Bolivian Investment Management Ltd (BIM) is an impact investments manager with over 25 years of experience creating and managing 14 investment companies and specialized funds seeking a positive impact beyond financial return.
We spoke to Daniel Maldonado, Investor Relations Officer at BIM about how they engage in blended finance, how they measure impact, their priority sectors, and more.
Can you tell us about BIM and how you engage in blended finance?
BIM, established in 1997, is one of six companies within the Panamerican Group, a financial group established in 1994 in Bolivia. BIM was founded as an asset manager with a focus on investments that create impact beyond financial returns. In its early years, BIM managed multi-sectoral funds. However, in 2007, with the launch of Locfund—a regional local currency microfinance investment vehicle focused on Latin America and the Caribbean—BIM shifted its focus exclusively to the microfinance sector.
Although the term blended finance was not widely used in 2007, when the first version of the vehicle—Locfund L.P.—was launched, the fund’s structure already reflected many of its core principles. It was able to attract two private investors, drawn by the potential impact outcomes of Locfund. However, this interest was made possible only because those investors had previously worked alongside public capital providers.
The track record built through this initial experience allowed the management team to maintain relationships with prior investors. Still, in the successor vehicle, the only private investor represented just 4.8% of the total capital raised. Despite the positive financial and impact results of Locfund I, raising additional private funding for Locfund II proved to be a challenge.
By 2020, with more than 12 years of successful operations, the new and current version—Locfund Next—was launched. This iteration managed to raise a larger pool of capital and succeeded in bringing in private foundations whose participation was both material and catalytic to the fund’s launch. However, these foundations had impact mandates embedded in their bylaws, and Locfund Next continued to face difficulties in attracting "pure" private investors—those motivated primarily by risk-adjusted financial returns—in the financial inclusion space in Latin America and the Caribbean (LAC).
Today, the effort to attract private capital remains ongoing. Experience has shown that when targeting private investors willing to take development-related risks in less conventional markets, a strong track record and critical mass are essential. Only then can vehicles like Locfund Next align with the risk-return expectations of private capital.
Can you tell us more about Locfund Next? What are some of the outcomes/expected outcomes?
Although the fund is in its fifth year of operations, it is expected to deliver the projected financial returns by its 10th anniversary.
Locfund Next is structured as an evergreen-like fund, allowing shareholders to enter and exit at the end of defined equity stages. The initial equity stage spans 10 years, with each subsequent stage lasting five years.
Preliminary results from the first cohort of equity investors have been positive, sparking renewed interest from potential investors. As of June 2025, Locfund Next has built a robust capital structure with the participation of 16 investors, including six purely private investors. All 16 investors, though, have at the core of its mission, the requirement of development outcomes.
During this period, the fund has disbursed over $380 million across 279 transactions, reaching a total of 61 microfinance institutions (MFIs) throughout the region. Locfund Next has consolidated its position as a regional leader, becoming the Microfinance Investment Vehicle (MIV) with the widest MFI outreach at the same time, operating concurrently in 15 countries.
Furthermore, in alignment with its core development and impact mandate, Locfund Next was able to raise technical assistance resources from the same investors, in order for this fund to be deployed to the microfinance institutions to strengthen areas such as gender equality, asset and liability management, and corporate governance, among others. To date, Locfund Next has completed 147 Technical Assistance initiatives across the region through its Technical Support Facility – TSF, reducing the risk of the underlying portfolio of the fund.
This momentum is expected to attract greater participation from private investors during the second equity stage, anticipated around 2029–2030.
Can you tell us more about the challenges you’ve faced with attracting institutional investors to Locfund Next?
The first challenge relates to scale. Both the size of the fund and the individual investment tickets must align with the mandates of institutional investors. Since the launch of Locfund I in 2007, and through the consistent growth of Locfund II and now Locfund Next, this challenge has been progressively addressed, resulting in a vehicle with sufficient critical mass to appeal to institutional capital.
The second challenge lies in the limited familiarity most institutional investors have with the microfinance sector. This often necessitates the inclusion of additional risk mitigation mechanisms to make the investment case viable. To address this, BIM has explored several alternatives, including the use of partial guarantees from development finance institutions (DFIs). These guarantees could, in turn, be supported by technical assistance funding from other DFIs—effectively creating a dual-layered blended finance structure to enhance investor confidence and facilitate further growth of Locfund Next’s operations.
How do you measure the impact of your blended finance investments?
Given the nature of microfinance, Locfund Next’s portfolio inherently generates impact across multiple indicators. The fund focuses on attending to underserved populations through the microfinance institutions it supports, reaching over 40% of end clients located in rural areas across the region and targeting more than 50% of women among its final beneficiaries.
Locfund Next also aims to support the most vulnerable segments of the population. One key indicator of this is the average loan size to end clients, which currently stands at $1,400, reflecting the fund’s reach to low-income borrowers.
What role do you see blended finance playing in the microfinance industry in LAC?
The microfinance industry in LAC remains a relatively small segment within the broader financial systems of each country. The total outstanding microfinance portfolio in the region is estimated at approximately $52 billion, but there are around 132 million people without access to formal financial services. The industry has maintained a steady annual growth rate of around 10%, driven primarily by unmet demand. To sustain this level of growth, the sector requires approximately $5 billion in fresh capital each year.
Unfortunately, public investors alone are not able to meet this financing need, underscoring the critical role of blended finance as a catalytic solution.
The encouraging news is that, where managed effectively and with a clear focus on financial inclusion, the microfinance sector has consistently delivered positive and stable performance. In many cases, financial indicators within the industry are not only healthy but also outperform those of the traditional financial system. These results provide a compelling case for further blended finance transactions, where private investors can engage under conditions that align with their risk-return expectations, while also contributing to inclusive development in the region.
Do you apply a gender lens in your blended finance activities?
Yes. While microfinance is inherently aligned with gender lens investing, BIM has made a deliberate effort to further emphasize this focus. As a result, Locfund Next was granted the status of a 2X Challenge Flagship Fund, and BIM recently became a signatory of the UN Women’s Empowerment Principles.
In practice, all microfinance institutions (MFIs) that Locfund Next has worked with are able to identify the proportion of women among their end-clients and the composition of their portfolio by gender. This gender-disaggregated data is monitored by Locfund Next on a monthly basis to ensure a clear understanding of the fund’s outreach to this key segment. On average, more than 60% of the end-clients served through the portfolio are women.
How do you see BIM’s blended finance activities evolving in the future?
We believe that our strong 15+ year track record has helped build a compelling case for attracting greater private sector participation. This has been achieved not only through the positive financial and impact outcomes of Locfund, but also by demonstrating the resilience and long-term sustainability of the microfinance industry. Looking ahead, we are confident that within the next five years, we can significantly expand private investor involvement, targeting a share of at least 50% among Locfund Next’s key stakeholders.
What are some opportunities you see for blended finance in Latin America? What are some challenges?
Large players, including global investment banks, have begun exploring investment opportunities more actively in so-called “exotic” markets. Latin America, in particular, has demonstrated its ability to deliver attractive returns with balanced and manageable risk profiles. Public records indicate that blended finance structures in the region have averaged issuance sizes of approximately $150 million, underscoring the growing appetite and scalability of such instruments.
Sectors such as financial inclusion, renewable energy, and circular economies stand out as key industries capable of absorbing substantial amounts of capital while offering compelling returns. The success of previous blended finance structures led by these institutions paves the way for future opportunities to mobilize private capital into the region.
However, Latin America is also characterized by a history of political volatility and recurring episodes of instability. These challenges can deter more conservative investors, especially when assessing opportunities that seek to combine financial returns with broader development outcomes.
