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Vinci Impact Fund

Project number 13030-01
Country Brazil
Sector Other
Status Proposed

Informação Geral

Company name
Vinci Partners
Investment type Equity
E&S category
FI-2
Disclosed date
Projected board date
Team Leader
Alberto Parodi

Finaciamento solicitado

Financing Requested
US$10 million
Financing Currency
USD

Client
information

Client Contact Name: Mr. Pedro Quintella
Title: Partner
Telephone: +1 646 559 8022
Email: pquintella@vincipartners.com

PROJECT
SCOPE
AND
OBJECTIVE

IDB Invest is considering an equity investment of up to US$10 million in Vinci Impact and Return IV (“VIR IV” or the “Fund”), an impact investment fund created to provide growth equity for small and medium-sized enterprises (“SMEs”) in Brazil, with a focus on less developed regions. Following a triple bottom-line strategy, the Fund will seek market-level returns while deliberately seeking measurable socioeconomic impacts in line with the Sustainable Development Goals (“SDGs”) and enhancing environmental, social and governance (ESG) standards.

The Fund’s impact strategy will primarily consist of (i) seeking to invest in less developed regions of Brazil, where access to capital and know-how is limited and/or (ii) focusing on companies where there is a clear impact embedded in its business model. Moreover, the Fund will invest in sectors and themes that cover determined SDGs, making VIR’s impact framework adherent to the United Nation’s development guidelines. Additionally, VIR IV will partner with entrepreneurs that values impact as a mean of operating their businesses and generating value and will target companies and business in which a reliable impact measurement and monitoring framework application is possible on a continuous basis.

Environmental
and
Social
Review

  1. Scope of Environmental and Social Review. The environmental and social review of the proposed transaction was carried out through desk research, a client web-conferencing call and a pipeline discussion. Vinci Partners have previously raised Funds with Development Finance Institutions´ participation for which an Environmental and Social Management System (ESMS) was developed (under their VCP III Equity Fund). They are new clients to IDB Invest and will make minor enhancements to environmental and social management generally for the VIR IV Fund in question (see action plan below). 
  2. Environmental and Social Categorization and Rationale. The proposed project is classified as an FI-2 per IDB Invest’s Environmental and Social Sustainability Policy. Investments to be supported by the Fund will be in SMEs within the healthcare, specialized retail, value added services, education and healthy nutrition sectors. Investments are expected to be made in approximately 9-11 companies, averaging between US$10 - US$25 million per investment. Category A sub-projects, per IDB Invest’s definition, will be excluded.
  3. Environmental and Social (E&S) Risks and Impacts. The main E&S risks of this project are associated with the Fund’s capacity to identify and manage the E&S risks associated with its lending activities. The Fund Manager will be expected to apply best practices in identifying, mitigating and managing any issues found in investments. Environmental, Social, Health and Safety (ESHS) impacts and risks associated with investments are likely to be minimal in nature.     
  4. Mitigation Measures. Vinci Partners have an Environmental and Social (E&S) policy and manual, an E&S officer, an impact coordinator and a basic Human Resources (HR) policy. Approximately 31% of the Fund’s employees are women and 69% of employees are male. In terms of leadership roles, 29% of those positions are occupied by women. The Fund is a signatory to the United Nations’ Principles for Responsible Investment (UN-PRI) and report annually on their performance. In addition, the Fund applies an internally developed Impact Measurement Framework and produces an annual Environmental, Social and Governance (ESG) report on their investment portfolios.  The Fund Manager will be required to ensure that all investments comply with IDB Invest’s Exclusion List, applicable E&S local laws, the IFC Performance Standards, as applicable, and apply an ESMS consistent with Performance Standard 1. The Fund’s ESMS includes a basic categorization guide, legal clauses and monitoring procedures. The Fund Manager will be required to provide an annual Environmental and Social (E&S) Compliance Report and E&S due diligence reports of the first three investments to IDB Invest prior to the Fund’s commitment. Training on the ESMS will be conducted with key staff and the Fund will enlist support from external experts as needed. The Fund manager will be expected to develop a comprehensive external grievance mechanism. The Fund will be expected to analyze, categorize and propose mitigation measures consistent with its Policy and ESMS. The Fund is not expected to finance any high-risk sectors.  See below for a list of actions defined under this transaction.
  5. Environmental and Social Action Plan

    Activity

    Description

    Compliance Indicator

    Timeline

    Review of the first three operations (after ESMS update)

    Vinci Partners will provide detailed E&S due diligence reports of the first three operations (prior to investment), with aim to; (i) confirm the categorization and level of analysis undertaken, and (ii) review the proposed action plans, if any

    E&S due diligence reports and action plans

    At time of sub-investment

    E&S capacity building

    Senior management, loan officers and credit analysts will be trained by an experienced firm on the ESMS and IFC Performance Standards. New personnel will also be trained

    Certificates of training completion

    (annual reporting for new personnel)

    6 months post disbursement

    Use of external experts

    The Fund will outsource the services of an experienced firm to undertake the E&S due diligence process (risk screening, action plan development and monitoring) for any high-level projects/investments.  High risk sectors are generally considered those in corporate / project finance that may present significant risks / impacts.

    Terms of reference (contract) with firm

    On each investment considered high risk

    Development of an external grievance mechanism

    An external grievance mechanism in accordance with IFC Performance Standard 2 will be developed.

    External grievance mechanism

    3 months post disbursement
  6. Contact Information For project inquiries, including environmental and social questions related to an IDB Invest transaction please contact the client (see Investment Summary tab), or IDB Invest using the email divulgacionpublica@iadb.org. As a last resort, affected communities have access to the IDB Invest Independent Consultation and Investigation Mechanism by writing to mecanismo@iadb.org or  MICI@iadb.org, or calling +1(202) 623-3952.
For inquiries, comments and requests about the project

For inquiries, comments and requests about the project

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