Deetken Impact

Why We Invest in Impact and How You Can Too

Photo by Ruth Hazlewood

Photo by Ruth Hazlewood

We are honoured to have received the MaRS Social Finance "Impact Investor of the Year" award, which "is presented to a Canadian organization or initiative that has created—or demonstrated the potential for creating—positive social or environmental impact through direct investment". We are grateful to our partner and global leader in impact investing, Oikocredit, for supporting our nomination. And we look forward to continuing to work towards sustainable investing. Receiving this award has prompted us to reflect on why we focus on impact investing and how important it is to continue to promote these investment options in Canada.

Impact investments, as opposed to traditional investments, not only focus on achieving strong financial returns, but also on delivering measurable environmental and social benefits. We promote entrepreneurship among women, provide credit to micro and small businesses, and improve access to clean energy, affordable housing and healthcare. Deetken Impact has been successfully investing in triple bottom line (financial, social, environmental) opportunities for the past decade. Our investment funds are designed to promote the achievement of the United Nations Sustainable Development Goals. Specifically, we are helping achieve good health and well-being, quality education, clean and renewable energy, and decent work and economic growth.

Promoting Impact Investing is no small task but it is one we are extremely passionate about. Our mandate is to make impact investing more accessible to both Canadian and international investors alike. And not just accredited and institutional investors as it has been traditionally the case. We want to give everyone an opportunity to better align their investments with their values regardless of their wealth and with no sacrifice to financial returns. That's why financial instruments such as Deetken Impact Bonds, which Canadians can buy from their RRSP and TFSA accounts, are becoming so popular and the preferred option for many individual investors. As Impact Investing becomes more widespread and new investing options emerge, more people can contribute towards making a more sustainable world.  We are excited to be part of this journey.

Deetken Impact at FOROMIC 2017

Plaza San Martin in Buenos Aires, Argentina

Plaza San Martin in Buenos Aires, Argentina

Elegant, precise, controlled, the Tango got the show started at the closing dinner for the 20th InterAmerican Forum on Microenterprise (FOROMIC) in Buenos Aires (Argentina) last night. Halfway through, the curtain was drawn for several minutes before raising to reveal an explosive performance of the Cumbia in honour of Barranquilla (Colombia), the host city for FOROMIC 2018. The enthusiastic applause for the tango gave way to dancing in the aisles as thrilled Colombians shouted “Bravo” in support of the performers.  The marked contrast in seeing performances of the two iconic dance styles in such quick succession kept a smile on my face right through the second half of the show.

Other contrasts in Latin America and the Caribbean (LAC) are less thrilling. By many measures it is the most economically unequal region in the world. From the Rio Grande to Cape Horn the reality behind those measures is evident. Wealth and poverty are neighbours in many cities of the region and, to echo the sentiment expressed at the closing ceremony of FOROMIC 2017, “poverty is expensive”.  Microfinance, the provision of small loans to individuals at the bottom of the economic pyramid, addresses one aspect of those costs, the higher cost of finance. By promoting financial inclusion across the economic spectrum, microfinance companies make it possible for microenterprises to access credit for investment and working capital at a lower cost and in a more secure way than is otherwise available through informal money lending.

Deetken Impact has been supporting financial inclusion in the LAC region with loans to microfinance companies for over a decade. During this time, we have seen a remarkable growth in the industry. Indeed, since the first FOROMIC was held in 1998 the number of microfinance customers in the region has grown from 1.5 million to 20 million.[1] Over 1,200 people attended the event this year and we had the opportunity to meet with dozens of them over 3 days on the 24th floor of the Sheraton hotel overlooking the Plaza de San Martin in Buenos Aires. Over the course of our conversations we met with people representing organizations in Argentina, Bolivia, Colombia, Ecuador, El Salvador, Haiti, Honduras,  Nicaragua, and Peru.

The theme of this year’s FOROMIC was the role that the digital revolution and recent technologies are playing in financial inclusion and entrepreneurial innovation in the region. The theme was explored in the context of technological acceleration, stimulating innovation, regulation, rural production, client-centeredness, smart cities, human talent, small and medium-sized enterprises, and climate finance, among others.  The conversations and panels provided further impetus for Deetken to continue to extend the offering of our Big Data and Machine Learning advisory services to our partners in the region who are offering financial, education, and health services to thousands of people.

The President of Argentina, Mauricio Macri, opened FOROMIC 2017 by highlighting that in Argentina only about 50% of the population has a bank account, and that the majority of those who do have accounts, withdraw their entire paychecks on the first day it is deposited. These observations illustrate the challenge that lies ahead for all of us working to increase financial inclusion as part of the broader effort to reduce the contrast between rich and poor throughout the LAC region.

[1] https://www.economia.gob.ar/argentina-will-host-the-inter-american-forum-on-microenterprise-foromic-annual-meeting-in-2017/

My journey through three impact success stories in Mexico

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On my most recent visit to Pro Mujer Mexico I had the opportunity to meet with three inspiring entrepreneurs and learn up-close how our investments impact real lives.  Pro Mujer is an outstanding microfinance organisation with operations across 5 Central and South American countries and Deetken Impact provides them access to capital to lend to their clients and support their operations in health and education services.

 

A Naturopathic Practice With Indigenous Roots

My first visit took place in Tezontepec, a small town about 2.5 hours east of Pachuca, home of Pro Mujer’s head office. The road narrows from freeway to rural highways through agricultural lands and eventually the narrow streets of the town centre on a hillside. We pick up Lenin, the head of the office, who also happens to be the loan officer for Marta. You can see that they know each other well, and it isn’t surprising given that Marta has been a client for 10 years and 29 loan cycles. 

Marta is an example of the success of Pro Mujer’s programmes. She has gone from selling tortillas to owning a successful business which includes nutrition and spa treatments inspired by their indigenous community.

Marta became interested in these therapies from her husband who practices in the same field.  Their house was too small to use as a full-time practice. Funding from Pro Mujer has not only allowed her to buy the land and construct a building but also for her and her daughter to earn diplomas in naturopathic medicine.  She is a specialist in medicines and her daughter in massage. Loans then allowed her to expand her services and broaden the range of products that she offers. This includes a greenhouse for medicinal plants and a special sweat lodge used in combination with other therapies.

Marta, her family, and business

Marta, her family, and business

As her business includes the use of traditional plants and techniques I am hopeful that it can help in the preservation of the region’s indigenous knowledge. What’s next for Marta? We’ll soon see as she has a  proactive personality, continuously looking to expand her knowledge and business.

 

The Neighbourhood Home Cooking Canteen

We have returned to Pachuca, an industrial city two hours east of Mexico City, and we visit Pro Mujer entrepreneur Maria de los Angeles in a sprawling part of the city outside the historic centre.  Here Maria has created Cocina Economica which means “Affordable Kitchen”. It provides popular Mexican food at low cost, yet it still includes table service so workers from the neighborhood and the school across the road can rest their legs.  

Maria had no experience managing a restaurant or a kitchen but the opportunity to rent a spot across from the busy school was too good to pass up. She opened it originally as a breakfast spot and teachers would come every day.  The teachers were followed by school staff and then more people from the area. Her loans have helped her set up her business, have cash to pay the rent up front, and slowly add tables and chairs.  

Maria has been a PM client for 3 years and 6 months and her Pro Mujer loan officer, Fabiola, has been there along her side during her journey. Before Pro Mujer, Maria took care of children and the house she lives in.  She was also selling goods via catalogue, which is a common starting point for many women in Pachuca. Maria’s loan group is now at 16 members and they are on their 12th loan cycle.  Maria finds everyone in the group to be very responsible and also very supportive of each other. 

Maria, her friend Ibis, and Pro Mujer loan officer, Fabiola

Maria, her friend Ibis, and Pro Mujer loan officer, Fabiola

These days, Cocina Economica gets quite busy and sometimes her friend Ibis, her son and daughter all help out. Despite the success, Maria is ambitious: she has heard that another similar sized restaurant is available and she may be soon taking on both businesses.

 

A Boost To The Little Corner Store

Back on the road and 475 winding and beautiful kilometers to the south we arrive in Oaxaca, an area recently affected by two powerful earthquakes. Oaxaca is among the most culturally rich locations in Mexico, its cobblestone streets and colourful colonial buildings are striking to an outsider like me. Despite its beauty, Oaxaca has significant poverty. Here I meet Maria-Elena and her daughters. 

The bold Maria-Elena and daughters Ibis and Geysi in their "bodega"

The bold Maria-Elena and daughters Ibis and Geysi in their "bodega"

Maria –Elena has been a client for 1.5 years and is into her 5th loan cycle. Before opening her store, she was a street vendor and then worked in a cookie bakery. Her daughters Ibis and Geysi, one of whom has now graduated university, previously sold these cookies from the same factory, going store-to-store.  Her store has grown from a fruit and vegetable kiosk to offering personal care products, meat, cheese and milk.  Loans have helped her to sell these higher value products and build out the store with shelving, counters and appliances. 

Her daughters, Geysi and Ibis proudly tell me their mother is in the “leading lending group” in the city. I’m thinking this healthy competition drives even more excellence from Pro Mujer clients. They are all a force: bright, charismatic and full of confidence. As I leave, I thank them for their warm hospitality and they boldly tell me that they will come visit me at my home in Canada.  I, of course, gladly extend the invitation to my new associates.

Highlights from the Caribbean Renewable Energy Forum 2017

Fernando Alvarado, CEO of the Caribbean Basin Sustainable Energy Fund

Fernando Alvarado, CEO of the Caribbean Basin Sustainable Energy Fund

Last week, we had the opportunity to attend the 9th annual Caribbean Renewal Energy Forum (CREF) in Miami, Florida. The event has grown rapidly in importance during the last couple of years, and it focuses on the emerging trends in renewable energy across this region. Among the keynote speakers during the opening ceremony, we heard from the honorable Jennifer McIntyre, Canada’s Ambassador for Climate Change. She emphasized the historical immigration links between Canada and many of the Caribbean nations, and the joint commitment to combat climate change through sustainable energy practices.

Deetken Impact was invited to the Conference by one of our partners in the region, the Caribbean Basin Sustainable Energy Fund (CABEF), whose geographical mandate includes not only the small and large Caribbean islands, but also the Central American countries that share the Caribbean basin. Fernando Alvarado, CEO of CABEF, was a keynote speaker and a panelist in the topic of how to unlock private and public sector financing for renewable energy projects.

After such a strong and devastating hurricane season, the discussion also focused on the destruction and reconstruction needed across the Caribbean. Despite all the challenges, there is cautious optimism that the recent events will force policy makers, utilities, and community leaders to plan for a more resilient and sustainable energy framework. Some of the frequently heard topics included microgrids, inter-island grid connectivity, resiliency alternatives, and energy storage.

It is noteworthy to mention the large delegation of Canadian companies present in this year’s CREF: over 40 companies, which were by far the largest contingent from outside of the Caribbean. Canada had the largest meeting facilities, and plenty of networking activities organized by Trade Commissioners from Global Affairs Canada. Given the unique challenges and opportunities across the Caribbean basin, we expect that the Deetken Impact Fund will continue to support projects in renewable energy, a key impact sector for our Fund.

Ready to make a DIFference? Deetken Impact Fund teams with Frontfundr to make it easier than ever for Canadians to invest in impact

 

Deetken Asset Management is excited to announce that Deetken Impact Bonds* are now available on the Frontfundr platform. This means that investors from across Canada can use their savings to benefit communities in Latin America and the Caribbean while earning market-based returns.

Deetken Impact Bonds are used to support a portfolio of exceptional businesses that are committed to our impact goals: decent work and economic growth, affordable and clean energy, good health and well-being and quality education for all. Examples of DIF’s investments include:

  • Financial services NGO in Ecuador, providing loans to help entrepreneurs rebuild after a devastating earthquake
  • Small run-of-river hydro project in Peru, adding clean energy to the grid with minimal adverse environmental impacts
  • Micro and small enterprise lending in Argentina, offering vital health services and business training alongside business loans

Frontfundr is an innovative platform that offers regular investors access to private market opportunities like the Deetken Impact Bonds.

If you’re ready to make a DIFference, check out our campaign on Frontfundr today!

* Deetken Impact Bonds are issued by Deetken Impact Investment Corp., a feeder vehicle for the Deetken Impact Fund. Please be aware that investments of this nature carry risks to your capital as well as potential returns. Please read all investor materials before deciding to invest. You can also learn more about informed investing on InvestRight, a program of the British Columbia Securities Commission (BCSC).

      Written by Alexa Blain, Chief Operating Officer of Deetken Asset Management Inc.

Deetken joins the B Corp Movement

At Deetken Asset Management, we are committed to identifying and supporting companies that generate sustainable returns while making a meaningful, positive contribution to their communities. Pursuing more than one “bottom line” is core to our business model and our investment philosophy.

That’s why we decided to become a Certified B Corporation.

Certified B Corporations are a new type of company which use the power of business to solve social and environmental problems. B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification to milk.

We are proud to join a growing community of over 2,100 Certified B Corps from 50 countries who have voluntarily chosen to conduct business in a way that creates value for all stakeholders, not just shareholders. In Canada, Certified B Corps include a diverse range of businesses from coffee roasters and sustainable food providers to major banks and media companies.

To become a Certified B Corporation, Deetken Asset Management participated in a rigorous evaluation process. Because most business decisions have the potential for positive impact, our operations were assessed from end to end, from our governance framework to the way we treat our workers to our environmental impact. We achieved a particularly high score on our practice of investing in businesses which have a proven and deliberate strategy to benefit the communities in which they operate, by promoting entrepreneurship or increasing access to renewable energy, affordable housing or education.

“The B Corp movement is a tremendous force for changing the way that the world does business,” said Alexa Blain, Chief Operating Officer of Deetken Asset Management. “The ultimate goal is to encourage companies to grow in a way that creates shared and durable prosperity for all. It’s a natural fit for Deetken to join this collective movement. The assessment process provided us with a new lens on our business, and we look forward to continuing to drive best practices alongside this global community of like-minded companies.”

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For more information on B Corporations, visit www.bcorporation.net.

For more information on Deetken Asset Management, visit www.deetken.com.

Fundación Covelo and DAMI: Making a Difference in Central America

On October 28th 1998, Hurricane Mitch struck Honduras and caused the worst flooding the country has experienced in close to 100 years.  In addition to claiming thousands of lives and destroying an estimated 35,000 homes, Mitch decimated one of the main markets in Tegucigalpa, the country’s capital.

In the aftermath of the disaster, most lending institutions were reluctant to provide credit to businesses that relied on a market that had been destroyed. How would these businesses repay loans, they asked, without a market to sell their products?  Without these loans, people would not be able to restart their businesses, making the impact of the hurricane even more devastating.

Fortunately, one organization was willing to provide this much needed credit. This was Fundación Covelo (“Covelo”), a pioneer of microfinance in Central America.

Today, Covelo functions as a second level institution and facilitates US$ 31.7 Million in loans to 40 microfinance institutions, which in turn serve close to 300,000 clients in rural Honduras, Nicaragua, Guatemala and El Salvador. Covelo’s support targets low-income, mostly rural households. More than 53% of Covelo’s clients are women.

Covelo has had a catalytic impact on the microfinance sector in Honduras.

The foundation has supported the drafting and approval of regulatory laws for the sector and promoted a new field of study at the national university focused on building a technical career in microfinance.

Through its MFI clients, Covelo provides or supports a range of services that have a social and/or environmental impact. These include, among other areas of focus, providing credit to micro, small and medium enterprises, including rural businesses; supporting social housing; and offering micro-insurance. 

In addition, Covelo is one of the few providers of student loans. It has not only promoted the creation of a specialized institution dedicated to educational loans but has also contributed its own funds to the project, targeting young students in Honduras in need of financial support in order to finish their studies and/or to progress to a higher or more specialized level of studies. Covelo has lent to approximately 800 low income students who have demonstrated high academic achievement.

Covelo is also committed to the generation of clean energy to serve the needs of non-electrified rural homes. An estimated 1.5 million people, approximately 30% of the rural population in Honduras, do not have access to the national electrical grid. The “Sol y Luz” (“Sun and Light”) project enables households to borrow US $ 1,000 to purchase a solar panel to generate electricity.  To date, Sol y Luz has provided electricity to over 750 families in Honduras and Nicaragua. This has allowed these families to extend their study or chore hours. It has also increased their access to radio and television as well as enabled them to charge cell phones and other electronic devices.  In short, Sol y Luz has helped increase productivity and made an enormous contribution to improving the quality of life for its beneficiaries. (Learn more about the Sol y Luz project by watching this video.)

At DAMI, we are very pleased to be in negotiations, together with Inter-American Development Bank, to provide subordinated loans to Covelo. Our contribution will help the Covelo team support the 40 microfinance institutions who with whom they work.

Learn more about Covelo by clicking here.

Deetken reflects on the Responsible Investment Association (RIA) Forum

Last month I attended the RIA Foundation & Endowment Forum in Toronto. The forum was hosted by the Responsible Investment Association (RIA), Canada's membership association for socially and environmentally responsible investment. It focused on responsible and impact investing through the incorporation of environmental, social and governance (ESG) factors.

The event was run exceptionally well with informed and engaging speakers. Discussions surfaced some of the real issues that investors face in adopting an impact focus, including accessing investment vehicles that deliver commercial risk adjusted returns, provide liquidity, and deliver measurable impact.

As investors, these issues are front of mind for us at Deetken. I was encouraged to see that they are directly addressed by the Deetken Impact Fund (DIF), one of Canada's first registered international impact investment funds. I came home feeling even more confident that our approach with the DIF is something innovative and that the Fund is in uniquely positioned to meet the needs of other investors looking to tilt their portfolio towards an impact focus.

Of special note, we were pleased to attend as special guests of our new partner Oikocredit and look forward to the next RIA event in Vancouver in 2017.

Read more about Deetken Asset Management Inc. and the Deetken Impact Fund.

Written by Samir Shah, Managing Partner and Co-founder of The Deetken Group

Oikocredit and The Deetken Group announce exempt market dealing agreement

The Deetken Group (1) and Oikocredit have entered into an Exempt Market Dealing ("EMD") Services agreement to distribute Oikocredit's securities ("Depository Receipts") in several Canadian provinces, including, but not limited to, Ontario, British Columbia and Alberta. The sale of these securities will take place by way of private placements.

"We are pleased with the agreement to help Oikocredit as an Exempt Market Dealer in several Canadian provinces," said Samir Shah, Director of The Deetken Group, "There is a strong alignment between our organizations in terms of our focus on impact investments. Oikocredit is a global leader in this investment category, and The Deetken Group is committed to continue to strengthen commercial bonds with like-minded organizations. We see this agreement as part of our mission to improve access to impact investment products for Canadians."

"We see a lot of demand for impact investments that combat poverty and contribute to sustainability in developing countries," said Eugene Ellmen, Canadian Director for Oikocredit. "This agreement permits us to reach out to accredited investors across Canada to help meet this demand."

The Deetken Group is a management consulting and investment firm based in Vancouver, Canada. With close to a decade of active investing in impact-based organizations, The Deetken Group is a pioneer in the impact investment space in Canada. Through deep financial and strategic analysis, and strong local relationships in the countries we work in, we are able to generate sustainable, long-term returns on our investments.

Oikocredit has over 40 years' experience in funding to partner organizations active in inclusive finance (including microfinance), agriculture and renewable energy. Oikocredit's loans an investments enable people living on low incomes to sustainably improve their living standards. Oikocredit finances more than 780 partners in over 70 countries and its outstanding capital totals € 940 million.

(1) Deetken Asset Management Inc. is registered as an Exempt Market Dealer in the provinces it is distributing Depository Receipts.

For further information:

Deetken Impact Fund closes

Deetken Asset Management Inc. is pleased to announce the first close of the Deetken Impact Fund (or “DIF”) -- - one of Canada’s first registered international impact investment funds.

DIF aims to deliver strong, consistent returns by investing in exceptional businesses that promote entrepreneurship and improve access to basic services, including clean renewable energy, healthcare and affordable housing. 

It has a clear double/triple-bottom line mandate: to have a measurable positive social and/or environmental impact in the communities where it operates as well as yield market-based returns.

The Fund’s geographic focus is Latin America and the Caribbean, where Deetken Asset Management has a strong pipeline of investment opportunities in sustainable mid-sized projects and businesses.

“These mid-sized business, which are financially stable and often fall below the radar for larger funds, have a strong demand for capital combined with a need for customized technical assistance,” said José Lamyin, Chief Investment Officer. “We strongly believe that by investing in and collaborating with these businesses, we are helping to create new opportunities for growth and development in their communities.”

Alexa Blain, Chief Operating Officer, added: “We are tremendously excited to be offering Canadian and international investors the opportunity to invest in a truly unique portfolio of double or triple-bottom line investments. It’s an important step in our commitment to creating high quality impact investment products that are accessible to both large and small investors.”

DIF is domiciled in Canada and managed by Deetken Asset Management Inc., a registered Investment Fund Manager, Portfolio Manager and Exempt Market Dealer with the BC and Alberta Securities Commissions. 

Deetken Asset Management Inc. is a joint venture between The Deetken Group, a Vancouver–based asset management and business advisory firm, and Cooperativa Abaco, Peru’s largest credit union. Together, these founding partners bring decades of experience in impact investments across Latin America and North America.