View
9
Download
0
Category
Preview:
Citation preview
STABILITY IMPACT FUND
STIMULATING ENTREPRENEURSHIP IN FRAGILE CONTEXTSCARE. ACT. SHARE. LIKE CORDAID.
value propositioncordaid investments
Morvigor Ltd tea factory, Sierra Leone credits: sascha noé
Laure Wessemius Chibrac, Director Cordaid Investments September 2014
1. OUR PURPOSE
ECONOMIC DEVELOPMENT IS A CRITICAL COMPONENT OF PROMOTING STABILITY
n About 1.4 billion people live in fragile and
conflict-affected countries. These economies
are among the least developed and world‘s
poorest. Lack of economic opportunities
and high unemployment rates are the
most critical determinants triggering civil
conflict.
n When entrepreneurs try to expand and
grow their businesses, they often lack
professional business skills, access to
markets, networks, technology and not the
least access to finance.
n Most foreign investors avoid conflict zones
and local banks are not ready to invest in
small businesses, because of high risk, cost
and low financial return.
n Our purpose is to promote greater resilience
and peaceful development in fragile
contexts through the stimulation of MSME’s
(micro, small & medium enterprises) in their
economic development.
“A 5% negative growth shock increases the likelihood of a civil war the following year by nearly 50%”Edward Miguel, University of California, Berkeley
“Economic Shocks and Civil Conflict:
An Instrumental Variables Approach”
© Cordaid
2. OUR SOLUTION
stability impact fundstimulating entrepreneurship in fragile states
The Stability Impact Fund is an impact-first fund offering investors the opportunity to contribute to job creation, economic development and peace building by supporting the development of MSME’s (Micro, Small & Medium Enterprises) in fragile contexts.
KEY ASPECTS
1. Focus on fragile contexts, where social impact on stability, job creation, economic development and stability is the most significant. Financial return is moderate
2. Access to deals and availability of business support services through local partners
3. Reach the missing middle by combining indirect and direct investments
4. Blend with grants (>EUR15 m) to build capacity of MSMEs, up to 40% in case of direct investments
5. Mitigate risk through currency protection tool6. Committed anchor investors: Cordaid Investments and
a family foundation to invest EUR 10 mln as founders
€€€
STABILITY IMPACT FUND60% 10% 30%
IMPACT
MISSING MIDDLE
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
4 rs = 300!
$$@
€€€
€
R.O.I.=%
SEEDSwaterresistant
TOILET
currency protection
capital +BDS training
capital +T.A.
capital +T.A.
€
€ €
€ €
MFI MFI
stability impact fund September 2014 © Cordaid
3. OUR SOLUTION
fund terms: impact-firstour proposition to investors
© Cordaid
IMPACT FIRST
n SMEs will have access to finance and show economic growth (EBIT) of 10% per year
n New jobs will be created of which 35% will focus on empowering youth
n Micro-entreneurs of which 50% women have enlarged their business
n Leading to greater resilience and peaceful & economic development
FOCUS OF FUND This fund focuses on fragile states. A fragile state
has weaknesses in its governance, security and
justice, economic opportunities for all and a limited
capacity to provide basic services.
GEOGRAPHICAL FOCUS n Direct investments in Sierra Leone, Burundi,
Ethiopia, Philippines (South) and Guatemala.
n Indirect Investments in South Sudan, DRC,
North Kenya, North Uganda, Haiti, Colombia
and Myanmar. CURRENCY PROTECTION n EUR 3-5 mln (10% fund size) convertible loan
offered by philanthropic investors to cover for
first risk on currency losses
n Yearly provision calls based on average currency
exposure of overall portfolio
DISTIBUTION CHANNELS n MFI’s: 60% of capital (indirect)
n SME’s: 10% of capital (direct)
n SME funds: 30% of capital (indirect)
TERM AND FINANCIAL RETURN Term: Open ended
Expected IRR: EUR inflation
ASSET CLASSES n 60% debt senior or subordinated
n 40% equity or quasi-equity
4. OUR SOLUTION
investment targets and bd servicesour proposition to micro, small & medium enterprises
stability impact fund September 2014 © Cordaid
€€€
STABILITY IMPACT FUND60% 10% 30%
IMPACT
MISSING MIDDLE
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
4 rs = 300!
$$@
€€€
€
R.O.I.=%
SEEDSwaterresistant
TOILET
currency protection
capital +BDS training
capital +T.A.
capital +T.A.
€
€ €
€ €
MFI MFI
€€€
STABILITY IMPACT FUND60% 10% 30%
IMPACT
MISSING MIDDLE
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
4 rs = 300!
$$@
€€€
€
R.O.I.=%
SEEDSwaterresistant
TOILET
currency protection
capital +BDS training
capital +T.A.
capital +T.A.
€
€ €
€ €
MFI MFI
€€€
STABILITY IMPACT FUND60% 10% 30%
IMPACT
MISSING MIDDLE
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
DETERGENT
4 rs = 300!
$$@
€€€
€
R.O.I.=%
SEEDSwaterresistant
TOILET
currency protection
capital +BDS training
capital +T.A.
capital +T.A.
€
€ €
€ €
MFI MFI
MICRO INDIRECT THROUGH MFI’S
EUR 250k – 1m
EUR 500 - 10k ACCESS TO FINANCE FOR ENTREPRENEUR
INVESTMENTS SIZE
TA GRANT FOR INVESTEES*
BD SERVICE FOR LOCAL SME*
5 - 10%
EUR 10k - 100k
25 - 40%
EUR 100k – 1m
10 - 20%
SMEs DIRECT
EUR 10k – 100k
SMEs INDIRECTTHROUGH FUNDS
EUR 1m – 5m
* % of investment size
5. OUR PROOF
investment cases MFI: RUFI (South Sudan) SME FUND: WAVF (Sierra Leone/Liberia)
© Cordaid
USD 400 K loan
USD 2.7mln equity
13% return on local currency
20%* return on local currency
1,400 micro entrepreneurs
received a loan
28 sme’s financed
USD 670 average loan
USD 360 K average investment
55% women
1050 jobs created
* ExpectedTea factory personnel, Sierra LeoneEnterpreneur, South Sudan
6. OUR PROOF
funds under management
at 31-12-2013
impact-first investor since 1997
stability impact fund September 2014 © Cordaid
PRINCIPLES & CERTIFICATIONSCUMULATIVE IMPACT INVESTMENTS
Since inception in 1998, Cordaid financed 250 partners and made 466 investments with a mix of equity and debt instruments.
€ mln
160
120
80
40
01999
6
1998
0
2003
39
2007
91
2001
20
2005
63
2009
117
2012
143
2000
11
2004
51
2008
105
2011
134
2002
29
2006
78
2010
128
2013
156
Equity
Guarantee
Senior Debt
Sub. Debt
EUR 78 MLN Total assets
EUR 51 MLN Total committed
EUR 39 MLN Total disbursed
450+Investments since 1998
EUR 637,500Average investment
66 %Female clients
-1,3%Return on Investment
TYPE OF INVESTEES
€ mln
70
60
50
40
30
20
10
0
MFI SME Prod. Org.
MFI Fund SME Fund Other
201220112010 2013
INVESTMENTS INSTRUMENTS 2013
2012 2013
€ mnl
30
25
20
15
10
5
0
Africa Latin America Asia
20112010
COMMITMENTS PER REGION
42%
10%
43%
5%
42%
7. OUR OBJECTIVES
the objectives for 2018OBJECTIVES RELATED TO FUND IMPACT
n 65 SME’s financed (25 indirectly through funds and
40 directly in 5 focus countries)
- Yearly 10% increase of EBIT
- 1500 new jobs created (35% youth)
n 40 MFI’s financed and over 50,000 micro
entrepreneurs financed, 50% women
n 50% of SME’s receive BDS training. Minimum of
1200 people will be trained.
n Up to 10 % of investments go directly in small and
very small enterprises.
OBJECTIVES RELATED TO FUND SIZE AND RETURN
n Target EUR 40 mln investments disbursed
n Target IRR: capital preservation / Euro inflation
(estimated 1-2% p.a)
n EUR 15 mln in technical assistance and business
development services
philippines(mindanao)ethiopia
kenya (north)uganda (north)
burundi
south sudan
haiti
guatemala
dem. rep of the congo
© Cordaid
n Direct investments
n Indirect Investments
colombia
sierra leone
myanmar
8. OUR PROCESS
close, disburse, scale and manage
1. FIRST CLOSING & DEALS BY Q1 2015n Fund raising of EUR 25 mln
n Deal flow of 30 potential indirect investments
2. DISBURSEMENT & BDS TO FIRST INVESTEES IN FOCUS COUNTRIES (2014-16)
n MFI and SME funds in 12 countries
n Initiate direct investments in Sierra Leone in 2014,
in Philippines (South), Ethiopia, Guatemala and
Burundi in 2015/2016
n Annual impact and financial performance reporting
3. SECOND CLOSING (YEAR END 2016) & SCALE OF DISBURSEMENTS (2018)
n Additional 25 million raised
n Steady deal flow of direct and indirect investments
n Annual impact and financial performance reporting
4. PORTFOLIO MANAGEMENT (2018 ONWARDS)
n EUR 50 mln under management
n Annual impact and financial performance
reporting
n Continuous fundraising
n Steady deal flow generation
n Continuous investments required to fund patient
capital, equity investments with 10-15 years horizon
€€
€25 MM
2016
# investments
STABILITY IMPACT FUNDPORTFOLIO
€
R.O.I.=%
impact
2016
# investments
€25 MM
+ €25 MM
end 2016
€€
€25 MM
2016
# investments
STABILITY IMPACT FUNDPORTFOLIO
€
R.O.I.=%
impact
2016
# investments
€25 MM
+ €25 MM
end 2016
€€
€25 MM
2016
# investments
STABILITY IMPACT FUNDPORTFOLIO
€
R.O.I.=%
impact
2016
# investments
€25 MM
+ €25 MM
end 2016
€€
€25 MM
2016
# investments
STABILITY IMPACT FUNDPORTFOLIO
€
R.O.I.=%
impact
2016
# investments
€25 MM
+ €25 MM
end 2016
fragile contexts require patient capital
stability impact fund September 2014 © Cordaid
9. OUR RESOURCES
fund structure & managementclear separation of capital and grants
© Cordaid
Cordaid Investments
ManagementContract
1 member
Internal External
Investment
InvestmentDecision
100%
Anchor Investors
Stability Impact Fund
Cordaid Foundation
T.A. Manager Fund Manager
Local BDS Trainers
Advisory Board
Investors
Investment Committee
SME’s Family Foundation
10. OUR KEY RESOURCES
FUND MANAGEMENT
BDS MANAGEMENT
Laure Wessemius ChibracDirector InvestmentsFormer functions:- MD Corporate Partner- Director Equity Capital Markets,
ABN AMRO Rothschild London/Paris- VP Equity Advisory, BNP Paribas
Sascha NoéInvestment ManagerFormer functions:- Programma manager Microfinance,
Oxfam Novib- Programma manager Estern Europe,
Central Asia, Caucasus, Oxfam Novib
Alain NkurikiyeInvestment ManagerFormer functions:- Consultant, Berenschot- Business development and strategy,
Vlisco Netherlands B.V.- Sales and Communication officer, PSI
Resi JanssenInvestment ManagerFormer functions:- Policy officer, Cordaid- Team leader Africa, Cordaid- Executive Secretary, MicroNed- Investment officer, Oxfam Novib
Peter van PoortvlietDirector EntrepreneurshipFormer functions:- Team manager PSI Africa- Project officer PSOM Mozambique,
Kenya and Indonesia at EVD- Project officer, EGL
stability impact fund September 2014 © Cordaid
how we make it happen
n Cordaid
n Cordaid Investments
peru
haiti
sierra leone
ghana
tanzania
burundirwanda
uganda
ethiopia
philippines
vietnam
india myanmar
kenya
south sudan
bolivia
honduras
nicaragua
dem. rep of the congo
11. CORDAID INVESTMENTS
IF we provide inclusive and affordable financial and business development services for growth to MSMEs in fragile contexts
THEN employment will increase and business opportunities will develop sustainably, securing the income of people in the communities and reducing their vulnerability
BECAUSE we believe that investing in small and medium enterprises in fragile countries will contribute to strengthening the economic development and the peacebuilding process
theory of change
© Cordaid
12. CORDAID INVESTMENTS
stability impact fund September 2014 © Cordaid
being part of cordaid
# of investees (institutions vs SMEs), # of equity stakes, loans, guarantees and grants provided, total volume of each financial
product
We provide equity, loans, guarantees and grants to financial institutions as well as directly to SMEs
Local financial institutions and SMEs often lack the capital to professionalise and grow
# of institutions trained, # of MSMEs trained, # networks established /trained, # of board positions
We directly build capacity of financial institutions and SMEs through board memberships and coaching, as well
as contracting consultants/interim managers
Local financial institutions and SMEs often lack the capacity to formalize and grow
# BDS providers trained, # of BDS providers that received a grant, total grant volume
We build the capacity of BDS providers locallyLack of sufficient and adequate local Business Development
Service providers
# of fund reports, financial and social return of fund, # of investors, total volume of fund, # conference & events
We manage funds (dealflow, ESG, monitoring, reporting, measuring impact, currency protection tools). We demonstrate and share our
experiences and outcomes within the investment sector
Investors perceive the risk to invest in fragile states as high, because of their lack of trust, information, thorough risk
analysis and experience
# of dialoguesWe facilitate constructive dialogues between private sector
stakeholdersPoverty, high risk of natural disasters and poor governance
structures make it difficult to do business
PROBLEM ACTIVITY OUTPUT
CORDAID - BUILDING FLOURISHING COMMUNITIES IN FRAGILE STATESFlourishing communities are the social fabric of a nation, where caring for and taking care of one another are fundamental values.
Cordaid Investments Employment will increase and business opportunities will develop sustainably, securing the income of people in the communities
and reducing their vulnerability, strengthening the local economies and the peacebuilding process.
Increased income and job creation decrease the incentive for people to
engage in negative activities like war and crime. On top of that, less private sector conflicts also lead to improved stability.
Entrepreneurs have improved access to finance and business development support
stimulating businesses and job creation. More successful businesses will increase the confidence to invest in fragile states.
The governance of financial institutions and SMEs improves as well as the professionalism of the Business
Development Service sector.
Entrepreneurs, with emphasis on youth and women, are empowered with skills,
technology, network and capital.
security opportunity governance empowerment
OUTCOME
IMPACT
CORNERSTONES
CARE.ACT.SHARE.LIKE CORDAID.
HEALTH CARE
DIS ASTER RESILIENCE
EN TRE PREN EUR SHIP
WO MEN’S LEAD ER SHIP
CHILD & EDU CA TION
EX TRACT IVES
FOOD SE CUR ITY
SE CUR ITY & JUSTICE
URB AN MAT TERS
IN VEST MENTS
145 MLN spent on fighting poverty annually
324,000 private donors in nl
800
partner organizations
38 countries
INFORMATION
More information see www.cordaid.org/ investments
You can also contactLaure Wessemius-ChibracDirector Investmentslaure.wessemius@cordaid.nl
CONTACT
CordaidP.O. Box 16440 2500 BK The Hague The Netherlands+31 (0) 70-31 36 300
www.cordaid.org
CORDAID FACTS AND FIGURES
source: annual report 2013
Recommended