand this source of financing to support the country's climate goals, contributing to a resilient growth trajectory."
In the fiscal year ending in June 2020, IFC's long-term investments in the region totaled a record US$7.1 billion, including a record US$4 billion mobilized from other investors, enabling investments to foster sustainable growth across the region, create jobs, and fight the impacts of the COVID-19 pandemic.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested US$22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
About Altum Capital
Founded in 2014, Altum Capital is a leading Private Debt Firm specialized in underwriting structured credit to NBFIs and SMEs in Mexico and selectively in Latin America. Altum Capital provides financing to companies in a broad range of industries. Over the last 7 years Altum Capital has made over 120 loan investments totaling to US$ 400 million, and currently has US$ 290 million in AuMs. For more information visit www.altumcapital.mx