Deetken Impact: Promoting Gender Lens Investing in Latin America and the Caribbean
Deetken Impact is a registered Canadian impact asset manager that manages diversified portfolios of investments that generate long-term returns while driving sustainable growth and prosperity. Deetken Impact manages USD $145 million in assets across five funds that invest throughout Latin America and the Caribbean in sectors such as renewable energy, financial inclusion, education, healthcare, affordable housing, circular economy, and responsible consumption. Deetken Impact applies a robust gender lens investing (GLI) approach across investment and business activity, incorporating gender considerations and metrics from screening to exit to assess, monitor, and advance companies’ gender business practices. To advance gender objectives established in the investment process, Deetken Impact provides tailored and hands-on guidance to pipeline and portfolio companies.
Ilu Women’s Empowerment Fund
Deetken Impact launched the Ilu Women’s Empowerment Fund (the Ilu Fund) in 2016, and three years later, formed a partnership with Pro Mujer, a Latin American women’s development organization, to collaboratively manage the fund as a joint venture. As of 2023, the Ilu Fund manages USD $35MM and is fully deployed across 25 impact-focused companies that provide integrated and thoughtfully designed services for women and other underserved populations. Given strong demand for the Ilu Fund’s capital, particularly from Central America, Mexico, the Andean countries, and the Caribbean, Deetken Impact is expanding the fund to USD $70 million to continue investing in financial inclusion, clean energy, education, healthcare, and affordable housing.
The Ilu Fund has had a 7-year track record of delivering strong returns to investors, with an average annual return since inception of 6% (net of fees), including COVID-19 pandemic effects. Today, the Ilu Fund’s 25 portfolio companies are serving more than 775,000 clients of whom 75% identify as women and 26% reside in rural areas, as well as employing more than 7,500 individuals with formal and full-time work.
Results, Challenges and Lessons Learned
1 - Expanding GLI products for diverse Canadian and international investors
When the Ilu Fund was launched, there were very few Canadian capital providers for international impact and none that offered a GLI product accessible to private investors. The Ilu Fund became an important mechanism for untapping diverse capital for GLI investments. By structuring two feeder vehicles for Canadian and international investors, the Ilu Fund provides a mechanism for Canadian and international individual investors, credit unions, foundations, and private institutions to invest their capital in impact and gender-focused businesses throughout Latin America and the Caribbean.
Today, the Fund is a blended finance vehicle that includes public and private sector investors and offers different risk-return options to suit investor preferences. For instance, after successfully closing the first fundraising round from catalytic investors, the U.S. International Development Finance Corporation (DFC) provided USD $10MM in senior debt financing. Subsequently, and in response to the economic shocks driven by the COVID-19 pandemic, the Ilu Fund recognized the need to continue providing capital to portfolio companies to support their sustainability and impact in a challenging business environment. To provide more security to investors during an uncertain environment, the team raised a first-loss tranche of USD $1MM provided by catalytic investor Pro Mujer, which ultimately unlocked an additional USD $5MM in private sector capital through an impact bonds issuance.
To date, the Ilu Fund has 100 private sector investors of which 44% of individual investors identify as women. For many, their contribution to the Ilu Fund was their first gender-smart investment.
2 - Providing more than just capital: gender smart engagement with portfolio companies
The Ilu Fund uses its very own Gender Scorecard tool to assess gender performance across areas of the business including women in leadership and governance, gender smart products, services and marketing, workplace equity, value chain equity and advocacy, and community engagement. Based on the results from the gender assessment in the due diligence phase, the team establishes specific gender objectives that companies are expected to achieve over the investment period. However, throughout the first few years of capital deployment, the Ilu Fund team noticed that despite their commitment to gender equality, companies were lacking the expertise, capacity, and resources to advance the objectives on their own. As such, the Ilu Fund team identified an opportunity to accelerate that process while building capacity within company teams through hands-on technical assistance engagements.
With the support of the USAID Gender Equality and Women’s Empowerment Hub program, the Ilu Fund developed the Ilu Women’s Empowerment Program in which, among other activities, the Ilu Fund team led 15 customized gender engagements with portfolio companies. Across all projects, the Ilu Fund team trained nearly 500 business leaders of whom two-thirds identify as women. Projects directly advanced gender-smart business practices including:
New products and services for women clients alongside gender-sensitive marketing and communication strategies
Policies to incorporate and formalize Diversity, Equity and Inclusion commitments and practices
Inclusive talent recruitment and management processes
Tools, dashboards, and processes developed to strengthen gender-disaggregated data collection, management, and analysis
Importantly, the program developed greater gender awareness, knowledge, and business intelligence within company teams which ultimately improved their capacity to develop and execute inclusive and equitable commercial, talent, and operational strategies in the long-term. The program also reinforced the Ilu Fund’s thesis that it will act as a partner and steward for its portfolio companies by providing customized business support and advice to foster gender-smart and sustainable business growth.
For more information, contact Rachel Murphy, Senior Impact Officer: rmurphy@deetken.com
September, 2023
This publication is made possible by the Government of Canada's Investment Readiness Program and CAFIID’s Gender Lens Investing Community of Practice
