Magallanes and Gawa Capital launch a microcredit fund in developing countries

Photo by Shane Rounce on Unsplash

Madrid – October 2018.

Magallanes Value Investors, the fund manager co-founded by Iván Martín and Blanca Hernández, and Gawa Capital, an impact investment advisory firm co-founded by Agustín Vitórica and Luca Torre, have joined forces to promote economic development through a social impact hedge fund, which seeks to break the spiral of poverty suffered by the financially excluded population in developing countries.

The product, called “Magallanes Impacto”, is an open-ended investment fund - with an initial minimum investment of EUR 100,000 and quarterly liquidity - in unlisted debt from social microfinance institutions (MFIs) that provide micro-loans to disadvantaged people in poor or developing countries. The investments (initial target of 6 to 10 assets) will, at first, be focused in Latin America (Mexico, Nicaragua, Chile, Peru or Ecuador) and Asia (India or Sri Lanka, among other countries), areas where Gawa has already identified projects. In Africa it is more complicated to find MFIs that meet all GAWA’s Due Diligence requirements, but the region is not ruled out in the future.

The fund is constituted with a double purpose of profitability and social impact. Profitability is expected to reach 1% to 4%, to offer an alternative to liquidity in an environment of negative rates. Its social nature is manifested in the resignation of the management fee (1.5% -1.75% per investment range) by Magalles and Gawa Capital, if the impact score is below the minimum criteria.

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