The investment will allow Kandeo Investment Advisors to provide much-needed financing to MMEs in the context of the COVID-19 pandemic.
The objective is to contribute to strengthen the job security and local economic development of these countries.
Kandeo 3D aims to have a total capitalization of up to US$150 million.
Elizabeth Martínez de Marcano, Country Manager of IFC in the Andean Region, said:
“The productivity of middle size companies is often constrained by limited access to long-term finance.
According to the World Bank’s Enterprise Surveys database, only 35.4 percent of MME investments are financed by banks in Peru, 44.8 percent in Colombia, and 8.6 percent in Mexico.
By promoting a broader access to capital, this investment in Kandeo 3D will allow IFC to tackle the low productivity growth of MMEs that holds back the economy of these countries and fosters informality and financial uncertainty in the region”.
Eduardo Michelsen-Delgado, Kandeo’s CEO, stated:
“Strengthening the middle market could boost Latin America’s GDP growth by 50 percent, adding $1 trillion in GDP by 2030, according to a report by McKinsey & Co. Limited access to finance is one of the greatest challenges medium-sized companies face when expanding their businesses, to boost dynamic companies that provide well-paying jobs and to increase a growing middle class with spending power”.
Increasing the productivity of MMEs is key to achieve sustainable growth in Latin America and the Caribbean (LAC).
In LAC economies, MMEs are needed to fill the gap between a small number of large companies and a high number of small and often informal enterprises, or what is often referred to as the “missing middle”.
MMEs are hindered by lack of access to capital.
Most firms, even if they have access to credit from traditional commercial banks, are only able to secure short-term loans for working capital, which are not enough to modernize their businesses, boost productivity, and remain competitive in rapidly evolving markets.
IFC’s support to Kandeo 3D will help spur the growth of an alternative financing channel for middle-market enterprises, create jobs, enable financial inclusion, and ultimately drive economic diversification in the region.