Project Disclosures Project Name: Adobe Capital Project Number: ME4016A-01 Expected Consideration Date by the Board: 12/03/2013 Date Posted: 10/18/2013 Investment Summary Company: Adobe Social Mezzanine Fund I L P (Investee) Sector: Investment Funds Country: México Scope Objective:
Adobe Social Mezzanine Fund I Limited Partnership (“Adobe” or the “Fund”) supports the growth of sustainable (from a financial, social and environmental perspective) SMEs which have adopted innovative business models focused on commercializing environmentally friendly products and/or alleviating poverty by serving underprivileged segments of the population. The Fund targets a number of different sectors that provide products and services to the base-of-the-pyramid, as well as agribusiness, water, recycling and waste management, clean tech and clean energy, and ecotourism. As of October 2013, Adobe has already made one investment, and has commitments from investors for US$15.9 million. The Fund’s final closing is expected to reach US$20 million by early 2014.
The Fund will invest in 8-10 Mexican SMEs by providing flexible financing solutions through quasi-equity, equity and debt that will be used for working capital, purchase of long-term assets, company expansions, and acquisitions. The Fund will work closely with target SMEs to identify their real needs and offer creative financial structures which (i) properly align incentives; (ii) adequately support the growth of social enterprises; and, (iii) maximize their profitability and probability of success to continue pursuing their social missions.
The Fund leverages New Venture Mexico’s (“NVM”) existing technical assistance platform which has supported more than 200 sustainable SMEs since 2004. The Fund’s access to the NVM business accelerator, mentor network, institutional third-party relationships and deep local industry knowledge provides it with a competitive advantage in identifying the most promising SMEs within the social impact segment in Mexico, while helping reduce the Fund’s costs.
The IIC’s participation in the Fund, for up to US$2.5 million, is expected to play an important role in providing Adobe with a direct link with the IDB Group. 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.
Other investors in the Fund include: DEG, Mexico Ventures, CAF, and other institutional investors.