IDB Invest provided a $70 million financial package to Caja La Araucana (CLA), a non-profit corporation in Chile that provides its members with social welfare benefits and services. As part of the financing, approximately $20 million was mobilized from responsAbility Investments AG. LarrainVial, a financial advisory and intermediary firm based in Chile, acted as financial advisor to Caja La Araucana in this deal.

The project seeks to expand Caja La Araucana's social credit portfolio to benefit low-income pensioners and female workers, both of which have limited access to the traditional financial system. Additionally, a smaller portion will be used to develop CLA's green social credit, a new consumer product for the purchase of electromobility and energy-efficient goods.

“Caja La Araucana is a strategic partner of IDB Invest and this project will help strengthen the Chilean financial system by increasing financial inclusion, gender equality and climate finance,” said Diego Flaiban, Financial Intermediaries Division Chief (a.i.) of IDB Invest. 

“This new partnership with Caja La Araucana marks a milestone in resource mobilization and contributes to promoting financial inclusion without increasing economic burdens for people through social loans,” said Florencia Attademo-Hirt, IDB Group Representative in Chile. 

Francisco Sepúlveda, General Manager of Caja La Araucana, commented: “This loan will allow us to increase the delivery of social financing, promoting financial inclusion and responsible borrowing, strengthening access to people who do not have it today. The income generated by the social loan is fully reinvested in benefits in areas of social welfare such as health, education and housing, among others, contributing to the sustainable development of Chile.”

Although a large part of the Chilean adult population has access to financial products, only a third simultaneously access credit, savings and cash management, with particularly low usage among older adults. The Financial Market Commission estimates a financial inclusion rate of 45%, lower for women and the elderly.

Family Allowance Compensation Funds (CCAF, for its acronym in Spanish) such as CLA offer social credit with non-discriminatory interest rates, allowing people at higher risk to access affordable financing and eliminating the barriers of the traditional financial system.

In addition to the loan, IDB Invest will support CLA through technical advisory services with the aim of developing its sustainability strategy and impact indicators, and strengthen its green credit and gender and diversity financing business segments.

The operation will contribute to the following United Nations Sustainable Development Goals (SDGs): SDG 1 (No Poverty), SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), SDG 10 (Reduced Inequalities), and SDG 17 (Partnership for the Goals).

About IDB Invest 

IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $21 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.     

About Caja La Araucana 

A private, non-profit institution that belongs to the social security system. Its purpose is to improve people's well-being and its vision is to be the best compensation fund, contributing to people's happiness and reducing inequalities. It is the second largest compensation fund in the country, with 1.4 million members and a presence throughout Chile.

About responsAbility Investments AG

responsAbility Investments AG is a leading impact asset manager specializing in private market investments across three investment themes. These themes contribute directly to the United Nations Sustainable Development Goals (SDGs): Financial Inclusion, Climate Finance and Sustainable Food. All responsAbility investment solutions pursue a specific measurable impact alongside market performance. With more than 270 employees collaborating across 8 offices, the firm manages assets worth $5 billion as of June 30, 2024, in approximately 280 portfolio companies in 70 countries.