BIO to strengthen presence in Central America

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Increasing access to finance for local SMEs

BIO has committed USD 4 million in equity in CoreCo Central America Fund I, an SME-focused private equity fund engaged in corporate investments in Central America (Guatemala, Honduras, El Salvador, Belize, Nicaragua, Costa Rica and Panama) and the Dominican Republic. The Fund is managed by CoreCo Management, Inc.

At the end of June 2012, the fund was able to close on a total of USD 53 million, both private and public sector money. Contribution from the private sector amounts to about USD 10 million. This is an important achievement, in particular for a first time Fund/Fund manager.

CoreCo will target fast growing service industry sectors, such as business services, healthcare, IT, financial services, telecommunications, consumer goods, retail and logistics. CoreCo will make primarily USD 2-6 million investments in SMEs that have the potential to become regional leaders in their respective sectors, focusing on companies that already have a regional presence.

BIO plays a strategic role in line with its mission:

- By acting as a catalyst in capital mobilization: BIO‘s participation in the first closing is key to attract private sector money.

- By playing a pioneering role in underserved markets: BIO acting as a core investor will play a pioneering role in the Private Equity industry in Central America.

- By participating in the Limited Partners Advisory Committee: BIO will promote good corporate governance and E&S practices

Development impact

The project will have a significant impact in terms of access to finance and availability of funding for local SMEs as well as on the promotion of corporate governance:

- Increase the availability of PE financing in Central America: The Fund aims to fill a financing gap faced by Central American SMEs that have growth potential but face difficulties in acquiring long-term financing.

- Contribute to SME development: In particular, the Fund aims to improve SME’s governance and operations. The SMEs that CoreCo will invest in will: (i) directly create local jobs by hiring personnel as they grow; (ii) contribute to local economic growth by purchasing goods and services from other businesses in the region, which can also lead to indirect job creation; and (iii) pay taxes, contributing resources that may be used by governments to make improvements in local communities.

- Participate in the development of the VC/PE industry in the region by supporting the creation of additional fund management capacity.

For BIO, this is the second investment in a PE fund focused on Central America. BIO has previously invested in CASEIF II.