TriLinc has provided financing to a retailer of electronics and furniture in Indonesia who caters to consumers in the lower middle to lower income brackets. Since its customers lack access to traditional forms of credit, such as credit cards, the Electronics Retailer allows them to purchase household appliances and electronics, such as refrigerators, washing machines and televisions, on payment plans. The loan from TriLinc will support the company’s purchase of inventory, and the borrower expects that it will be able to significantly increase the number of customers it provides financing to in the coming years. As an affiliate of a larger group that has produced and sold furniture in Indonesia for 25 years, the company seeks to provide Indonesia’s growing middle class with one-stop shopping for home appliances and electronics. TriLinc’s due diligence and underwriting has uncovered strong revenue and profitability growth potential for the retailer.
Indonesia is one of the fastest-growing economies in Asia and is classified as a middle income country by the World Bank.1 Real GDP growth over the last 5 years (2008-2012) has averaged more than 5.9%, and has averaged above 5% since 2000 (2000-2012).2 In fact, other than China and India, Indonesia was the only member of the G-20 to record positive growth during the global financial crisis in 2009.3 Its major export sectors include petroleum and natural gas, textiles, electrical appliances, apparel and footwear.
Indonesia meets TriLinc’s country standards for its performance across relevant growth, stability and access metrics.4 In particular, Indonesia scores especially well versus its regional peers on a series of growth indicators, buoyed by a strong domestic market of nearly 250 million citizens. Both Fitch and Moody’s have rated Indonesia’s debt as investment grade since 2011.
Additional Sustainability & Impact Highlights
- In Indonesia, more than half of small and medium-sized enterprises (SMEs) report being fully credit constrained, as defined by the World Bank5
- The borrower provides access to financing for lower middle and lower income Indonesians, with limited access to credit, who on average are paid wages approximately 12% below the national average6
- According to the borrower, its customers include teachers, taxi drivers, and small traders and sellers, whose financial positions have previously prevented them from purchasing household appliances and electronics
- The borrower plans to expand its operations to Sulawesi Island, a region in Indonesia generally more heavily populated by lower middle to lower income Indonesians
1World Bank, World Development Indicators Databank, June 2013. 2IMF, IMF World Economic Outlook Database, April 2013. 3CIA World Factbook, 2013. 4There is no assurance that our investment in this company or this market will be successful or that it will have the desired impact. 5World Bank Group, “What have we learned from the Enterprise Surveys regarding access to finance by SMEs,” Feb 14, 2012. 6World Bank, World Development Indicators Databank, June 2013.
The above information is as of the initial date of investment: July 26, 2013.
This borrower is no longer in TriLinc’s portfolio.
TriLinc originally performed an SDG mapping exercise in December 2017 to map all of our borrower companies, both current and exited from our portfolios, to specific SDGs based off of business activity. TriLinc’s official SDG alignment methodology was not finalized until June 30, 2018. For borrowers that had exited TriLinc’s portfolios prior to this time period, the selected SDGs for these borrower are a reflection of what TriLinc believes would have been the SDG alignment if 1) the SDGs had been in effect and 2) TriLinc had integrated the SDG alignment while the company was in the portfolio. The SDG mapping presented does not include input from Investment Partners or borrower companies given that the companies were no longer in the portfolio when the alignment was finalized.
There is no guarantee that TriLinc’s investment strategy will be successful. Investment in a non-listed LLC involves significant risks including but not limited to: ownership is restricted; no secondary market; limitation on liquidity, transfer and redemption of ownership interest; distributions made may not come from income and, if so, will reduce the returns, are not guaranteed and are subject to management discretion. TriLinc selects investments and conducts operations on behalf of its clients, and will face conflicts of interest. Investment with TriLinc is not suitable for all investors. Securities Offered through CommonGood Securities, LLC, a member of FINRA and SIPC.
An investment with TriLinc carries significant fees and charges that will have an impact on investment returns. Information regarding the terms of the investment is available by contacting TriLinc. This is a speculative security and, as such, involves a high degree of risk. Investments are not bank guaranteed, not FDIC insured and may lose value or total value. Some investments may have been made in an investment vehicle that is no longer open for investment. The highlighted investment may or may not have been profitable. There is no guarantee that future investments will be similar.
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