In line with our goal to mobilize private capital to achieve the Sustainable Development Goals (SDGs), sustainability considerations are at the core of our investment strategy.
Mezzanine financing: an inclusive form of financing
Mezzanine financing allows companies to expand operations without giving up ownership or control and can create a more efficient financial structure. Blue like an Orange recognized the large demand for affordable mezzanine debt in emerging markets and in Latin America and the Caribbean in particular, especially coming from mission-aligned providers. This prompted Blue like an Orange to focus on filling this financing gap for entrepreneurs by focusing mainly on mezzanine financing for its first Sub-Fund, Blue like an Orange Sustainable Capital Latin America Fund I (“Latin America Fund I”).
A unique cooperation model with Development Finance Institutions
Development Finance Institutions (DFIs) have unique knowledge and resources to thoroughly source and carry in-depth investment reviews. By working with DFIs, Blue like an Orange can conduct a more cost-effective due diligence process on potential investments, have preferred access to deal flow, assess development impact using high, market leading standards, and gain better access to data on social and financial performance.
IDB Invest is the only multilateral organization devoted solely to the development of Latin America and the Caribbean through the private sector. It has around US$12.1 billion in resources under management for co-financing, and 26 regional offices. In April 2017, IDB’s President, Luis Alberto Moreno, IDB Invest Chief Executive Officer, James P. Scriven, and Bertrand Badré, CEO of Blue like an Orange, signed a memorandum of understanding to promote economic development in Latin America and the Caribbean by providing additional capital to entrepreneurs. A co-financing framework agreement was then signed in June 2018 between Blue like an Orange and IDB Invest, followed by legal agreements in December 2018 for the Fund’s first two investments.
In addition to its relationship with IDB Invest, Blue like an Orange utilizes its substantial network of contacts and partnerships with stakeholders across the region, to source and finance potential opportunities.
Assessing the impact against several measurable standards
Tangibly measuring the social progress of the investments is paramount to Blue like an Orange’s responsible investment approach.
Since the origin and goal of the Fund is to contribute to the United Nations' Sustainable Development Goals by mobilizing private capital, the impact of all transactions will be assessed against these goals, in both the screening and monitoring process. Therefore, Blue like an Orange developed two sets of instruments to evaluate the transactions against the SDGs: the “Shadow SDG Indicators” and the “Reach Targets”. Furthermore, Blue like an Orange’s transactions will be assessed against additional standards (ESG criteria and when IDB is a co-investor, IDB’s proprietary DELTA Score ) over their life cycle to take into account a wider range of sustainability impacts.
“No Trade-off” Investment Policy between sustainable impact and financial returns
Blue like an Orange believes in a “no trade-off” principle between market level rates of financial returns and sustainable development outcomes aligned with the SDGs. The Fund follows a strict due diligence process for making investment selections in line with the SDGs and Blue like an Orange’s own objectives.