Abraaj Latin America Fund II, L.P.

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Project Number: 
RG3889A-01
Expected Consideration Date by the Board: 
06/23/2015
Date Posted: 
05/22/2015
Company: 
Investee: Abraaj Latin America Fund II, L.P. ("ALAF II" or the "Fund")
Sponsoring Entity: 
Abraaj Group
Financing Requested: 
US$3,000,000 equity investment
Sector: 
Investment Funds
Location: 
Regional
Scope Objective: 

ALAF II is a multi-sector fund that will invest growth capital in middle market businesses in Latin America. The Fund is the Abraaj’s Group (“Abraaj” or the “Group”) first Latin America Fund. The Fund has a regional approach focused on Mexico, Colombia, Peru, and Chile, to take advantage of the regional integration occurring through the Pacific Alliance. Opportunistically, the Fund may invest in other countries in South America and Central America (primarily Costa Rica and Panama). The regional integration, together with Abraaj’s team value-added will contribute to the creation and improvement of the phenomenon of Latin American multinational corporations, better known as multilatinas.

Abraaj is a leading fund manager focused on emerging markets across the world, and most recently Latin America. Abraaj currently manages US$9 billion, encompassing investments in ten broad sectors and 50 countries. To date, the Group has made over 160 investments and has achieved over 70 exits in multiple differing economic environments.

The Fund will invest in middle market businesses in sectors that are related to macro-trends like growing urban centers, and regionalization with focus primarily on companies whose growth is driven by private consumption and domestic demand.

The IIC’s participation in the Fund, for up to US$3 million, is expected to play an important role in furthering the engagement of the Abraaj Group with the IDB Group and with the Latin American and Caribbean region. This would give the Fund access to: technical assistance programs, key sector regional experience and network, potential additional sources of financing for co-investments or follow-on investments in the Fund’s portfolio companies, and access to best practices in corporate governance and environmental and social standards. The success of the regional integration of the portfolio companies of the Fund will create employment opportunities and develop further business links in the Pacific Alliance.

Environmental Review: 

This is a category FI-2 project according to the IIC’s Environmental and Social Sustainability Policy because the subprojects in the Fund’s current or future portfolio are considered medium risk. Companies in which the Fund invests shall be in compliance with the IIC’s list of excluded activities and with all applicable laws, regulations, and standards regarding the environment and occupational health and safety. To enable Abraaj to better understand the IIC’s requirements, Abraaj will be required to attend the IIC’s environmental training workshop for financial intermediaries. In addition, the Fund will be required to submit annual environmental reports to the IIC.

One of the basic principles of the Fund’s investments is the implementation of best environmental, social, and corporate governance practices. Abraaj is signatory to the United Nations-backed Principles for Responsible Investment and the United Nations Global Compact. In 2008, the Fund developed the Abraaj Sustainability Index that measures the development impact of the Group’s investments according to six key factors, including parameters on health and safety, environment, and social impact. This index enables each company to track its own progress and thereby continue to improve with the support of Abraaj.