Indonesia is the largest economy in South East Asia and its economy has charted an impressive growth trajectory since the 1997 Asian Financial Crisis. The main drivers of growth include a rising urbanization, a large base of domestic consumers and a young work force.
Indonesia’s economic growth has not been equitable. Only 20% of the 260 million Indonesians have benefited from the increase in economic wealth during the last decade, while 80% (more than 200 million people) have not. This results in income inequality, limited access to education, health and sanitation issues, inadequate productivity of low-income workers, high informal sector employment, and environmental challenges. Financial access to formal financial institutions is limited. Also, the country is characterized by gender inequalities. In comparison to many of its peers, Indonesian inflation has been both volatile and high over the past decade.
In Indonesia we invest through mezzanine (equity) and mezzanine (debt) instruments. As the ecosystem for impact investing is still in its early stages, we seek for other financing instrument than conventional equity which require a clear exit strategy. Many founding teams are building businesses to grow and manage beyond the typical period for equity funds to hold their investments. Therefore, we structure equity-alike debt instruments which will liquidate over time and are structured around the cash flow projections of the companies. Examples of these instruments are: convertible debt, debt with revenue share or debt with other forms of ‘kickers’. Investment ranges from USD 200k to USD 1m with an average tenor of 5 years on average. Structuring these instruments require that companies can provide robust cash flow projections.
We are an active investor, and we support our investees by participating in the Board and opening up our network and potential other resources to support the company in its growth.
We are sector agnostic and invest across sectors where positive impact is achieved for underserved population.
The dynamics and opportunities of the target country will drive the focus on specific sectors. Though the Fund is sector agnostic, the Fund invests typically in SMEs in the following sectors because of the impact potential:
Click here for the detailed investment criteria and to apply