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Design of Beyond Finance Asia-Pacific Facility

Overview: Convergence awarded a feasibility study grant to Beyond Finance, a Hong Kong based consulting firm with an all-woman team. This grant will enable Beyond Finance to design a closed-ended debt fund to finance companies that develop products and services for women consumers and companies led or founded by women in Asia and the Pacific.

A $300 billion gap in financing exists for formal, women-owned small businesses worldwide, and more than 70 percent of women-owned small and medium enterprises (SMEs) have inadequate or no access to financial services. Women-led businesses in Asia and the Pacific are no exception, with only a small number of women-owned SMEs able to access financial services, which mostly comes from private commercial banks. In addition, there is a lack of private debt available for these businesses.

Convergence’s grant will allow Beyond Finance to explore the feasibility of structuring a gender lens debt fund to improve gender equality by investing in companies that directly target women by operating in industries such as sustainable agriculture, water and sanitation, housing, and renewable energy. The Fund will also seek to improve access to finance for women by investing in micro-finance institutions serving women and fintech platforms with a financial inclusion and gender focus. To support climate resilience, a significant portion of the portfolio will focus on companies that offer climate smart solutions that address the needs of frontier markets in Asia and the Pacific in the Water Energy Food nexus.

Design question and learning potential for the market: How can a private debt fund be structured to finance businesses that focus on women as the target consumers and businesses led or founded by women in Asia-Pacific?

During the feasibility study, Beyond Finance will focus on developing the investment strategy for target geographies and design the structure of the fund accordingly. The grant will enable Beyond Finance to explore the feasibility of structuring a gender lens debt fund supported by a technical assistance facility. The technical assistance facility will enable the implementation of a rigorous impact measurement process that includes the establishment of key performance indicators (KPIs) for each investment, taking into account both environmental, social and governance (ESG) risks, and a gender lens scorecard. These KPIs will in turn have real world consequences for investees, as the Fund will aim to link interest rates with meaningful ESG and gender impact performance.