ESG, blockchain, LatAm fintech on private equity agenda

A wide array of issues related to fintech were discussed during IFC’s 21st annual Global Private Equity Conference (GPEC) in association with EMPEA (Emerging Markets Private Equity Association). The IFC is the International Finance Corporation, a sister organization to the World Bank.

Welcome keynote

“There’s a need for investors and fund managers to agree on a common set of principles to invest in the impact investing space. For the first time we have a common set of standards.” Newly appointed president of the World Bank Group, David Malpass, opened the first day of GPEC with a review of the Bank’s current work and objectives, including applauding the IFC’s recently released Operating Principles for Impact Management (the Principles) for consolidating the standards for impact in the market. Malpass also emphasized the importance of debt transparency in obtaining capital and building emerging economies. Building up transparency is a major mission for the World Bank going forward. He cited his travels to Mozambique and lessons learned there as the country is still recovering from its debt disclosure crisis. Globally, the World Bank is increasing the country-level focus of its programs, with plans to accelerate the decentralization of the Bank’s work to the relevant country offices as part of this process.

Keynote conversation: releasing $150 trillion of blocked assets in emerging markets

Erik Bethel of the World Bank Group interviewed Hernando de Soto of the Institute for Liberty and Democracy on ways to employ blockchain technology to access more than USD150 trillion in locked assets in emerging markets. Using the example of mining assets in Peru, where local communities are not benefitting from corporate exploration of the resources for which they have long been the custodians, de Soto elaborated on how tokenization of the profits from such businesses can empower and strengthen local economies in a sustainable manner. Engaging the local communities as partners would then reduce conflicts and challenges preventing capital from flowing into these markets. Investors looking for untapped opportunities in EMs with high growth potential may do well to explore how technology-enabled solutions may provide the means to access these opportunities in a manner that mitigates political upheavals and have a positive impact on local economies.

The rise of Latin American tech

Jennifer McLeod Petrini of IFC interviewed a diverse panel of technology investors in Latin America adopting strategies from early-stage venture capital to growth equity, including Francisco Alvarez-Demalde of Riverwood Capital Partners, Gonzalo Costa of NXTP Labs, Eduardo Michelsen-Delgado of Kandeo and Jorge Steffens of Oria Capital. The panel kicked off with an examination of Latin American technology startups and their role solving current structural inefficiencies in the region’s economies. The increasing adoption of financial technology carries the potential to transform local communities in Latin America by reaching populations that currently have no access to financial services. Entrepreneurs in Latin America often adapt solutions that have worked in other markets and implement them to solve unique local issues. The panel noted that even with the region’s technology ecosystem displaying rapid growth, it still faces a scarcity of available financing, providing an opportunity for private investors to step in.

In a recent article profiling LatAm fintech, media outlet Finextra noted while the region is playing catch up in many respects, there’s major momentum as well. For example, the estimated total number of fintechs in the region increased from 619 to over 1100 during 2017-18, representing a 73% increase year-on-year, with Brazil (150%) and Mexico (93%) experiencing the biggest increases.

Climate change: opportunities for investors

As noted by panel moderator Daisy Streatfield, Investor Practices Programme Director at the Institutional Investors Group on Climate Change (IIGCC), the numbers for climate investments are staggering, and only growing – per IFC estimates, USD23T in these investments exists out to 2030. Speaking with Frederick Long of Olympus Capital and Dhanpal Jhaveri of Everstone Capital and EverSource Capital, the panel provided perspective from current climate-oriented investors with particular insight into India and China. Clean energy has been a vibrant sector for environmental investment, but both panelists see the most essential opportunities coming in the reverse supply chain of industries. Companies in this growing industry sector enable the recycling and repurposing of products for a new life cycle while avoiding the rising climate and financial costs of simply disposing used goods and making wholly new products. This sector will only grow in importance for both the environment and the economy.

Read the full conference note

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