47535 - SMEV Pomona

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Summary of Investment Information

Project Number

47535

Company Name

Pomona Impact Fund II, L.P.

Date SPI Disclosed

Feb 7, 2023

Country

Central America Subregion

Region

Latin America and the Caribbean

Projected Board Date

Mar 7, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jun 22, 2023

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Jul 17, 2017
Signed : May 25, 2023
Invested : Jun 20, 2023

Sector

Venture Capital Fund

Additional Project Attributes

Blended Finance

Project Description

The proposed transaction is an equity investment of up to US$7.5 million and up to 25% of the fund’s total commitments in Pomona Impact Fund II, LP (Pomona II or the Fund) a SMEV fund targeting US$30 million in commitments to invest in small enterprises in Central America, with opportunistic investments in Mexico, Colombia, and Ecuador.

The Fund will seek to make approximately 15 investments in SMEs including some pre-profit tech-focused SMEs, providing ticket sizes between US$0.5 million and US$2.0 million. Pomona II will focus primarily on Guatemala, El Salvador, Honduras (IDA) and Nicaragua (IDA), with a secondary focus on Belize, Costa Rica and Panama. Up to 20% of the Fund may be allocated in opportunistic investments in Mexico, Colombia and Ecuador. The Fund is sector agnostic but will focus on industries where Pomona has developed expertise and has the most potential social impact, such as: Agriculture, Education, Health and Water.

Associated Advisory Engagement

The technical assistance to be provided through this project will primarily focus on building capacity of the Fund Manager’s team and the Fund Manager’s ability to strategically plan exits, holistically approach portfolio value creation, and strengthen their operational efficiency along with the aim of providing expertise and support to the fund manager on deal structuring, portfolio performance, value addition and exit strategies.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	250.0

Development Impact

Pomona will support value creation for its portfolio in Central America and commit to investing in at least 30 percent female led portfolio companies for the first time. The market creation claim is to support the creation and development of nascent PE markets via demonstration effects. PE markets in Central America are highly underdeveloped, with only a small amount of activity in a few large countries.

IFC will provide both financial and non-financial additionality. IFC will support the fund with own-account equity. IFC will play an active role as a trusted reference to provide comfort to other potential investors. IFC will also support Pomona to integrate gender-lens investing into its mainstream fund and implement E&S best practices. Lastly, IFC will provide technical assistance focus on building capacity of the Fund Manager’s team and also build the capacity of SMEs in the Fund’s portfolio.

E&S Category Rationale / Risks and Mitigation

The project risks derive from the E&S risks associated with the Fund's investment activities, its capacity and systems in place to manage these risks. Potential risks consist primarily of labor, occupational, health and safety (OHS) related themes for services companies and pollution prevention for agri-processing and manufacturing. Most transactions are expected to be of medium to low E&S risk, therefore the project has been categorized as FI-2 according to the IFC's Sustainability Framework. The Fund will not invest in coal-related activities, energy generation (hydro, solar or wind projects) or higher risk business activities that may include a) involuntary resettlement, b) risk of adverse impacts on Indigenous Peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage or d) significant Occupational Health and Safety risks.

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2025.

Investee	Country Of Investment	Sector
Abaco	El Salvador	O-CA- Finance Companies
Flosan	Guatemala	G-HA- All Other Chemical Product
Fuun Creations	El Salvador	T-AC- Other Training
Hybrico	Guatemala	V-HA- Energy Efficiency
Moovin	Costa Rica	E-AE- Other (Including General Freight Trucking)
ProNuvo	Costa Rica	A-BD- Other Animal Production
Teclogi	Colombia	E-AE- Other (Including General Freight Trucking)
Tunart	Guatemala	A-CA- Fishing
Vexi	Mexico	O-CB- Finance Companies - Consumer Finance

Pomona developed and implemented an ESMS that includes policy, procedures, responsibilities and tools for undertaking E&S risk management in addition to training relevant staff. E&S due diligences are performed by Pomona's team together with knowledgeable local legal consultants prior to investment closing. All potential investments are screened against Exclusion List and through legal due diligence (host country laws). For potential investees with E&S legal gaps, a corrective action plan is designed, included in legal documentation and monitored constantly (quarterly basis). The Fund will be required to: (i) maintain its ESMS to screen the potential investments in line with the IFC Exclusion List and LAC countries laws and regulation; and, (ii) report annually to IFC. Pomona will inform IFC in the event of any material change in the nature or scope of its portfolio activities. Pomona II has submitted the first three E&S Due Diligences conducted for IFC review.

Contacts

For Inquiries About the Project, Contact

Pomona
Richard Ambrose
Partner
-
info@pomonaimpact.com
-
www.pomonaimpact.com

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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