FMO, the Netherlands Development Bank, has supported private sector growth in developing and emerging markets by investing in ambitious entrepreneurs for more than 45 years. With a focus on three sectors of high development impact: financial institutions, energy, and agribusiness, food & water, its core business over the years has been providing debt and equity financing to private enterprises and financial institutions globally.
As demand grew in nascent markets, FMO realized the need among institutional investors to learn from their experience and to better understand how to approach responsible investing in these markets.
Yvonne Bakkum, then Director of FMO Private Equity, believed FMO needed to move the needle and allocate resources for this kind of engagement.
“In terms of stimulation needed, DFIs are doing quite a lot. What we do need is more stimulation from mainstream institutional investors because I think they are talking a lot about impact investing but when you critically analyze what they’re really doing it’s quite marginal especially compared to how much assets under management they have,” says Yvonne.
“I think they are not ambitious enough [...] if you’re really serious about what you want to achieve you can of course change your policies and organizational structures. It should move a bit from ‘nice to have’ to ‘must have’ and the good news is thatthis is a trend that has already begun.”
She now heads FMO Investment Management, a separate entity of FMO, which supports and advises institutional investors by offering a selection of funds with different market based risk-return profiles to suit investor appetite. Their focus is on scalable projects with two indicators in mind across the portfolio: job creation and greenhouse emissions avoidance.
FMO IM’s first fund supports SME financing and closed in 2013 at EUR100 Million. FMO Investment Management recently launched a second fund jointly with NN Investment Partners for emerging market loans. This new fund is a broad based emerging markets private debt proposition with a clear impact angle. It addresses the search for yield and offers portfolio diversification benefits.
FMO Investment Management uses a double approach in its impact measurement model using inputs and outputs of client’s data but also macroeconomics statistics related to countries and sectors to determine progress.
“I would consider all of FMO’s portfolio to be impact investing which is not a point of view that is necessarily shared by all DFIs. We are a development bank and our whole purpose for existing is to have development impact. All our investments are evaluated to have sufficient impact.”
Yvonne Bakkum is moderating Workshop D2 "Impact Investing in Emerging Markets: What have we learned?" during TBLI CONFERENCE NORDIC 2015, taking place in Copenhagen on May 15-16.