The National Bank for Economic and Social Development (BNDES) will select up to three equity investment funds (FIPs) aimed at impact businesses, that is, ventures with the objective of generating social and environmental effects and positive financial results in a sustainable manner. In order to attract private investments for this purpose, the BNDES will invest up to 25% of the total value of each fund, which will have to raise the remaining volume in the market. The expectation is that the funds will be selected in November and that at least R$ 800 million will be raised for investments, including resources from BNDES and other investors.

With this initiative, the Bank seeks to encourage businesses that support the transformation of society and the improvement of life for Brazilians in various aspects, such as waste management, housing, digital accessibility, environment, transport, water resources, basic sanitation and education. The action is in line with the BNDES' 2020-2022 Triennial Plan and with the Sustainable Development Goals (SDG) of the United Nations (UN).

The launch of the public call closes the BNDES Impact Week, which had national and foreign participants. At the beginning of the week, registration was opened for the 2021 edition of BNDES Garagem, aimed at accelerating startups with a socio-environmental impact. Watch the debates here.

“The public call for the selection of impact investment funds, added to the new BNDES Garagem, represents the most vigorous integrated, structuring and systemic support ever carried out by BNDES. It follows BNDESPar's strategy of encouraging investment in actions with an impact in the country, in support of the AGS (Environmental, Governance and Social) agenda and development of the capital market in the country”, said Bruno Laskowski, Director of Participations, Market BNDES Capital and Indirect Credit.

The call for impact funds has two modalities, according to the size of the companies. Up to two funds will be selected in the FIP Impacto MPME modality, with a focus on companies that present gross operating income of up to R$ 90 million in the year immediately prior to the fund's contribution. In this case, each fund should aim to raise at least R$ 200 million. In the FIP Impacto Livre modality, a fund that invests in projects with no revenue limit may be selected, with a minimum committed capital of R$400 million as a perspective.

Considering these amounts, if the three funds are contracted, the BNDES' initiative will leverage at least R$ 800 million for investment in high-impact businesses. As a rule, the fund teams that will compete in the public call and their operational bases must be headquartered in Brazil.

Selection – The structure of the proposal will be evaluated. considering the fund's impact thesis and dimensions such as the portfolio formation strategy and investment in ventures from peripheral regions, the composition of costs and fundraising. The commission, made up of BNDES professionals, will also assess the manager's team, its gender and ethnic diversity, in addition to the inclusion of people with disabilities, among other criteria. The methodologies for measuring the socio-environmental impact of the investee companies will also be analyzed. Proposals may be submitted to BNDES until August 13th.

Impact Investing – According to the Global Impact Investing Network (GIIN), the value of the global impact business market has been growing steadily, from US$77 billion in 2015 to US$502 billion in 2018 and reaching US$715 billion in 2019. However, assets classified as impact investment under fund management in Brazil totaled US$785 million in the 2018-2019 period, which corresponds to only 0.11% of the global amount.

The call is another BNDES initiative to transform the lives of generations of Brazilians, promoting sustainable development. On the BNDES website, it is possible to identify the impact of the BNDES from a socio-environmental perspective by verifying the volume of resources invested by the Bank according to each of the SDGs.

FIPs – BNDESPar's performance through FIPs expands the access of companies – especially small and medium-sized ones, which find it more difficult to obtain credit than larger ones – to long-term capital and encourages improvements in their management, boosting the Brazilian market. The funds also leverage investments with private resources and spread the risk between different agents.

In March 2021, the FIPs in which the BNDES held shares invested in more than 200 companies, located in 21 units of the federation. At the time, the Bank's committed capital in equity and credit funds totaled R$4.3 billion, which, added to the resources of other investors also invested in these funds, totaled R$23 billion. In other words, for every R$1.00 that BNDES committed in investments via FIPs, approximately R$4.35 were allocated by other investors.