Eimy Alarcón
Investment Analyst
Peru / ESG
Felipe Rodriguez Otero
Head of Investor
Development
Luisa Maria Guevara
Head of ESG / Knowledge
Office Peru
Generating economic value goes beyond financial results. Our numbers reveal both employment generation and clients’ needs and expectations, especially those underserved by traditional financing in Colombia, Mexico and Peru.
The following information reflects consolidated figures across the 14 companies that make up the investment portfolio*.
* This includes companies that have already been sold. In the case of GFO, figures represent a 2018 cut off, a 2020 cut off for Conix and Finsocial 2020, and a 2022 cut off for Exitus.
Kandeo Asset Management (Kandeo Investment Advisors LLC), headquartered in Miami, is a private financial sector limited liability company with more than 10 years of experience as a funds manager in Mexico, Colombia, and Peru. To date, it has USD 427 million AUM in two private equity funds dedicated to investing in businesses that offer financial services to underserved populations with development potential, and one private debt fund providing financial offerings to medium sized businesses from a variety of different sectors.
Over the last decade, Kandeo has generated superior market returns concentrating on operational excellence and solid ESG performance. Kandeo promotes responsible investments, moving away from short term gains and toward a value creation strategy that integrates aspects of ESG throughout the life of an organization.
Kandeo firmly believes that returns are even greater when they meet social, environmental, and governance objectives. Part of Kandeo’s philosophy is to implement an ESG diagnostic at the time of investment and maintain this focus as long as the company remains a part of the portfolio.
Throughout 2022, Kandeo’s team conducted training sessions on ESG topics with PRI, IDB Invest, IFC and World Bank. A private consultant with expertise in ESG was hired to deliver additional training to the company’s internal ESG team. The firm provided valuable insight and analysis for each of our portfolio debt fund companies.
In 2022, Task Force* and PRI published a case study on Responsible Investment Practice which was carried out by Kandeo and promoted to its portfolio companies. These activities demonstrate Kandeo’s sense of leadership and strategy development meant to propel the companies in which it invests.
Kandeo’s sustainable development strategy statement can be found on its homepage: www.kandeofund.com
_
* More information can be found at: Report on Responsible Investment
The norms and processes that shape corporate governance promote individual and collective respect for all people. They also frame Kandeo’s commitment to fight all types of discrimination, harassment, prejudice, and inhumane working conditions.
Kandeo respects freedom of association established by the local labor legislation, as well as all agreements ratified by the International Labor Organization (ILO) in each country in which it operates. In 2022 no strikes nor labor disputes were reported. In addition, there are no workers’ unions, nor have any cases of discrimination been reported.
Kandeo offers additional benefits that go beyond regulation, highlighting work flexibility, health coverage, and holidays.
Kandeo promotes inclusion and gender equality by expanding its call for new hires to universities located outside major cities.
In terms of governance, Kandeo has four vital committees:
Kandeo has developed a Code of Good Corporate Governance, a process which is used when faced with any critical situation or potential conflict of interest that may pose a negative consequence related to business conduct and its stakeholders. To date, there has yet to be such a situation to apply this code procedure.
To avoid potential company gaps, employees are regularly trained to further develop and strengthen technical knowledge and professional skills.
Over the course of 2022, Kandeo’s team was schooled on topics related to best practices, financial analysis, due diligence evaluations under international sustainability standards, macroeconomic sustainability, current events and pertinent regional and global issues. It’s worth mentioning that 100% of Kandeo’s team holds the World Bank’s “Sustainability Training and E-Learning Program (STEP)” certificate as well as the IFC certification in “E-Learning Course on Managing Environmental and Social Performance''.
Investment Committee
The committee consists of six members of which two are independent. It convenes on a quarterly basis to monitor the behavior of Kandeo’s portfolio companies and identify areas for improvement.
Oversight Committee
The committee is made up of members from Kandeo’s management team and fund investors. It convenes quarterly with the aim of monitoring the management of its portfolio companies.
Management Committee
The committee is made up of five members and convenes monthly to monitor the company’s cash flow and anticipate events that might cause stress or may be disruptive to operations.
ESG Committee
The committee consists of three members and meets every six months to monitor Kandeo portfolio companies’ ESG initiatives. The committee is in charge of managing ESG issues transversely for Kandeo.
Kandeo firmly believes that organizations can strengthen decision making through open dialogue and strong relationships with stakeholders. This gives way to a clear understanding of expectations regarding the environmental, social and governance management of its investment portfolio.
Kandeo recognizes that proper relationship management with stakeholders improves the bottom line as well as the company’s social and environmental impact. Through connections, Kandeo maximizes its contribution to the UN’s Sustainable Development Goals, while increasing stakeholder satisfaction and generating positive impact.
Kandeo has outlined its various stakeholders with whom it can generate impact, taking into account stakeholders’ expectations and needs through effective communication. All stakeholders have the same level of importance and are organized in terms of issue or company matter.
Kandeo has authorized various channels of communication for its stakeholders. All complaints, recommendations, and concerns received are addressed by the ESG Committee. The following channels are open for stakeholders to contact Kandeo:
Additionally, there are direct modes of communication in place for employees, investors, and portfolio companies. Kandeo and its portfolio companies strictly comply with applicable regulations across the regions in which they operate. In 2022 there were no lawsuits or court rulings that could materially affect the companies’ financial situation, nor were there any significant fines or penalties levied against the portfolio companies or their managers.
Kandeo promotes responsible investments, moving away from a focus on short term financial gains and instead looking towards value creation through ESG integration during the investment period.
In 2022 Kandeo updated its Environmental and Social Management System (ESMS) policies and procedures, approved by Kandeo's Head of Administration. The documents detail the steps necessary to evaluate and monitor its portfolio companies in regards to health, work safety, environmental management, channel for complaints, among others.
The Due Diligence process applied to all portfolio companies and deployed by Kandeo's ESG team is based on the Performance Standards established by the International Finance Corporation and Inter-American Development Bank.
The materiality analysis below is in accordance with Global Reporting Initiative Standards.
STAGE 1
Understand the organization’s context
Kandeo is a regional alternative asset manager which has mobilized resources from globally recognized investors to be implemented via equity or debt to medium-sized companies in Mexico, Colombia and Peru.
STAGE 2
Identify real and potential impacts
Kandeo is able to generate real impact through its portfolio companies. Kandeo was able to pinpoint key indicators through careful monitoring of each portfolio.
STAGE 3
Assess the importance of the impacts
The significance of the positive impacts generated by Kandeo can be measured through the contribution of each portfolio company toward its Sustainable Development Goals.
STAGE 4
Prioritize the most significant impacts to report on
The material topics resulting from the previous step were validated and approved by Kandeo’s ESG team.
Material issues identified:
Responsible Investments
(GRI 2-24)
Kandeo believes that financial results go hand-in-hand with social and environmental initiatives. An active ESG approach helps to reduce risk, lower operating costs, and gain access to financial resources meant to drive positive impact. It’s through this approach that Kandeo provides above-market returns while generating opportunities for communities economically disadvantaged and creating innovative environmental solutions across its business operations.
Financial Inclusion
Economic Performance
Through its two private equity funds, Kandeo invests in companies that offer financial services to the economically disadvantaged seeking financial inclusion. Through its 14 portfolio companies, Kandeo has directly contributed to financial inclusion in Colombia, Mexico, and Peru over the last 10 years. For example, 73% of Acceso Crediticio’s clients had regained access to financial services and systems by 2022.
Decent Work and Economic Growth
Kandeo recognizes that gender equality is a fundamental right and a key factor in economic and business growth and social development. Concrete actions must be implemented to ensure tangible progress promoting female empowerment and equal opportunity. In 2021 Kandeo formally signed the Principles for Women’s Empowerment established by the United Nations.
Gender Equality
Kandeo’s ESG team works not only to ensure the development of ESG initiatives within its portfolio companies, but also to support all investment decisions by a thorough analysis of environmental and social impacts. The team continues to supervise and monitor these investments by issuing annual reports and keeping ESG policies and procedures updated. The ESG team consistently takes part in the latest training programs and participates in a variety of sustainability events to stay abreast of new market practices that can be implemented throughout its investments and organization as a whole.
1. Please tell us about yourself: where you are from, what career you studied, professional background, family life, hobbies.
I received a degree in Business Administration from Universidad del Pacífico, later I completed an MBA in London at Cranfield University and I have a CFA and ESG certification. I started my career at Banco de Crédito del Perú (BCP) in the credit risk area and after my MBA, in the asset management area. Then I started working at Prima AFP and there I had a first approach to the world of alternative investments. In 2018 I received the assignment to lead the ESG thematic in the company.
2. What challenges have you faced along the way and how have you overcome them? Has being a woman worked against you, for you, or had no effect?
I became a mother when I was in university and since then I have had two roles to fulfill, being a mother and developing my career. Studying the MBA meant leaving my children in Peru, but it was a step that contributed to my professional development. When I made this decision there were people who criticized what I was doing because I was a mother.
In this sense, the biggest challenge has been to find a balance between my family and my work, in particular, to manage my expectations regarding culpability, for example, doing your job well demands a lot of effort and somehow you neglect your role as a mother and vice versa.
In general, top management positions are mostly lead by men and that means that you have few female references. In addition, networking outside working hours, which is also important, implies less family time, which becomes a disadvantage. But we should not only analyze external or cultural factors, but also analyze ourselves, women tend to have a more conservative risk profile and we should work on that.
3. There are currently large gender gaps in the Latin American business world. Only 15% of women hold management positions and only 14% own companies, according to a study by the Inter-American Development Bank (IDB). In your opinion, what is missing? How do you think that women who are just starting their careers can benefit from the knowledge and experience of experienced professionals? What can we all do together for and with each other?
I believe that it is key for women in representative management positions to use the reach they have to encourage other women to develop, through mentoring or sponsorship. Life and professional experience add a lot and encourages women to continue to grow. As much as we can, we must help each other.
4. At Prima, how do you approach the issue of equal opportunities between men and women? Do you consider that the company has evolved in this aspect, in closing gender gaps?
Until a few years ago there were no women on Prima's board of directors and today there are 2 women participating. At Prima, the participation of female employees is approximately 60% of the total, but at a higher level, the participation of women is lower. We know this doesn’t change from one day to the next, so measures are being taken to improve this aspect, for example, in the case of middle management and above, it is mandatory to have a woman on the team. Prima has networking and leadership programs for women. Within my area there are no formal programs but since I am responsible for selecting almost half of my team, I always try to maintain a balance, currently I have 3 female interns, 3 female analysts and 3 male analysts.
5. In addition to the gender aspect, what else is the organization doing to contribute to the 2030 agenda of the Sustainable Development Goals?
At Prima and Credicorp we work through 3 corporate strategic pillars: the first, aimed at creating a more sustainable and inclusive economy through financial inclusion and sustainable assets under management; the second, improving the financial health of citizens through financial education, simplicity and transparency that allows reaching the affiliate in a simple way; finally, the third, empowering our employees through the leadership and networking programs mentioned above.
6. What’s next for you? What professional dreams do you want to pursue or achieve?
I am currently studying to become a Yoga teacher because I believe that personal, spiritual and physical development is very important. I would love to continue to be involved in sustainability regardless of the position I am in, I believe that there is still a lot to do in ESG.
7. What would you recommend to women to achieve their dreams?
Be authentic. This authenticity, which is sometimes associated with typically feminine values such as empathy and listening skills, will help women differentiate themselves from others; these are very important traits in leadership and also generate a great deal of value in organizations. It is also important that women are motivated to keep learning.
1. Please tell us about your professional and personal background. Where are you from, what did you study and what has been your professional trajectory up until this point?
I’m from Bogota and I received a degree in Business Administration from the Universidad de la Sabana and another in Human Resources from the Universidad de los Andes. I also have two master’s in human resources management from the University of Sergio Arboleda and the University of Illinois, Chicago. I’m a mother of triplets and this has been one of the best experiences of my life. My daughters have been a great driving force in my life. It was a big challenge conceiving them and they’ve become my best team. They are now about to start their college studies… they have been key to my professional success.
2. How did you become Mareauto’s CEO? Tell us about the road that led you to this position.
I joined the organization 4 years ago as a regional talent manager, which was a new position that sprung from integrating the company’s operations in Colombia, Peru, and Ecuador. At this time, I was the only woman in the group, leading a less strategic area; however, I worked closely with the regional managers, first level managers and especially with the CEO at the time. I got involved in not only talent issues but also strategy, getting to know the company in great detail. This was able to happen because I’ve always sought to convert the area dealing with people and talent into a strategic ally of the CEO. And that’s exactly what I did when I arrived at Mareauto. I identified what should be done from my area to leverage and support growth processes for the organization.
Once the position for CEO was open, the board of directors hired a headhunter. I was in charge of managing the transition and understood the company’s goals and strategy. Since the process was taking time, the board of directors offered me the position in the interim for a couple of months. I proposed that during that time they also consider me as a possible candidate. Thus, I completed the various exams and interviews and two months later I was informed of their decision to name me as CEO.
3. What challenges have you faced along the way and how have you overcome them? Has being a woman played against you, worked in your favor, or had no effect?
I’ve never felt that being a woman has affected my career nor my dreams. I started my career in junior positions and I have been climbing upward little by little. I strongly believe in being prepared once an opportunity presents itself. It’s also important to build yourself as a person over time and have a very clear set of values. I believe this is what has propelled my career rather than being a woman.
4. There are currently large gender gaps in the Latin American business world. Only 15% of women hold management positions and only 14% own companies, according to a study by the Inter-American Development Bank (IDB). In your opinion, what is missing?
It is important to eliminate unconscious biases that limit our professional growth. It is also important to be clear about the goals we want to achieve. In my personal case, I had an objective of leading a company and at the same time was aware that I had chosen an unconventional path.
It’s unusual for a Human Resources professional to become CEO. It’s true that women have a greater burden because by nature we are bound to commitments like family, children, etc. And here it is key to organize and build priorities around your family.
5. You have been at Mareauto for a long time. Do you think that the Company has evolved in terms of equal opportunities for men and women? What was the biggest change you feel the company has made?
Mareauto offers equal opportunities to women and men. Additionally, I personally worked hard for the inclusion of different groups. Society is evolving regarding these issues and the diversity conversation is becoming more natural. For Mareauto, it’s necessary to have the best possible talent, regardless of gender or race. This is our policy.
6. As CEO, what strategies would you like to implement at Mareauto to promote professional development and women’s leadership internally?
Currently I promote preparation. It's so important to be prepared from the beginning so that when opportunities arise, we are ready to face them head on. We are also working to raise awareness regarding people’s personal and professional development and how this is directly linked to their motivation and life’s purpose. Where you work is the vehicle that supports your development and that’s why it’s so important to be clear about where you want to go. I want Mareauto to be an organization that opens doors to talent. We are also conducting workshops about “purpose” with all our employees and staff. I believe this will enhance people’s commitment and reduce staff turnover. Without people there is no company.
7. Do you see Mareauto focused on contributing to Sustainable Development Goals outlined in its 2030 agenda?
We are aware that Mareauto’s activity has already had great impact environmentally. We are entering the world of electric cars and currently we have 180 vehicles. With regards to the social impacts of the company, we take great care of our workforce, and these aspects directly contribute to the fulfillment of the sustainable development goals.
8. What’s next for you? What professional dreams to you want to pursue or achieve?
After working as CEO, I plan to share my life experience to help motivate others to fulfill their dreams.
At Kandeo, we believe it’s more relevant than ever to generate positive impacts through investment. Although we have surpassed what is believed to have been the COVID-19 pandemic’s roughest period, society still faces challenges that require everyone’s contribution. The war in Ukraine, material and food shortages, climate change, and regional political crises are just some of the current events affecting the well-being of thousands of people worldwide.
It’s with this frame of mind that Kandeo seeks to work consistently with companies whose portfolios demonstrate creative strategies for market longevity, strong social and environment management, and best practices for corporate governance. These types of strategies and initiatives directly support the United Nations Sustainable Development Goals and give way to the positive impact activities seen in many of our portfolio companies. Businesses are especially excelling in employment generation, financial inclusion, and gender equality in the workplace.
All of this can be attributed to the support, guiding principles and technical knowledge provided by Principles of Responsible Investment (PRI), best practices related to social and environmental sustainability, and policies related to diversity and inclusion promoted by our investors.
We are pleased to present the 2022 results of Kandeo’s portfolio companies across the following chapters.
For the first time, our report was prepared using Global Reporting Initiative 2021 Standards, enabling the disclosure of information with internationally comparable homogeneous criteria. The scope was therefore limited to sharing certain foundations (GRI 1), general disclosures (GRI 2) and material topics (GRI 3).
All of our investments are committed to maximizing positive results by overcoming current and impactful challenges.
Happy Reading.
In 2020, Kandeo sought PRI's support. Principles for Responsible Investment (PRI) is an organization that aims to understand the investment implications of environmental, social and governance (ESG) factors. It supports an international network of investor signatories to incorporate these factors into investment and ownership decisions.
In its recent publication, Principles for Responsible Investment highlighted Kandeo’s ESG practices case study. The article discusses Kandeo’s methodology and procedures, which had been developed with PRI’s guidance, that aimed to include ESG principles into its investment processes and results. Read more about the study here: Case Study PRI + Kandeo.
In 2021, under the advisory of IDB Invest, Kandeo formally declared its commitment to implementing Principles for Women’s Empowerment established and disseminated by UN Women and the United Nations Global Pact. The guiding principles provided by the organization included 7 steps to promote gender equality in the workplace, market, and community.
In 2022, Kandeo joined Responsible Investment Program (PIR) a Peruvian organization that seeks to change investment culture by articulating and empowering key players in the financial sector, through promotion of responsible investment policies and practices.
To more easily incorporate the TCFD’s (Task Force on Climate Related Financial Disclosure) recommendations, LACADI designed a five-part survey to evaluate the state of each financial institution’s progress. Kandeo took part in this study and is now aware of the implications of climate change on its investment decisions. Kandeo is considered to be in the preliminary stage of managing climate change risks and opportunities in regards to the TCFD’s four action areas (governance, strategy, risk management, metrics and targets).
In 2022, Sarona carried out an evaluation report to measure gender-related indicators within Kandeo’s work with Sarona Peer Group*, based on 2X Challenge criteria published by 2x Collaborative*.
* Includes 27 funds from emerging markets.
* 2X Collaborative is a leader in gender-related investment and provides its members diverse opportunities to learn and invest.
Given that Kandeo Funds 1 and 2 are currently in the disinvestment stage, stage 4 was applied to ten portfolio companies. In the case of Kandeo 3D Fund, all stages were applied.
4. Monitor
Works with the company to develop an effective action plan that contains the following basic indicators:
-
Environmental and Social Management System (ESMS): To document procedures.
-
Comittee ESG: To hold regular commitee meetings.
-
Annual Work Plan: To document a work plan with relevant KPIs.
-
ESG Team: To designate those responsable for various aspects involving ESG.
-
Annual Reports: To generate annual ESG reports.
-
Training: To train employees on ESG.
Given that Kandeo Funds 1 and 2 are currently in the disinvestment stage, stage 4 was applied to ten portfolio companies. In the case of Kandeo 3D Fund, all stages were applied.
Kandeo implemented a system to manage ESG risks across the portfolio base on PRI methodology, IFC and IDB perfomance standards, and the support of the portfolio companies’ management teams. The following methodology is how Kandeo incorporates ESG into its investments:
1. Identify
Kandeo performs a first filter ensuring that the potencial portfolio company and its clients do not participate in activities listed on the IFC exclusion list. It also verifies that the company doesn’t have any existing incidents or fines related to environmental or social issues.
2. Evaluate
Categorizes the level of risk the potential company presents through an exhaustive process of due dilligence based on IFC/IDB performance standards.
3. Model
Establishes an action plan with clear KPIs with the potential company’s management team.