Solidus Investment Fund

The Solidus Investment Fund (SIF) is a fund investing in Latin American and Caribbean microfinance institutions (MFIs). SIF was launched in 2005, and its main investors are Finnfund, IFC, KfW and Norfund. SIFEM has committed USD 3.0 million to the fund on SECO's behalf.

SIF provides mezzanine finance in the form of income loan participations, convertible preferred securities, and convertible subordinated loans. Sought out MFIs must have maximized their senior debt funding and be still in need of additional growth capital. Cash flow generation and ability to withstand performance downturns are taken into account to structure sub-debt investments with equity components. Conversion ratios are contingent upon pre-determined book values, and exercised at exit. The typical Solidus mezzanine product has a term of 5-6 years (renewable) and a fixed interest rate of 8%-15%. Interest rates are determined as a function of country risk, MFI credit risk, local interest rates, international interest rates, maturity, and investment structure.

SIF is managed by Cyrano Management, a corporation specializing in financial institutions and investment funds that service small businesses, based in Lima, Peru. Cyrano also manages numerous microfinance funds in Latin America and globally.