Packaging Investment for TriLinc: Pandemic-proof Ecuadorian company receives investment

The following article was originally published by James Cutchin on the Los Angeles Business Journal website. Click here to view.

Manhattan Beach-based TriLinc Global has cleared a $3.25 million loan to a Latin American sustainable packaging company.

The new funds, set to mature in June 2025, are added to an existing five-and-a-half-year term loan program between TriLinc and the Ecuador-based packaging manufacturer.

Capital for the transaction was drawn from two of TriLinc’s four existing funds, according to the company’s Chief Investment Officer Paul Sanford.

TriLinc makes impact investments in developing markets to support businesses with a strong social benefit. The small- to medium- sized companies must meet high environmental, sustainability and governance, or ESG, criteria, as well as deliver market-rate returns.

TriLinc declined to disclose the company’s name, citing contract privacy restrictions, but said the business uses mostly recycled materials to make sustainable cardboard packaging.

“Their business really started with the boxes for bananas,” Sanford said. The company uses 97% recycled cardboard to make shipping containers for their country’s large volume of agricultural products.

Sanford said the company recycles or repurposes almost everything used on its facilities. Water used in cardboard breakdown is treated, then either reused in manufacturing, used to water plants on company property, or pumped through mister systems to keep workers cool, according to Sanford.

After no more usable material can be extracted from recycled cardboard mash, Sanford said, the company repurposes the leftovers into inexpensive portable housing components.

“There is an economic incentive to do this,” Sanford said. “They do save money. … But they’ve gone beyond that. It’s a mission statement for them.”

TriLinc’s latest investment is located in one of the countries hit hardest by Covid-19 in South America. Official Covid-19 deaths in Ecuador were just shy of 3,000 in late May, although most experts say the true number is likely much higher due to limited testing.

Despite this challenge, Sanford said his firm’s investment should be largely insulated from the turmoil. The company is one of the only makers of this type of packaging in Ecuador, according to Sanford, leaving the nation’s agricultural producers with few alternatives to transport their goods.

Because they largely service critical food suppliers, he said, there is also less likelihood that serious drops in demand will hurt the business. “We even looked at the actual ability to transport these products to their destination markets like the Port of L.A.,” Sanford added.

The statements and opinions expressed in this article are those of The Los Angeles Business Journal. The information contained in this article is distributed for informational purposes only and should not be considered investment advice or a recommendation of any particular security, strategy, or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. TriLinc cannot guarantee the accuracy or completeness of any statements or data. The information contained in this article is accurate as of the date submitted but is subject to change.

Sustain and Gain: TriLinc Makes the Most of Socially Conscious Investing

The following article was originally published by James Cutchin on the Los Angeles Business Journal website. Click here to view.

Trilinc GlobalCEO Gloria Nelund focuses on impact investments.

TriLinc Global CEO Gloria Nelund focuses on impact investments. Photo by Ringo Chiu.

Last year saw record levels for socially conscious investing, with sustainable fund assets reaching $960 billion globally in 2019 — the highest ever, according to research firm Morningstar Inc.

And early this year, the head of the world’s largest asset manager, Blackrock Inc., flagged sustainability issues as serious investment risks and said his firm would be pulling back from certain fossil fuel investments.

Then Covid-19 hit, rocking global markets and tightening or closing the flow of investment dollars to most industries. Rather than hindering the rise of sustainable investing, however, the pandemic appears to be helping to validate the sector’s staying power.

In the first quarter of 2020, global sustainable fund assets declined by 12%, compared to a drop of 18% in the overall fund universe, according to Morningstar.

Manhattan Beach-based sustainable investment firm Trilinc Global has continued to invest throughout the pandemic, including three new investments in the last month, according to founder and Chief Executive Gloria Nelund. The firm has had no loan losses to date, she said, and does not anticipate any as a result of the pandemic.

Trilinc focuses on impact investments — or investments that have a positive effect on a society or the environment — in small- to medium-sized businesses in developing countries. Nelund founded the firm more than a decade ago after noting lackluster performances at many sustainability-focused investment groups.

“They were struggling to raise funds because they were mostly philanthropy with very little real investment strategy behind it,” she said. “Investors are not willing to give up returns to do impact investing. Many can’t.”


By Ringo Chiu
Los Angeles Business Journal
A focus on underserved markets has paid off for TriLinc during Covid-19, according to CEO Gloria Nelund.


Emerging world investing

Nelund said her firm bases all of its deals first and foremost around “a real investment opportunity” with market-rate returns. All target businesses then go through an extensive screening process for environmental, sustainability and governance, or ESG, criteria as well as an impact assessment.

The “supply-demand mismatch” in many developing economies, Nelund said, can help drive better returns — as long as investors understand realities on the ground. TriLinc partners with local investment managers to identify investment opportunities, conduct due diligence and act as asset managers.

Nelund said this focus on underserved geographies has unexpectedly paid off during Covid-19.

“One advantage to being in emerging markets is that not all have been affected in the way that more developed markets have,” she said.

Some of TriLinc’s investments are located in countries like Namibia, which has relatively little travel or tourism, low population density and poor infrastructure, which can ironically help slow the virus’ spread. Namibia had 21 confirmed Covid-19 cases and zero deaths as of May 25, according to the World Health Organization.

Gerard Tellis, director of the USC Center for Global Innovation, agreed that, while low-quality health care infrastructure is an undeniable disadvantage, many developing countries have factors that have helped slow or stop Covid-19’s spread and limited near-term economic damage.

Certain developed economy features — such as well-established public transportation infrastructures — have, according to Tellis, become less objective advantages in the face of the pandemic.

“That (infrastructure) is a huge mixer of population,” he said. “If it’s not hygienically treated, you could have a massive spread of disease as you saw in the New York and New Jersey areas.”

Some areas of the developing world have been harder hit by the pandemic than others. Through late May, Brazil and Mexico recorded the second- and third-highest numbers of daily coronavirus deaths. To avoid economic meltdowns, these countries have started to reopen despite growing infection and death rates.

According to Nelund, TriLinc has relatively low exposure to high-risk areas and industries. A coronavirus risk assessment her firm conducted across its portfolio found less than 3% exposure to “high-risk geographies” and less than 10% exposure to “high-risk industries.”

Those numbers may need revision if material changes occur in the global situation, although TriLinc’s high-collateral loan model could help insulate it from serious financial pain. The firm typically takes 200% of a loan’s value in collateral, according to Nelund.

“Even if companies go belly-up,” she said, “our investors typically won’t lose out.”

TriLinc is also diversifying into an entirely new market in light of the pandemic: the United States.


By Ringo Chiu
Los Angeles Business Journal
TriLinc is now looking for opportunities inside the United States.


New Markets

“We have always wanted to invest in the U.S., in the lower middle market, which is where the lending gap is here,” Nelund said. “U.S. small businesses have been impacted the same as other countries, if not more.”

In early June, the company will begin investing in American companies out of one of its four funds, according to Nelund. Over time, she added, the firm plans to roll these domestic investments out across all of its funds.

The new U.S. investments will focus on similar areas to TriLinc’s international funds, Nelund said. These will include businesses in rural areas and opportunity zones, women- and minority-owned businesses, as well as those with a generally strong social impact.

TriLinc’s entry into the U.S. market is part of a larger trend among impact investors, according to Jennifer Walske, director of the UCLA Anderson School of Management’s social impact program.

“You are seeing a lot of the biggest impact funds now pivoting to focus in the U.S.,” Walske said.

She pointed to Acumen Fund Inc., one of the most influential U.S. impact funds, which was established in 2001 to invest in developing economies. In a situation analogous to the current downturn, the company began investing in the United States in the wake of the 2008 financial crisis and the massive economic hardship that event inflicted on many poor Americans.

Walske said the tendency to question whether market downturns will have an outsized negative affect on impact investing is also not new.

“The question is always, is this real or is this a fad?” she said. “Every time something like this comes up, people always ask this question.”

The UCLA professor is optimistic about the answer, even in the face of a recession.

“It will be important to watch how this plays out,” she said, “(but) if you look at the millennials and their values and priorities, I think it is here to stay.”

The statements and opinions expressed in this article are those of The Los Angeles Business Journal. The information contained in this article is distributed for informational purposes only and should not be considered investment advice or a recommendation of any particular security, strategy, or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. TriLinc cannot guarantee the accuracy or completeness of any statements or data. The information contained in this article is accurate as of the date submitted but is subject to change.

Impact Investing: Can Funds Achieve Both Social Impact And Returns At Scale?

The following article was published by the London School of Economics and Political Science online in the LSE Business Review. Click here to view.

Helping the common good while making money is difficult but possible, with robust methodologies to identify and seize such opportunities, write Feng Li, Gianandrea Giochetta and Luigi Mosca

Popular opinion has it that ‘investing for the common good’ has gone mainstream. Yet our research finds that only a small proportion of funds has consistently generated market rate return and measurable social and environmental impact at large scale – especially in capital-starved emerging markets’ small and medium enterprises (SMEs), often deemed as risky and unattractive by mainstream investors. With investing for return and impact, known as impact investing, only selected opportunities exist. And it takes particular leadership skills, professional expertise and organisational setup to tackle them.


What is impact investing?

The need for impact investing has arisen from the persistence of societal challenges and the inability of existing institutions to eradicate them. Yet despite growing enthusiasm for such goals, there is still no consensus on what impact investing is. This is reflected in the huge variations in the estimated size of assets under management, from $502 billion by the Global Impact Investing Network (GIIN), to $30.4 trillion by the Global Sustainable Investment Alliance. Such lack of conceptual clarity and rigour causes confusion and dampens investor expectations. GIIN defines impact investing as“investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return”.

Unlike socially responsible investment (SRI) or environmental, social and governance (ESG) investing, impact investing is not just about avoiding “sin stocks”or “do-no-harm”, but also actively deploying capital to address social and environmental objectives while generating financial returns for investors. It requires intentionality: portfolio companies must proactively track, measure and report on their social and environmental impact. If successful, impact investing can unlock substantial capital from mainstream investors.


Challenges and opportunities for impact investing

We conducted extensive research of institutional investors and their portfolio companies. The result, however, has been disappointing. Most funds can deliver return or impact, but very few deliver both consistently at large scale. ‘Impact washing’ (particularly ‘green washing’) is rampant. According to Confucius, “he who chases two rabbits catches neither.” The challenge for impact investing is first to demonstrate that it is indeed possible to catch two rabbits at the same time, and then develop robust methodologies to identify and seize such opportunities.

For impact investing to scale, products must be capable of addressing a range of institutional needs, including the ability to absorb large pools of capital, adequate liquidity and robust risk management practices while generating measurable return and impact. These have traditionally been met through investment strategies targeting blue chip securities. Such an approach, however, results in channelling funds where it is harder to proactively generate impact, as bondholders and minority shareholders have limited opportunities to directly influence senior management teams of large corporations. Furthermore, blue chip securities are concentrated in mature markets, while the greatest need for impact capital is elsewhere. The IMF estimates a $700 billion unmet credit demand globally in terms of debt financing to emerging markets SMEs, a niche where every $1 invested contributes a further $13 to the local economy.

From a financial perspective, a supply-demand mismatch of this magnitude represents a significant opportunity, while from an impact point of view, it highlights the imperative of channelling more capital to where it matters the most. Nevertheless, institutional appetite for emerging market SME financing, particularly fixed income, remains marginal, associated with its reputation for high risk and low return.

“The highest calling of impact investing is to increase the amount of capital being invested in places, companies, products, and services that have significant social benefits”. However, the momentum has been gained predominantly in listed security markets through strategies such as exclusionary screening, positive screening, or active ownership. Since investors in listed securities can only achieve impact by, at best, influencing responsible behaviour through proxy voting, active ownership and shareholder activism, impact investing should focus more on private capital markets, through means such as venture capital, private equity and private debt. This is where investors encounter most challenges. Managerial guidance is urgently needed.


Is it possible to achieve return and impact at large scale?

Our research has found that successful examples of impact investing remain rare, particularly those consistently generating market-rate return and measurable impact at large scale. Over the last ten years, we engaged with a large number of institutional investors and their portfolio companies purported to deliver return and impact. Within the niche of SME lending in emerging markets, we have found only a handful of institutional players operating in the segment, and TriLinc Advisors LLC (TriLinc) stood out as an exemplar. Its flagship fund, TriLinc Global Impact Fund (“TGIF”), has made over $1 billion in loans to 82 businesses in 36 countries since 2013, delivering a consistent unlevered net annual return of seven to nine per cent to investors and measurable impact using established international standards. The experience of this case study illustrates that impact investing is indeed possible, but very difficult to do. It requires special leadership skills, professional expertise and organisational setup to identify suitable opportunities and seize them. Importantly, the success of TriLinc can be replicated.


Managerial implications

Our research shows that specialising in fixed income – which is the largest capital market – rather than other asset classes, brings a huge potential for scaling up impact investments. The case is also unique in that it focuses on emerging markets, servicing primarily undercapitalised SMEs in developing countries. The TriLinc success stems from its ability to distil a simple yet actionable strategy, structure an investment product matching institutional expectations, and execute it through an effectively configured operation. A series of managerial considerations also mattered, an area little explored in the context of impact investing.

The case demonstrated that it pays to focus on less efficient markets where greater arbitrage opportunities may be found. The specific niche covered by TriLinc is vast and there are opportunities for other players to enter this segment. A similar approach may be applied to other market niches demonstrating such characteristics.

From an impact perspective, the challenge is to identify targets that are both realistic and measurable using established international standards. Rather than pursuing complex objectives, it may be preferable to aim for goals with a high probability of success and that may be achieved over a relatively short time span.


TriLinc Global Impact Fund (TGIF): impact investing in an unloved market niche

TriLinc Global Impact Fund, LLC (TGIF) is an impact-investing fund managed by California-based TriLinc Advisors, LLC (TriLinc). It was ranked 9th in the Global Banking and Finance Review’s top 100 impact companies in 2019. As of December 2018, its portfolio companies created over 18,500 jobs, achieved 100 per cent compliance with local environmental, labour, health, safety and business laws, standards and regulations, and all have committed to working towards implementing international environmental and health and safety best practices. Seventy-seven per cent of portfolio companies also demonstrated positive impact on their local communities through services or donations; and 91 per cent implemented environmentally sustainable practices (Figure 1).

Figure 1. The investment approach by TriLinc Global Impact Fund (TGIF)

We conducted extensive research on TriLinc, including multiple interviews with key members of the senior management team and exclusive access to a confidential dataset on some of its portfolio companies. Our research identified four critical factors for its success.


1. Veterans with track record in commercial investing and motivation for impact

After a long career on Wall Street, founder and CEO Gloria Nelund assembled an experienced team at TriLinc – who often described themselves as “reformed Wall Streeters”. The team are united by the vision that impact investing represents a realistic alternative only if it delivers financial return in line with or superior to traditional products. By building on their commercial experiences, they strive to align social and environmental motives with financial objectives.


2. Investment strategy engineered to maximise both return and impact

TriLinc’s strategy was engineered from the ground up to maximize both financial and impact objectives. The global impact fund focuses on short term financing to SMEs in selected emerging economies for their expansion projects. Most investments seek to generate employment growth and support local communities and sustainable growth that can be directly aligned with the business objectives. TGIF focuses on private, US dollar-denominated short-term notes such as trade finance or term loans. This allows the adoption of company-specific ESG targets based on IRIS* standard, and enhanced risk management through ad-hoc structuring and collateralisation. Short-term loans may be held to maturity, pragmatically addressing the fund’s liquidity requirements.


3. Local partner networks for opportunity identification and monitoring

TriLinc selects target countries using a proprietary macroeconomic analysis platform that takes into consideration a number of variables, including growth, stability and access. For each target country, TriLinc teams up with an institutional-class investment partner supporting through local knowledge and presence on the ground throughout the entire life cycle. No investment is made without a local partner. This approach is seen as an efficient and cost-effective way to build a global presence. TriLinc remains involved in all key decisions and activities.


4. Investment process attributing equal weighting to impact and financial considerations

All deals are appraised through an intertwined process assessing the merits from both financial and impact perspectives. A loan is only made when both sets of conditions are met. TriLinc has identified five core impact metrics, tracked by every investment across the portfolio on job creation, wage increase, increased revenue, profitability improvement and increased company taxes paid. Additionally, each portfolio company selects, and–through KPIs–is held accountable for, its own impact objectives. TriLinc can influence its portfolio companies through both “positives” and “proactive prevention of negatives”, using IRIS standard to track and report impact activities at both the fund and borrower levels.

* IRIS (Impact Reporting and Investment Standards) is an initiative of the Global Impact Investing Network (GIIN), a nonprofit organisation dedicated to increasing the scale and effectiveness of impact investing.


  • Authors’ disclaimer: The authors do not receive any financial support, nor hold any financial interest in TriLinc and its associated companies or funds.
  • This blog post gives the views of its authors, not the position of LSE Business Review or the London School of Economics.
  • Featured image by Soneva Foundation, under a CC-BY-NC-2.0 licence
  • The statements and opinions expressed are those of the author and not necessarily those of TriLinc Global, LLC and its affiliates (collectively, “TriLinc”). It is meant for educational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product.  Certain information contained herein regarding TriLinc is based on information provided or confirmed by TriLinc while other information has been obtained from third party sources and such information has not been independently verified by TriLinc. No representation, warranty, or undertaking, expressed or implied, is given to the accuracy or completeness of such information. Past performance is not indicative of future returns.

Feng Li is chair of information management at Cass Business School, City, University of London. His research investigates how digital technologies facilitate strategic innovation and organisational transformation in the digital economy. He has led a series of multi-million pounds (dollars) research programmes aimed at addressing grand societal challenges via financially sustainable and scalable approaches. He advises senior business leaders and policymakers on how to manage the transition to new technologies, new business models, and new organisational forms. He is a fellow of the British Academy of Management (FBAM) and the Academy of Social Sciences (FAcSS). E-mail:


Gianandrea Giochetta is a senior research fellow at Cass Business School, where he focuses on impact investing and socially responsible projects. He has over 20 years of experience in corporate strategy and international capital markets, both in mature and emerging economies. He previously worked for JPMorgan, McKinsey and Booz Allen & Hamilton.


Luigi Mosca is a research fellow at Imperial College London. His research interests lie at the intersection of organisation theory and strategy. He received his Ph.D. in economics and management from the University of Padova (Italy). Prior to joining Imperial, Luigi was a research fellow at Cass Business School.

TriLinc Global CIO: Trade War Underlines Need For Southeast Asia To Rely Less On China, United States

The following interview initially appeared on Emerging Market Views here.


The stand-off over trade between China and the United States should serve as a wake-up call to export-reliant Southeast Asia nations about being less dependent on the world’s largest economies to power their economic growth, according to TriLinc Global’s Chief Investment Officer Paul Sanford.

TriLinc Global focuses on impact investing, extending private loans in the region of $5 million to $25 million to small- to medium-sized middle market ventures in industries that are, ideally, not directly impacted by political interference.

South-south trade (commerce with and amongst developing countries) has increased dramatically over the last ten to twenty years,” Sanford noted in an exclusive interview, so while the trade war between China and the United States matters in the aggregate, many of TriLinc Global’s borrowers are exporting to other emerging markets.

“What we’ve been more concerned about frankly is the (economic) slowdown in China,” he said, an occurrence that cannot be solely attributed to increased tariffs imposed by the US. “That is a more substantive risk that I’ve been watching for some time now,” Sanford added.

Many economists are coming around to the idea that China’s recent growth rate has been slower than official statistics indicate, and Sanford said he has held this view for a while – describing the world’s second-largest economy as “coming off the boil.”

What the tiff between China and the US has done is raise supply chain questions as it relates to Southeast Asia. “China hasn’t been the low-cost provider (in the region) for a while,” Sanford noted, overtaken by countries such as Cambodia, Laos, and Vietnam. Not only does this provide a bit of a cushion to global manufacturers, lowering concerns about a negative shock, the main question now is who will be the “winners and losers” from the China-US confrontation.

“It’s about being nimble and being aware of how that’s going to move,” he said, “I’m hopeful that the ASEAN group – which has just been like a club in name only, they don’t do anything – will finally start to realize they are stronger together than apart.”

The Association of Southeast Asian Nations is made up of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

While these countries have been content to tie their economic fortunes to both China’s rapid growth and demand from the US with these two economic behemoths now at odds with one another ASEAN countries need to start relying more on each other to fuel economic growth, Sanford said.

He described the custom duties imposed by ASEAN nations on imports from member countries as “absurd,” with most having more favorable bilateral trade agreements with the United States than each other.

As for Latin America, while the region benefits a lot from ‘south to south’ trade, it also regularly experiences a lot of volatility both economically – as high levels of US dollar-denominated debt have heightened their vulnerability to currency swings, and politically. The key to the region’s fortunes are tied to capital flows from the United States, Sanford said.

He noted that many investors do not like investing in other time zones, so Latin America both benefits and suffers from “hot money” originating from the US and usually in relative sizes that can move markets. “So they are constantly getting whipsawed,” he said.

This volatility and the political upheaval that usually follows is why TriLinc Global prefers to structure deals without any government involvement whatsoever – especially in Latin America. “Even if they are well-intentioned, they just create noise and drama,” Sanford said.

“LatAm is just the weakest of the regions, I think, because of all that volatility,” he said, referring to the regional economy as being “at the mercy” of US investors – with Argentina a case in point.

Emerging Europe, on the other hand, is more exposed and significantly impacted by capital inflows as well as outflows from Northern and Western Europe. Headline risk from geopolitical issues related to Russia serve to further complicate things, Sanford said.

However, the lack of access to capital for SMEs and lower-middle market companies “is so dramatic that there are so many opportunities,” he continued, irrespective of the headline risks.

In Sub-Saharan Africa, the key question in terms of the region’s prospects revolves around the trajectory of growth, Sanford said.

“Africa is in a really good place, our largest allocation is by far to Africa,” he said, “we have double the amount in Africa than any other region, so we are bullish on Africa.”

Looking below the surface, however, reveals a very divergent picture. Sanford described countries in Southern Africa as more stable but experiencing slower growth rates, while West African countries have the most opportunities but less political stability. While there is a lot of buzz around developments in East Africa, resulting in a lot of foreign interest, “I think the story has gotten ahead of what’s on the ground,” he cautioned, “it’s a little overpriced.”

As for North Africa, Sanford said countries in the region are still negatively tarred by geopolitical concerns in the eyes of investors. While some countries are unfairly lumped into this category, the risk is believed to outweigh the reward.

The Continental Free Trade Area (CFTA) is set to go into effect this summer after the agreement reached the threshold for required ratifications by the African Union’s member countries. It would create a single continental market for goods and services, encouraging cross-border investment flows, with the goal of eventually establishing a continent-wide customs Union and full economic integration.

“I am very cautiously optimistic,” Sanford said, especially in terms of the CFTA’s potential to fuel development to support increased intra-Africa trade, boost domestic manufacturing, and facilitate greater freedom of movement. “This free trade agreement is hopefully part of a greater Sub-Saharan African integration that will encompass trade … better infrastructure,” he said, “if that happens, it’s the single greatest thing that could happen to the continent.”

For questions or additional information, please email us at

Delivering Impact at Scale: An Interview with TriLinc Global’s Paul Sanford, Chief Investment Officer

The following interview initially appeared in the report titled Private Credit Solutions: A Closer Look at the Opportunity in Emerging Markets, published by the Emerging Markets Private Equity Association (“EMPEA”).

To download a full copy of the report, click here.

Why is the EM debt opportunity attractive to TriLinc and its investors?

TriLinc’s thesis is that the EM private debt opportunity is one of the most significant impact investment opportunities of our lifetimes. Therefore, our business strategy revolves around pairing impact investment opportunities with investment products and structures that are easily consumable and investable by large numbers and types of investors.

The investment opportunity stems from the supply-demand imbalance in financing for credit-worthy small and medium enterprises (SMEs) in emerging markets. IFC’s most recent estimate is that the financing gap for EM SMEs is as much as USD4.5 trillion. A supply-demand mismatch of that magnitude cannot help but be a compelling risk-adjusted investment opportunity that is inherently impactful from a developmental economics perspective.

TriLinc has been able to generate double-digit gross yields1 in its portfolios, with underwriting standards typical of cash-flow lenders but also with the over-collateralization typical of asset-backed lenders—the combination of which can significantly mitigate the risk of default loss.

We believe another attractive trait of the EM debt opportunity is that it easily lends itself to comprehensive diversification. The word ‘diversification’ is so often over-used that it frequently loses its meaning; yet it is systemically important to risk mitigation generally and to TriLinc’s EM private debt strategy specifically. We have been able to create pan-EM portfolios of private debt investments, across four different regions of the world—Latin America, Emerging Europe, Sub-Saharan Africa, and Emerging Asia—in over 30 carefully selected countries. The portfolio is further diversified by industry, investment type (i.e., term lending and trade financing), tenor (60 days to 60 months), and local market investment partners. This level of comprehensive diversification essentially allows TriLinc to create a quasi-index of private debt exposure designed to provide the return premium of idiosyncratic private companies while simultaneously diversifying out the tail risk. Finally, the strategy is non-correlated to public market securities.


How has TriLinc conveyed the value proposition of EM private debt to investors?

We begin with risk mitigation as being fundamental to the strategies we develop. For example, we have seen many opportunities that stretch for returns at the cost of weaker risk mitigation (e.g., subordinated, less collateral, and lighter covenants), but we have stayed committed to our view that most investors are seeking a predictable return over time rather than swinging for the fences with a higher risk of striking out.

Another example of this has to do with exits. One of the biggest complaints we have heard regarding private asset investing in emerging markets is the lack of exits. Because private debt is naturally self-liquidating, we remove that objection from consideration. Through 31 December 2018, TriLinc has had approximately USD668 million, or roughly 57%, of its loans go full cycle and pay off. This emphasis on risk mitigation and self-liquidation has allowed TriLinc to deliver a positive experience to its investors, which often leads to additional commitments, investor referrals, and long-term partnerships.

Next, we understand how investors invest, so we create investment vehicles that seek to match what they are used to investing in, and (importantly) give the investment professional recommending our strategy to their investment committees fewer idiosyncrasies that require explanation.


TriLinc operates a partnership model for accessing EM opportunities. How does this work in practice?

We strive to be very intentional about what will deliver the best results for our investors. A common refrain in investing is that the best investment decisions are often the ones to not proceed with certain investments. At TriLinc, decisions to avoid particular risks have been taken just as readily at the strategic level as at the individual investment level. We spent several years researching and analyzing the risks we believed were worth accepting versus the risks that were not.

Our investment partner model embodies this approach. We believe strongly that investors in any markets (let alone emerging markets) need to have a local presence and deep local market knowledge to consistently perform over time. There are only a couple of ways to achieve that—build it yourself over time or partner with local market specialists. After extensive research, we chose the latter. Our investment partner model provides local market access and knowledge, coupled with our dual underwriting and structuring, while meeting the exacting compliance standards of US-regulated investment firms. All of this work and intentionality has served TriLinc and its investors well over the last several years.


As you look ahead, what’s next for TriLinc and the EM debt opportunity?

We will keep doing what we are doing with our EM private debt strategy, while raising significant additional investor capital— there are still plenty of opportunities. We will continue driving our strategies and processes to seek the best of all worlds with attractive risk-adjusted returns and sustainability (ESG), while also driving positive impacts to the companies, communities, and economies in which we invest.

Disclaimer: TriLinc Global, LLC (“TriLinc”) is a holding company and an impact fund sponsor founded in 2008. This interview was provided for informational purposes only and does not represent a recommendation or offer of any particular security, strategy, or investment. There is no guarantee that TriLinc’s investment strategy will be successful. Prior performance is no guarantee of future performance. Investment in a pooled investment vehicle involves significant risk. TriLinc is dependent upon its advisors and investment partners to select investments and conduct operations.

1Past performance is not indicative of future results. No investor has actually received the returns discussed. Net returns are net of fees and expenses (management fees, incentive fees, and operating expenses).

The Global Economy’s Secret Engine: Middle Market Trade Finance

TriLinc is pleased to share with you our latest white paper: The Global Economy’s Secret Engine: Middle Market Trade Finance.

To download our whitepaper, please click here.


Trade finance, defined as short-term financing to facilitate the movement of goods, is a $17.7 trillion industry, with world merchandise trade volumes historically growing around 1.5 times faster than world real gross domestic product (“GDP”).1 The industry offers large investment potential with an estimated $1.5 trillion funding gap,2 and trade finance exhibits attractive characteristics such as U.S. dollar-denominated transactions, non-correlation, strong collateralization, and extremely low default rates, along with other risk mitigants. Middle market companies, also known as Small and Medium Enterprises (“SMEs”), are vital players in the sector, accounting for 40 percent of exports from Organisation for Economic Co-operation and Development (OECD) countries, and a somewhat smaller share in developing countries worldwide.3 The trade finance gap affects SMEs disproportionately,4 which creates potential for attractive risk-adjusted returns from trade financing to SMEs in select high-growth economies with stable political environments and reliable legal systems.


1World Trade Organization. World Trade Statistical Review, 2018. 2Asian Development Bank. ADB. 3OECD, 4World Trade Organization”. Trade Finance and SMEs, 2016.

GPCA Impact Investing Council

Industry Alliance

TriLinc’s Chairman and CEO, Gloria Nelund, is a founding member of the Global Private Capital Association (“GPCA”) Impact Investing Council.

TriLinc shares the belief of GPCA and their members that private capital can deliver attractive long-term investment returns and promote the sustainable growth of companies and economies. Led by Patricia Dinneen, GPCA Senior Advisor and veteran of Emerging Markets investing, the GPCA Impact Investing Council was founded in 2013 to help educate and scale the impact investing industry.  Since its founding, the Council has provided research and resources for professional investors considering how to build and/or expand institutional quality impact investing portfolios.


Goals and Achievements of the GPCA Impact Investing Council include:

  • Offering GPs a place to network and share new ideas, best practices and lessons learned
  • Providing market research on the impact investing industry
  • Offering LPs information about new products and general education about impact investing
  • Maintaining a database of institutional quality impact investing private capital funds
  • Building a rigorous evidence base, both quantitative and qualitative, with empirical data and case studies demonstrating the achievement of attractive financial returns as well as positive social and environmental benefits
  • Publishing educational communications about impact investing in the form of white papers, book chapters, surveys, etc.
  • Providing all industry players various opportunities for sharing and networking through meetings, conferences, receptions and interactive webinars

TriLinc believes that the GPCA Impact Investing Council plays a vital role in the on-going development of the impact investing industry.  As the leading global industry association for private capital in emerging markets, GPCA brings together more than 300 firms who manage more than US $5 trillion in assets across nearly 60 countries1, and the Impact Investing Council has proven to be an effective facilitator for furthering the impact investing industry.

To learn more about GPCA and the Impact Investing Council, click here.

1Source: as of 1/31/18.

Developing Economies – A Significant Opportunity for Investment

Annual consumption in emerging markets is estimated to reach $30 trillion by 20251, representing what we believe to be the largest growth opportunity in the history of capitalism.

Developing economies have seen strong GDP growth over the last several decades fueled mostly by Small and Medium-Sized Enterprises (SME’s). Formal SME’s contribute up to 60% of total employment, and up to 40% of national income (GDP) in emerging economies1.

The World Bank estimates 600 million jobs will be needed in the next 15 years to absorb the growing global workforce, and in emerging markets, most formal jobs are generated by SMEs which create 4 out of 5 new positions.2 These SMEs, however, are underserved by the financial markets. The International Finance Corporation has estimated the unmet demand for SME financing in developing economies to be as much as $1.1 trillion dollars.3


The Opportunity with TriLinc

  • Track record of earning market rate returns
  • Positive Social and Economic Impact with Investments
  • Target select high-growth economies


TriLinc provides investors with what we believe to be lower risk access to private investment opportunities available in select high-growth economies. At present, we operate in four global regions: Latin America, Southeast Asia, Sub-Saharan Africa, and Emerging Europe. TriLinc only operates in countries with a stable political climate, reliable legal systems and growing economies. To view our Global Impact in these regions, click here.


How We Do It

TriLinc provides term loans and trade financing to private, expansion stage middle market enterprises in carefully selected developing economies where access to affordable capital is significantly limited. Since 2013 TriLinc has:

  • Invested over $1 billion in 36 countries4
  • Sustained zero default losses5
  • A five year track record
  • Provided investors with a fairly consistent yield, stable value and low correlation to public markets


If you are interested in learning more, please contact us.

1McKinsey & Company, Winning the $30 Trillion Decathlon, 2012 2The World Bank: Small and Medium Enterprises Finance, 2018 3Closing the Credit Gap for Formal and Informal MSME’s, International Finance Corporation, 2013, Washington DC, IFC 4Transactions, economies and financed amounts as of 11/30/18. These investments occurred in more than one investment vehicle, not of all which may be open for investment. 5To date, TriLinc has not realized any loan losses, however the value of some loans have been marked down from their original loan amount and in such cases may no longer be accruing interest.

Impact Investing – Is It Possible to Have Your Cake and Eat It, Too?

Posted by Steve Distante on 5/31/18 10:39 AM

To view the original article, click here.

Is it actually possible to create investments that offer impact while at the same time returning market-rate financial returns? We interviewed Gloria Nelund of TriLinc Global, an investment sponsor with the mission of doing exactly that.

Vanderbilt: What do you see as the #1 reason you’ve been able to perform as well as you’ve been able to, creating market return as well as generating social impact?

Gloria Nelund:  We designed our investment strategy to take advantage of a real investment opportunity that also has the potential to create positive impact, and then we created rigorous processes, not only around our investment analysis but also around our ESG and Impact analysis.  What makes us different from other investment firms is that we embedded the ESG and impact tracking into our investment process.

For example, the analysis we do around a company’s ESG policies and practices is gathered in the beginning of our review, at the same time we’re doing our financial analysis of the company.  Our impact and sustainability analysts are part of the investment team and sit next to our credit analysts. When we first get an opportunity they’re together doing the analysis, yet they come at it from two different angles. One important thing about this process is that, early on in the deal analysis, we can identify any potential ESG issues that need to be considered before we commit to full due diligence.

We also are a bit unique in that we have impact objectives at both the portfolio level and the individual borrower-company level.  Our portfolio level impact objective on our current funds is Economic Development through providing access to capital to underserved SMEs in select developing economies.  That objective is tracked on all investments in the portfolio by measuring progress on five key metrics that are known to drive economic development (e.g. job creation).  Additionally, intent to create impact is something we look for in our portfolio companies, so, we require each borrower to identify their own impact objective(s) on which they are willing to be measured.

So, you can see that how we look at companies is multidimensional and goes past the traditional sort of pure investment analysis.

Vanderbilt: Do you think that the upcoming generations are truly more open to impact investing than their predecessors or does it seem more of a myth?

Gloria Nelund: Yes, I believe it is real.

I see it in my own kids, my nieces, nephews and their friends, and they’re all looking for investments that create some kind of impact. Right now, because they don’t have a lot of money, they’re looking at SRI and ESG-screened mutual funds, but, their desire to make a difference even shows up in the products they buy, the universities they consider, and the jobs they seek.

I truly believe it’s just a matter of time until we see the younger generations, the Millennials and Generation X, making more impact investments.  They’re just not at the stage in life yet where they have the wealth, but as they inherit or create wealth for themselves they will continue to drive demand.

We’re already seeing a catalyst with institutional investors though. They are starting to pay more attention to impact investing because there are now funds that can meet their institutional standards of quality investments with track records and rigorous processes. For example, our firm’s strategy now has a 5 year track record and almost $500MM under management so we are able to attract the institutional investors that we could never have as a startup.   It’s happening across the board as more and more fund managers are building the necessary track records and can finally be seen as a viable option for institutional investors.

Vanderbilt: What do you see as the biggest factor working against the progress of impact investing?

Gloria Nelund: There are a few things.

One is the lack of clarity from the industry itself around common definitions, language, and metrics.  I would say that, as an industry, we’ve made the biggest strides with ESG because the CFA Institute published an ESG Guide for Investors and have incorporated ESG principles into their CFA testing. That has really helped bring some clarity and emphasis.  But in other cases, the vocabulary can be quite varied. For example, we don’t all define “impact investing” the same way and we use different rules and standards for how we track and report.  The best illustration of this is “job creation.”  To measure growth in jobs, you need to know what defines a “job.” Is it only full time workers, or does it include part time workers, seasonal employees, contractors?

To make sure we are comparing apples to apples, there need to be commonly accepted rules and standards, similar to GAAP, the Generally Accepted Accounting Principles for financial reporting.  Just like companies in different industries have different types of financial reports, GAAP ensures that they all use the same definitions and apply common accounting rules the same way.  We need similar rules and standards that guide impact tracking and reporting, regardless of a firm’s individual impact framework.  For tracking and reporting on impact, our company uses the IRIS metrics, that then roll up to our impact objectives.

Second, education of advisors and investors is an issue. This is just a matter of time and scale; the more people who are aware of impact investing, and the more capacity there is, the quicker the adoption rate.

Third, there are still not enough investible funds that create competitive returns and impact at the same time.  Since the majority of investors simply can’t give up investment returns to do good, we need more impact investment options that can deliver market-rate returns.  Individual investors have two “buckets;” their investment bucket and their philanthropy bucket.  The investment bucket needs to generate their target returns so that they don’t outlive their money (or so they can maintain their lifestyle).  That means that anything perceived to have concessionary returns, ends up in the philanthropy bucket, which is a much smaller bucket.  So, if we want them to use “investment” capital, we need products that can do both; generate market rate returns from investments in sustainable, responsible companies, AND prove the impact of the investments.

Institutional investors have the same issue, but for different reasons.  They all have an investment mandate, or investment policy statement, that says “here is what you have to do.” So, they really can’t make concessionary investments either.

Impact investing, if done properly, can yield products that are scalable, deliver risk-adjusted market rate returns, with disciplined operations and compliance processes, yet at the same time, can generate positive, measurable impact. What Gloria didn’t tell us in the interview is that TriLinc Global is a B Corp, meaning they were required to undergo a rigorous certification process to demonstrate that the firm has great employee practices, great governance, is active in the community, and does appropriate things to support the environment. TriLinc Global is a great example of how we can be smart investors and business owners and do it all in a way that benefits people and planet.

Read more from the Vanderbilt Financial Group blog here.