February 9

Press Release: IFC and Itaú Partner in a Gender Bond to Support Women Entrepreneurship in Brazil

IFC subscribed $200 million in a gender bond to Itaú Unibanco to support the bank’s lending program to women-owned small and medium enterprises in Brazil, with parts of the proceeds focused on businesses based in underserved regions of the North and Northeast of the country.

The project represents the first gender bond issued by a private bank in Brazil in the form of Letras Financeiras (LFs), an exclusive debt security instrument for local financial institutions. IFC is also acting as an anchor investor to help mobilize other investors to participate in the issuance with up to $200 million.

The proceeds of the gender bond will be used to support women-owned small and medium enterprises (WSMEs) who face more difficulty in securing funding than men-owned businesses. According to data from the World Bank’s Global Findex Database and the World Economic Forum, while 4.6 percent of male-owned businesses in Brazil are able to borrow to start, operate, or expand a business, only 2.9 percent of women-owned businesses can access finance for the same purposes. Part of IFC’s investment to Itaú will focus on promoting and supporting access to finance for women in the North and Northeast of Brazil, which will help generate economic and employment opportunities in those underserved regions.

Gender bonds aim to promote positive social outcomes by being exclusively dedicated to help achieve gender equality. These types of bonds are usually issued by financial institutions to fund loan portfolios that are solely intended for women entrepreneurs and women-owned enterprises.

“IFC’s long-running partnership with Itaú showcases that supporting the financial and economic empowerment of women is vital for an inclusive and sustainable growth and to help Brazil tackle its development challenges, including those of productivity and competitiveness,” said Carlos Leiria Pinto, IFC Brazil Country Manager. “The use of innovative financial instruments helps accelerate market inclusiveness by encouraging other banks to increase their footprint in gender-themed instruments of their own.”

“The issuance of Letras Financeiras linked to social issues reflects not only our commitment to generating a positive impact, but also the growing appetite of investors for this type of debt security. This project represents the biggest operation in the Brazilian capital market with a focus on gender”, said Daniel Goretti, Treasury director at Itaú Unibanco.

Itaú and IFC have worked together in several projects over the years, including investments and advisory services focused on different products and segments, such as capital markets, gender finance, microfinance, and climate finance. In 2022, IFC provided $300 million to Itaú in a green bond to support lending for the acquisition of climate-smart vehicles in Brazil.

The signing of the gender bond marks the 10-year anniversary of Itaú Mulher Empreendedora, a capacity building program created by IFC and Itaú, designed to inspire, connect, and enable women entrepreneurs in their professional journeys. With a new focus on strengthening afro-descendent female-led businesses in the North and Northeast of Brazil, more than 350,000 women have already taken part in trainings, workshops, and acceleration initiatives offered by the program for which Itaú was recognized as Best Bank for Women Entrepreneurs by the SME Finance Forum.

This investment is part of IFC’s Banking on Women (BoW). Since its launch in 2010, IFC’s BoW has been providing financial and business solutions to women-led SMEs through its financial institution partners, with 204 investment and advisory services projects in 70 countries. As of December 2022, IFC’s BoW business has mobilized and invested more than $4 billion in financial institutions, specifically to finance women-led SMEs.

The project is also supported by the Women Entrepreneurs Opportunity Facility (WEOF) and the Women Entrepreneurs Finance Initiative (We-Fi) through a performance-based incentive. WEOF is an initiative launched by IFC—in partnership with the Goldman Sachs Foundation—to help expand access to capital for women entrepreneurs in developing countries and demonstrate the commercial viability of investing in women.

“We are pleased to continue to empower female entrepreneurs through access to capital in order to facilitate their growth and recharge their businesses,” said Charlotte Keenan, Global Director of Goldman Sachs 10,000 Women. “We look forward to supporting Itaú Unibanco as it expands lending to women-owned businesses in Brazil.”

Photo courtesy of Bioversity International.

Source: International Finance Corporation (link opens in a new window)

gender equality, impact bonds, impact investing, MSMEs, women entrepreneurs