OFF-GRID SOLAR & FINANCIAL ACCESSsimafunds.com/.../uploads/2016/10/SIMA_PitchDeck_FundI_Oct10_Full.pdfoff-grid solar & financial access senior debt fund i photo:simpanetworks& 10/10/16

O F F - G R I D S O L A R & F I N A N C I A L A C C E S S

S E N I O R D E B T F U N D I

Photo: Simpa Networks

CONFIDENTIAL – NOT FOR DISTRIBUTION 10/10/16

DISCLAIMER

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This document is intended for discussion purposes only and does not create any legally binding obliga;ons on the part of Social Investment Managers and Advisors (“SIMA” or the “Firm”). Without limita;on this document does not cons;tute an offer, an invita;on to offer or a recommenda;on to enter into any transac;on. When making an investment decision, you should rely solely on the documenta;on rela;ng to the transac;on and not the summary contained herein. SIMA is not ac;ng as your financial advisor or in any other fiduciary capacity with respect to this transac;on. The transac;on(s) or product(s) men;oned herein may not be appropriate for all investors and before entering into any transac;on you should take steps to ensure that you fully understand the transac;on and have made an independent assessment of the appropriateness of the transac;on in light of your own objec;ves and circumstances, including the possible risks and benefits of entering into such transac;on. You must (i) have such knowledge and experience in business and financial maPers as will enable you to evaluate the merits and risks of a proposed investment in the securi;es referred to herein, and (ii) be able to bear the economic risk of this investment. You should also consider seeking advice from your own advisors in making this assessment. If you decide to enter into a transac;on with SIMA, you do so in reliance on your own judgment. The informa;on contained herein does not cons;tute and shall not be construed to cons;tute legal and/or tax advice by SIMA. Individuals should consult with their advisors regarding their par;cular situa;on. The informa;on contained in this document is based on material we believe to be reliable; however, we do not represent that it is accurate, current, complete, or error free. Assump;ons, es;mates and opinions contained in this document cons;tute our judgment as of the date of the document and are subject to change without no;ce. Any projec;ons are based on a number of assump;ons as to market condi;ons and there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results. SIMA may engage in transac;ons in a manner inconsistent with the views discussed herein. SIMA trades or may trade as the principal in the instruments (or related deriva;ves), and may have proprietary posi;ons in the instruments (or related deriva;ves) discussed herein. SIMA may make a market in the instruments (or related deriva;ves) discussed herein. The distribu;on of this document and availability of these products and services in certain jurisdic;ons may be restricted by law. You may no distribute this document, in whole or in part, without our express wriPen permission. SIMA specifically disclaims all liability for any direct, indirect, consequen;al or other losses or damages including loss of profits incurred by you or any third party that may arise from any reliance on this document or for the reliability, accuracy, completeness or ;meliness thereof.

The informa;on contained in this preliminary transac;onal summary is confiden;al informa;on regarding securi;es that may in the future be offered by a to-‐be-‐formed, offshore special purpose vehicle (the “Issuer”). This preliminary transac;onal summary is being delivered to a limited number of sophis;cated prospec;ve investors to assist them in determining whether they have an interest in the type of securi;es described herein and is solely for internal use. The Issuer has no opera;ng history upon which prospec;ve investors may evaluate their performance. There is no assurance that the Issuer will be profitable or achieve its investment objec;ve. The result of an investment in the Fund may be adversely affected by a variety of factors.

The informa;on contained herein is not complete, is subject to material changes and, if any offering of securi;es is made, will be superseded by preliminary and final offering memoranda with respect to any notes as such offered. Such offering memoranda will describe in greater detail the Issuer of the securi;es described herein, the business and financial condi;on of such Issuer, a descrip;on of the securi;es described herein and the risks related to inves;ng in such securi;es. You will not be permiPed to make an investment decision with respect to the securi;es described in this preliminary transac;onal summary un;l you have received a printed copy of a preliminary offering memorandum with respect to such securi;es. Any decision to invest in the securi;es described herein should be made aUer reviewing the offering memoranda, conduc;ng such inves;ga;ons as the investor deems necessary or appropriate and consul;ng the investor’s own legal, accoun;ng, tax and other advisors in order to make an independent determina;on of the suitability, merits and consequences of investment in the securi;es described herein. This preliminary transac;onal summary is not an offer to sell any of the securi;es described herein and it is not solici;ng an offer to buy these securi;es.

Neither the Issuer nor the securi;es referred to in this material may have been or will be registered under the securi;es laws of any jurisdic;on. No applica;on has been made for the lis;ng of the Issuer on any stock exchange.

An investment in the Issuer represents a specula;ve and highly illiquid investment and involves a high degree of risk. There is no secondary market for the securi;es referred to herein and no such market is expected to develop. These securi;es will be subject to restric;ons on transferability and resale and may not be transferred or resold except as permiPed under the Securi;es Act and any applicable state or other securi;es laws, pursuant to registra;on or an exemp;on therefrom and, further, under the organiza;onal documents of the Issuer.

Demand For Solar Is Need-‐driven: 1.2 billion people in the world do not have electricity. 95% of these people live in Sub-‐Saharan Africa and Asia. In 2014, more than $23 billion was spent on non-‐renewable sources of energy including kerosene, baPeries, and candles.

O F F - G R I D S O L A R T H E MO S T CO S T -‐ E F F E C T I V E WA Y O F P ROV I D I NG E L E C T R I C I T Y

Proven Technologies Minimize Risk For Solar SoluIon Providers: GSM technology allows companies to monitor and automaIcally shut off products in the case of non-‐payment.

Technology & InnovaIve Business Models Make Solar Affordable: Not only is demand based on need, solar can be delivered affordably through smaller installments, oUen using digital payment technology.

Shrinking Solar Component Costs: Solar is cheapest form of energy in the world and solar components con;nue to drop. Since 2008, costs have dropped more than 80%.

Growing Investable Market: Bloomberg New Energy Finance es;mates the debt needs of off-‐grid solar providers to be $3.1 billion by 2020.

Many Developing Countries Are Solar-‐Rich: The majority of the countries that don’t have widespread power infrastructure are some of the richest with the sun’s irradiaIon.

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The confluence of these factors have made off-‐grid solar an aVracIve commercial opportunity and a reality for the poor.

TO T H E B A S E O F T H E P Y R AM I D

R E A L I T Y B o P c o n s u m e r s a r e f o r c e d t o t u r n t o u n h e a l t h y , c o s t l y , a n d d a n g e r o u s c a r b o n -‐ b a s e d s o u r c e s

Health Kerosene lamps contribute to

household air pollu;on which causes fatal respiratory problems

and is associated with 4.3 million deaths a year,

higher than the number of deaths resul;ng from malaria, AIDS, or sanita;on issues combined.

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Social

In darkness, social interac;ons are limited and

safety is reduced, especially for women.

Economic BoP households spend

10-‐15% of their monthly income on inefficient energy sources, diver;ng

money away from basic nutri;onal and educa;onal needs.

AUer the sun goes down, there is also

less economic acIvity.

Environmental

90 million tons of CO2 are emiPed annually from burning

fossil fuels for ligh;ng.

Ligh@ng Africa

HEALTH

•  Reduces home air polluIon avoiding the fatal respiratory illnesses

•  Reduces fire and ingesIon hazards associated with candles and fuels

SOCIAL

•  Increases study hours for children from 1.7 to 3.2 hours each night, on average

•  Increases community acIvity (night classes, mee;ngs, etc.)

•  Improves safety and vulnerability for households, par;cularly for women

ENVIRONMENTAL

•  Prevents 90 million tons of CO2 emissions per year

•  Reduces 25 billion liters of kerosene consumed per year

•  Prevents 270,000 tons of black carbon per year

ECONOMIC

•  Saves a household $60/year from a single solar light

•  Creates $27 billion in purchasing power

•  SImulates small business through increased evening hours

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Solar Aid

A L I F E C H A N G I N G I N V E S T M E N T

I N V E S T I N G I N C L E A N E N E R G Y A C C E S S

Y o u r i n v e s t m e n t i n S I M A ’ s F u n d w i l l b r i n g s o l a r e n e r g y t o 2 5 0 , 0 0 0 1 h om e s a n d w i l l i m p a c t t h e l i v e s o f m o r e t h a n 1 . 2 5 m i l l i o n 2 p e o p l e .

1Based on an average solar home system price of US $300. 2Based on an average household size of 5.

PragmaIc, short term 3-‐year $75mm senior debt fund

MulIple tranches allow investor to

choose their risk/return profile, each with target returns more aVracIve than mainstream investments.

Assets diversified over 20-‐25 companies in two industries:

1) younger, fast-‐growing off-‐grid solar solu;on providers

2) more established financial access companies that incorporate solar asset based micro-‐financing and technology into their business model

to increase their customer base

Fund goals:

Build the off-‐grid solar sector by requiring a Code of Conduct that includes Customer Value, Product Quality, and Customer Service.

Socially orient companies to align social goals with business

opportuniIes.

Create a common pladorm for a range of investors (family offices, founda;ons, corporates, ins;tu;onal investors, etc.) to advocate for

best pracIces and build the off-‐grid solar sector.

SIMA has designed a strategy to leverage equity investments of prominent VCs and corporates in off grid coming at the perfect ;ming

to embark on the fast sector growth.

F U N D O P P O R T U N I T Y

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Photo: d.light

T R A C K R E C O R D T E A M

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We are one of the longest serving fund managers in the impact invesIng space.

We have managed 13 funds totaling $630mm, inves;ng in 50+ countries with less than 3.4% losses.

In addi;on to investors, we consider ourselves industry builders with a long track record.

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C O S T S A R E D E C R E A S I N G

Source: Paul Maycock, Bloomberg New Energy Finance

S O L A R C O M P O N E N T

8

$75.00

$0.61 $-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

1976 1985 2003 2012 2015

PV Cost ($/W)

PV module prices have fallen 80% since 2008; 20% in 2012 alone

0

300,000

600,000

900,000

1,200,000

1976 1985 2003 2012 2015

CumulaIve Capacity (MW)

C A P A C I T Y I S I N C R E A S I N G

D E M A N D F O R S O L A R I S N E E D - D R I V E N L A C K O F A C C E S S T O E L E C T R I C I T Y I N D E V E L O P I N G C O U N T R I E S

Share of people without electricity for developing countries (UNDP, 2008)

Of the 1.2 billion people in the world who lack adequate access to electricity, 95% of them live in Sub-‐Saharan Africa and Asia, the geographies SIMA targets.

n.a. < 25% 25% -‐ 50%

50% -‐ 75% 75% -‐ 90% > 90% LDCs

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2 0 2 0 E S T I M A T E D T O B E

~ $ 3 . 1 B N A N N U A L L Y B Y

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Source: Bloomberg New Energy Finance, 2016

>10W SHS Pico-‐PV

2015 2017 2020

0.5 0.2 1.2

0.3 2.7

0.4

$0.7 bn

$3.1 bn

$1.5 bn

G R O W I N G O F F - G R I D E N E R G Y M A R K E T

In 2014, several prominent corporates expanded their investments into the sector including Engie, Total, Orange, Schneider Electric, and Solar City.

T E C H N O L O G I E S

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Mobile money enabled repayment in installments over 12 to 36 months

$Smart solar energy as a service with a

remotely monitored baVery

Server-‐based Customer Management; can be in the cloud

P R O V E N

m i n i m i z e r i s k f o r s o l a r s o l u ; o n p r o v i d e r s a n d m a k e p r o d u c t s a ff o r d a b l e t o c u s t o m e r s t h r o u g h s m a l l e r i n s t a l l m e n t s

Solar Company Maintenance Team

Customer Database

Solar System Health DiagnosIcs

Customer

One example of how an off-‐grid solar company can deploy technology within its business model:

MANU F A C T U R E R S

•  Need capital for R&D to tailor products for BoP customers

•  Inventory financing to order units and parts from overseas suppliers

•  Product/Receivable financing if opera;ng throughout the PAYG value chain

Design and engineering OperaIons Manufacturing NaIonal distribuIon Retailing Consumer

financing

D I S T R I B U T O R S & R E T A I L E R S

•  Distributors and retailers need to finance product acquisiIon

•  Financing required over 12 to 24 months to place products with clients (PAYG)

•  Important working capital needs because of long transport and distribu;on ;mes (12 to 20 weeks)

C ON S UM E R S

•  Underdeveloped product acquisiIon financing acts as a barrier to reach full market poten;al.

•  SIMA uses its wide microfinance network and exper;se to strengthen links between off-‐grid solar companies and MFIs

The energy value chain operates with a 4 to 6 months working capital need.

E n e r g y V a l u e C h a i n

S I M A ’ S P O S I T I O N I N G O N T H E

SIMA operates throughout the enIre value chain and finances companies with a variety of needs:

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$5 – 60

0.5 – 3 WaV Solar Panel lithium-‐ion baPery

Single LED lantern, mobile charging on some models

Plug-‐and-‐play system, 2–6 LED lights, radio, mobile charging Technician installed mulI-‐room energy system: 4–10 LED lights, mobile charging, fridge, fans, TV

$100 – 1,000

4 – 200 WaV Solar System lithium-‐ion baPery, typically

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SO LAR HOME S Y S T EMS PORTAB L E SO LAR L I GHT S

O F F - G R I D S O L A R E N E R G Y P R O D U C T S

Individual Solu<ons – Product Sale

S I M A ’ S P O S I T I O N I N G

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We provide working capital financing to growing, innova;ve companies serving BoP customers with off-‐grid solar energy and financial products that benefit their lives.

E N E R G Y A N D F I N A N C I A L A C C E S S

S I M A P O R T F O L I O C O M P A N I E S P R O V I D E

In the off-‐grid solar energy sector, portolio companies are commiPed to providing high-‐quality, long-‐las;ng, cost-‐saving products and good customer service ~60-‐70% of the Fund’s assets

In the financial access sector, portolio companies have solar asset-‐backed financing and deploy FinTech to expand their customer base with affordable products designed to meet BoP

financial needs ~30-‐40% of the Fund’s assets

These complementary sectors are building the infrastructure of the future for services to the BoP, based on digital technologies

14 Photo: Simpa Networks

T E R M S A N D C O N D I T I O N S

At investor’s discre;on, op;on to extend maturity by 3 years

Fixed income product with defined tenors up to 3 years

Management fee: 1.75%

Minimum investment: $250K (smaller amounts at the discre;on of the manager)

Four risk/return categories: Highest IRR of 20% and greatest credit protec;on of 41.9%

F U N D K E Y

15 Photo: Mobisol

A 3-‐year*, $75 Million Senior Debt Fund

*Op;on to extend for 3 more years at investors discre;on

F U N D S T R U C T U R E

S I M A O F F -‐ G R I D S O L A R & F I N A N C I A L A C C E S S S E N I O R D E B T F U N D I

16 NB: Figures provided for illustra;ve purposes and are not a promise for a specified financial return

Super Senior Tranche US $46.0 million Coupon: 3%

Senior Tranche Size: US $14.0 million Coupon: 5%

Junior Tranche Size: US $14.5 million Coupon: 7%

CatalyIc Tranche Size: US $0.5 million IRR: 20%

$75M

$29M

$15M

Fund Size

US $5 million first-‐loss guarantee 34% of Junior Notes

Liabili;es

60-‐70%

Off-‐Grid Solar Companies

30-‐40%

Microfinance Ins;tu;ons w/ solar asset

backed micro-‐financing programs

Assets

CAPITAL STRUCTURE Credit ProtecIon as % of Fund Size

Dollar Amount

As a % of Principal

As a % of Principal & Interest

Super Senior $46.0 M $31.4M 41.9% 40.2%

Senior $14.0 M $17.4M 23.2% 21.5%

Junior $14.5 M $7.9M 10.5% 8.8%

CatalyIc $0.5 M $2.4M1 AUer loss of 3.2%,

investors begin to take a loss

Projected returns assume 1.7%

credit loss

L E V E L O F C R E D I T P R O T E C T I O N

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1 Composed of the modeled projected credit loss of 1.7% (equal to $ 1.2 million) and the excess spread of 1.7% (equal to $1.2 million).

Organizat ional Structure of S IMA Fund I

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Board of Directors of Fund I (BV)

General Partner Social Investment Managers &

Advisors, LLC New York, NY, USA

LPs/Noteholders Fund I (BV) Netherlands

Accountant Grant Thornton or Ernst & Young (TBC)

Fund Servicer US Bancorp

FX Hedging MFX Solu@ons

Legal Counsel O’Melveny & Myers LLP

Service providers:

Social Investment FoundaIon Netherlands

Board of Directors of Social Investment Founda;on

Netherlands

Investment CommiVee

Loan ApplicaIon and Review

Pipeline

Due Diligence and

Compliance

Credit Write-‐Up and Investment CommiVee

Legal

Closing and Fund Disbursal

ReporIng and

Monitoring

S I M A ’ s I N V E S T M E N T

P R O C E S S

INCLUDES SOCIAL AND ENVIRONMENTAL FACTORS

Investment screens Skype calls Term sheets Sample Covenants

Applica;on Financial model Document review Preliminary commitment lePer

Ques;onnaire Site visit Social scorecard KYC/AML checklist Social and environmental diligence

Risk ra;ng Financial model Qualita;ve informa;on Iden;fy and agree on social goals

Local legal opinion Loan agreement

Covenants

Signing of documents Wire money

Quarterly/monthly repor;ng and covenant tracking of financial,

environmental, and social goals Interest payment

Re-‐ra;ng External audit

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One of the longest serving social investment fund managers. Created Deutsche Bank Social Asset Management business -‐ Managing Director with portolio of $800+ mm

Responsible for FINCA InternaIonal’s social enterprise sector engagement, focused on solar energy and innova;ve financing structures Global Off-‐Grid LighIng AssociaIon (GOGLA) working commiPee. Founding Board member, Microfinance. Informa;on Exchange (MIX). Advisory Council, Social Investments for the World Economic Forum

Long-‐Ime social investor in financial access and energy access firms. Developed and launched Moody’s CorporaIon’s first social ra;ng product Co-‐developed four microfinance funds at Deutsche Bank. Founded Jamaica’s first independent MFI. Managed 4 foundaIons, serves on the board of a family office. Advisor to ACCION Interna;onal and Catholic Relief Services’ Impact Investment CommiPee. Member, Social Performance Task Force Indicators CommiPee. Board member, several Deutsche Bank Funds

S I M A T E A M P I O N E E R S I N T H E S O C I A L F I N A N C E I N D U S T R Y

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Investment professional with a over 12 years experience in the field of impact invesIng managing private equity and debt funds CIO of Bamboo Finance. Designed and Launched the Bamboo Financial Inclusion Fund II, targe;ng microfinance / SME banks and Fintech companies. At Deutsche Bank structured several funds for microfinance and care companies. Management Consultant, DeloiVe ConsulIng and Ernst and Young Corporate Finance Board member CONFIE, Banco FIE, Apoyo Integral, Accion Investments, Asmitha

ASAD MAHMOOD, CEO & MANAGING PARTNER

MICHAEL RAUENHORST MANAGING PARTNER

XAVIER PIERLUCA MANAGING PARTNER

ERIN DAVIS, VICE PRESIDENT, USA

BRIAN MCCONNELL VICE PRESIDENT, Nairobi

FAIQ KAHN VICE PRESIDENT, Karachi

SAMMY MALAKI VICE PRESIDENT, Nairobi

Former Investment Officer, FINCA InternaIonal – focused on developing linkages between microfinance and delivery of Energy and SanitaIon products. Fellow, South Pacific Business Development (SPBD) Tonga. Senior Research Associate, Dana Farber Cancer InsItute. BA Spanish, Wheaton College (MA). MBA & MIA, American University

Expert in evaluaIng financial insItuIons and businesses serving low income clients. Former Regional Manager – Africa at Micro-‐Credit RaIngs InternaIonal Limited (M-‐CRIL). Conducted over 40 ra;ngs. Led development efforts across SSA. Former Senior Analyst at Planet RaIng. Published research at the World Bank on access to finance. Peace Corp Volunteer. MBA (Finance), American University, Kogod School of Business, BA (Economics), Kenyon College. Conversant in French

Former CFO Nuru Energy, oversaw financial ac;vi;es for the group’s six business units in five countries. Former controller at Access Afya Kenya Limited (A healthcare social enterprise). Accountant at Retriever Limited where he set up the finance unit. CPA, Kenya. MBA, University of Derby, City of Derby, East Midlands, United Kingdom. Speaks five languages

Former Business Planning Manager at Habib Bank Limited (Islamic Banking), Karachi. Managed end-‐to-‐end launch of HBL-‐Car Leasing product and helped design long term strategic framework for HBL-‐IB. Credit Analyst at JCR-‐VIS Credit RaIng – designed credit scoring for different sectors. B. Sc. in TexIle Engineering. MBA in Finance, Ins;tute of Business Administra;on, Karachi. Na;ve Urdu speaker, proficiency in Chinese.

C O M M I T T E E I N D E P E N D E N T , E X P E R T I N V E S T M E N T

Deepak Kamra (Chair), General Partner of Canaan Partners -‐  Deepak is a prominent venture capitalist and directs Canaan Partners’ impact investment strategy.

Personally, Deepak is a leading social investor and serves as the chairman for several of Deutsche Bank’s funds’ credit commiPees.

Asad Mahmood, SIMA CEO -‐  See bio on previous page. Joe Fernandez, Founder and Director of Trade Without Borders -‐  Joe is an expert on evaluaIng manufacturing processes and has served major clients including Tesco,

Home Depot and Carrefour. Trade Without Borders is a Social Enterprise whose mission is Sustainable Development Through Responsible and Inclusive Trade of Impact Products. Its primary focus is on clean energy soluIons for underserved markets through its Solageo online platorm.

Tor Gul, Former CEO of Oikocredit -‐  Tor headed Oikocredit, the worlds largest impact investor and has more than 600 relaIonships globally.

Tor has served on the investment commiPee for several of Deutsche Bank’s funds Donn Tice, Former CEO of d.light -‐  Developing world energy execu;ve and investment professional who has built and scaled d.light, a global

off-‐grid energy business in 60 coun;es, advised and developed off-‐grid energy investment funds, and advised African governments on energy policy to accelerate private sector market growth.

21 One Degree Solar

APPENDIX

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F I N A N C I A L A C C E S S

Number of customers: 10,000+

2012: AMK Cambodia without digital finance (113 offices) 2014: AMK Cambodia with digital finance (139 offices and 1,600 agents)

T Y P I C A L

Revenue: > $5mm

113 Offices Branch Office Sub-‐Branch Office

Number of employees: 150+ Customer service: code of conduct, signatory to SMART Campaign

Technology: innova;on and technology is a key strategy component for greater outreach

139 Offices & 1,600 Agents Branch Office Sub-‐Branch Office

Agent

Business model: Microfinance using FinTech Microfinance with solar asset-‐backed financing

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C O M P A N Y

Example of an MFI using FinTech to increase outreach:

O F F - G R I D S O L A R C O M P A N Y

P R O F I L E :

Revenue: $1 -‐ 10mm

Number of employees: 100 -‐ 500

Business model: _ Distributors _ Manufacturers _ Distributors and manufacturers

Distribu;on model: _Cash and carry _Lease to own _Pay-‐as-‐you-‐go (flexible payment based on usage) _Off-‐grid “u;lity”(customer never owns system)

Number of customers: 5,000 -‐ 50,000

Customer service: warrantees, code of conduct, aUer-‐sales service

Technology: many companies use digital monitoring and payment

How company interacts with customers and collects payments

Mobile money enable repayment

over 3 years

$

Smart solar energy as a service. Remotely monitored baPery.

Smart retail kiosks and technicians

24 Photo: GREALTEC

2 I M P O R T A N T B U S I N E S S M O D E L S S I M A F I N A N C E S

PAYG

Products Market Management Capacity

•  Manufacturing (outsourcing, procurement, capacity, cycle, cost)

•  Product (client adequacy, subs;tutes, pricing, versions, R&D deployment cycle)

•  Sales and client demand drivers

•  Technical features (IP, proprietary technology, valida;on, adop;on of technological changes)

•  Environmental impact

•  Trends, size, historical actual and future projected growth rates, drivers

•  CompeIIon (key players, price pressures, trends, differen;a;on)

•  Profile of customers (income levels, economic incen;ve, u;liza;on)

•  Sales, distribuIon channels and post sale services

•  Working capital assump;ons

•  ExecuIon abiliIes of management

•  Track record (number of years of opera;on, growth comparisons, delays in execu;on)

•  IncenIves (Stake in company, Esop plan, termina;on clauses)

•  Key management gaps

•  Shareholder and Board support (financial, opera;onal)

Direct Sales

Customer SelecIon &

Product Adequacy

Monitoring, Service & CollecIons

Cash Flow SegregaIon & Repossession

•  Market: segment, footprint, satura;on

•  Sales: rep/agent, training, incen;ve

•  Product: price, pay-‐ plan, adequacy

•  UnderwriIng: agent /call center role, credit scoring

•  Customer Contract: terms, repossession, etc

•  Customer Service: warrantee, call center protocol,

•  Remote on/off and top-‐up processes

•  Product Quality

•  Monitoring/ERP system (capacity, accuracy, etc)

•  Payments: Mobile interoperability, fail rate, manual recon

•  Customer Communica;ons

•  Ater sales service •  Portolio quality (PAR,

write-‐offs, provisioning, repossession, etc.)

•  Segrega;on of operaIonal vs financial cash

•  Lien/collateral security and reserve

•  Technology analysis (tracking of deployed products, remote switch-‐off, tamper proof)

•  Repossession and redeployment process

P A Y G & D I R E C T S A L E S

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FINANCIAL PERFORMANCE

Annual Revenue Growth Revenue/Unit COGS/Unit Gross Revenue/Unit OperaIng Expenses/Unit Financial Expenses /Unit Net Profit/Unit Overall Profitability Efficiency (%)

ASSET QUALITY

PAR>90>30 (%) Cash Received Vs. Expected (RVE) % Locked (or % Out of Credit [OOC]) % Write-‐off % Repossessed % Redeployed

QUALITY OF TECHNOLOGY Compliance to Technical Standards Average Maintenance Cost Churn Rate Fault Rate

LIQUIDITY Growth in Funds From OperaIons (FFO) and Funds Flow from Financing (FFF) (%)

Debt Servicing (x) 2 years month by month and projected cash flow analysis

CAPITALIZATION Financial Leverage (x)

IMPACT Environmental, Social and Governance

FINANCIAL RESULTS & OTHER INFO ReporIng Requirements

T W O I M P O R T A N T B U S I N E S S M O D E L S S I M A F I N A N C E S

S I M A D U E D I L I G E N C E C R I T E R I A

Pay As You Go (PAYG) and Direct Sales of Pico Solar products, are the two prevalent models in the off-‐grid solar sector relying on different factors of success. The elements and concepts listed, while not exhaus<ve, are key concepts to assess in the context of a due diligence on these two business models.

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C R E D I T & S O C I A L I M P A C T S C O R I N G R E V I E W E D B Y

Business analysis: Country Overview Analysis of Strengths and Weaknesses Strategy and Business Planning Market Risk Reference Check Financial & Credit Analysis: Financial Analysis Loan Product Profile Credit Analysis Capital Structure OperaIonal: Internal Control Environment Credit Risk Management Produc;vity and Efficiency Management & Governance: Governance Human Resources Management Informa;on Systems (MIS) Social & Environmental: Social Performance Scorecard Environmental Performance Indicators

I N V E S T M E N T

C O M M I T T E E


Adapted from Deutsche Bank Social Scorecard and Moody’s Social Performance Assessment

S O C I A L S C O R E C A R D C A T E G O R I E S

Defining Social Goals And Commitment To Mission #1

Customer Orienta;on #2 Monitoring And Repor;ng Social Goals #3

Responsible Treatment Of Employees #4

Environmental Impact #5 28

Photo: Simpa Networks

O F F - G R I D S O L A R C O M P A N Y P R O F I L E E X A M P L E S

Investors:

Khosla Impact, Synergy Energy, Bamboo Finance, S;ch;ng Doen Founda;on, AECF, SunFunder, Ceniarth

CompeIIve Advantages:

Proprietary hardware and cloud based-‐sotware dashboard: monitors and collects customer usage and their repayment history and can remotely shut down the service due to severe delinquencies and redeploy the product

In-‐house customer financing: to assist customers with payment plans (12-‐36 months) and work with them to lower the risk of defaults

Products:

15 -‐ 50 waP solar panels, baPeries, and other accessories

Business OperaIons:

Small to medium-‐sized company selling solar systems to the low-‐income African mass market on a pay-‐to-‐own monthly payment plan. It leads and manages all aspects of its business opera;ons through an engineering lab in London, manufacturing plant in China, and a franchise distribu;on network in 35 countries and 30 local shops in Kenya, Rwanda and Uganda.

Employees:

40 total (38 in the UK and 102 worldwide)

Est. 2010 Operates in Kenya, Rwanda

BBOXX

$9M of Capital Raised to Date

Revenue (2014): ~$4.4M



Investors:

Fidelity Growth Partners India, Bamboo Finance, Deutsche Bank, Prabhakant Sinha


Intelligent, durable, affordable products: run for 30 hours straight and offer a breakthrough five-‐ year lithium Ferro-‐phosphate baPery

Direct To Village (DTV) channel: penetrate hard to reach regions, offer its agents, ‘micro entrepreneurs’ both an income stream and a sense of personal worth

Global Partnerships: distribu;on efficiencies; One Acre Fund (Rwanda, Kenya, Tanzania, Burundi), Fullerton India, Total (Hai;, Cambodia, Nigeria, Tanzania, Zambia), SunnyMoney (Kenya, Malawi, Zambia, Tanzania), Wilkins Engineering (Ghana), ZamSolar (Zambia), Global Cycle Solu;ons (Tanzania), Great Lakes Energy

Products:

Smallest: wide-‐angle beam for general illumina;on and spotlight mode for tasks; sold 3 million lanterns since 2009 launch and serves over 8 million users. In a 5-‐year period, 1 million were sold in only the last 8 months Largest: smart solar-‐powered lamp system designed to provide light in more than one place at a ;me; three solar hanging lamps with individual switches to control the intensity of light with 2-‐year warrantee

Business OperaIons:

11 offices in 4 countries

Leverages 6,000 micro-‐entrepreneurs, earning a steady income by selling in their own communi;es

Experienced 100% growth in each of the past 3 years; aims to be in 16 million households by 2016

Employees:

630 Full-‐Ime employees across the US, Sub-‐Saharan Africa, India, and China. 6,000 Sun King micro-‐entrepreneurs

Est. 2007 Operates in India, Kenya, Uganda

GREENLIGHT PLANET

$14M of Capital Raised to Date

Revenue (2014): ~$5-‐7M



Investors:

Deutsche Inves;;ons-‐ und EntwicklungsgesellschaU (DEG), European Union – European Development Fund, The Africa Enterprise Challenge Fund (AECF), Mobile for Development – GSMA, The Energy and Environment Partnership with Southern and Eastern Africa, myclimate


InnovaIve payment scheme: pay-‐as-‐you-‐go 36-‐month installment method circumvents ini;al investment hurdles for customers who could previously not afford a high quality solar home system Comprehensive ater-‐sales services: three-‐year warranty on the baPery and a twenty-‐year guarantee on the solar panel Remote monitoring: GSM modem included in the solar controller tracks and stores technical data from the panel and baPery in a web-‐based database; poten;al maintenance problems can be addressed swiUly; tracks payment paPerns and enables the systems to be locked remotely in case of overdue accounts – thus decreasing the risk of payment default The Mobisol Akademie: training ins;tu;on for local entrepreneurs, contractors and Mobisol staff

Products:

Systems come in five different sizes ranging from 30, 80, 100, 120 to 200 WaP-‐peak (Wp). Smallest: lights two rooms and charges four mobile phones per day Largest: powers mul;ple lights, consumer appliances such as a laptop/TV or a refrigerator and can charge up to ten mobile phones simultaneously

Business OperaIons:

Combines solar energy with an affordable payment plan via mobile phone, comprehensive customer service and innova;ve remote monitoring technology. Offices in Tanzania and Rwanda (15,000 solar home systems installed so far)

Employees:

Berlin: ~60 employees, Tanzania: over 100 permanent employees and 150 freelance operators, Rwanda: 90 employees and 50 freelancers

Est. 2010 Operates in Kenya, Rwanda, Tanzania

MOBISOL

$20M in capital, $6.7M in grants of Capital Raised to Date

Revenue (2014): ~$10M



Investors:

AECF, Acumen, Novastar Ventures, Ashden, Arc Finance, Centenary Bank, Challenges, Invested Development, SunFunder, DOEN, NL Agency


End-‐user credit facility: adapted to the needs and spending habits of its target market

Franchise Model: Well-‐developed distribu;on network, quality equipment and customer service

Products:

Modular, expandable Solar Home System product range (40-‐500Wp)

Business OperaIons:

SolarNow sells high-‐quality modular solar home systems with 18 months credit through a network of 43 branches across Uganda. With 4,200 sales to date, the company is providing energy access to a significant number of rural communiIes. The company plans to expand to Tanzania and Kenya over the next 2 years.

Employees:

70 employees

Est. 2011 Operates in Uganda

SOLARNOW

Revenue (2014):

~$4M


C O N S U L T A N T S

JUL IE HARR IS IMPACT INVESTMENT CONSULTANT

Innova;ve, socially mo;vated, senior execu;ve with over 30 years experience working in finance and has been consul;ng in impact inves;ng for the last 10 years.

Deutsche Bank SecuriIes, Director, Structured Finance/Asset SecuriIzaIon: Originated, structured and managed a portolio of over 60 transacIons totaling over $6 billion across the credit spectrum. Built client opportuni;es in structured finance and asset securi;za;on. Focused on non-‐investment grade corpora;ons, new asset classes, interna;onal/cross border and emerging markets.

Minlam Asset Management, Managing Director and Senior Investment Officer: Created and implemented the protocol for Minlam’s investment strategy for microfinance investments including the underwriIng and deal origina;on process, overseeing investment analysis, leading in-‐country due diligence and comple;ng documenta;on. Deutsche Bank Microcredit Development Fund, Senior Consultant: Originated and structured financial transac;ons for start-‐up, intermediate and mature microfinance insItuIons worldwide. Evaluated mission, strategy, governance, business plans, internal controls and sustainability of socially moIvated organizaIons. Coordinated with global banking team to iden;fy and assess grant and loan candidates. Blue Orchard, Geneva, Switzerland: Member of the credit commiPee; review and opine on credit offerings presented for investment. ConsultaIve Group To Assist The Poor, Washington, DC: Created disclosure guidelines and benchmark performance metrics (financial and social) for microfinance investment vehicles to improve transparency and promote interna;onal investment

LOU ISE MORETTO IMPACT INVESTMENT CONSULTANT

Over 25 years of experience in banking, interna;onal development, and social inves;ng including working with program related investments and promo;ng clean energy

independent consultant of impact invesIng and financial inclusion for private, public and non-‐profit organiza;ons. Projects include: strategy for developing impact inves;ng and microinsurance capabili;es at mainstream financial ins;tu;ons, research on market building investments for financial inclusion, analysis of investment trends and barriers in Sub Sahara Africa, transi;on management of a CDFI, and designing and managing an impact investment conference.

Women’s World Banking, Served as Head of Capital Markets Group, Sr. Director and Member of CEO Leadership Team. Advised over 30 partners on debt, equity, and capital markets transac;ons

Grassroots Capital Management, Served as Managing Director Investments at an impact investment firm specialized in global microfinance, small-‐medium enterprise, affordable housing and sustainable agriculture investments

Deutsche Bank Global Social Investment Funds, Served as a deputy manager structuring and managing funds, overseeing portolio management, origina;ng social investments, and strengthening opera;ons.

JP Morgan Chase and NaIonal Westminster Bank, banker in global exposure management and specialty lending groups with responsibili;es covering: credit management, deal origina;ons, structured financing and managing syndicated bank facili;es.

Adjunct Professor at Columbia University’s School of InternaIonal Public Affairs

Board member of Vitas Holding, which manages financial ins;tu;ons in the Middle East

33

C O N S U L T A N T S

TROY BERENS GENERAL ELECTRIC SOLAR BUSINESS, TECHNICAL SOLAR CONSULTANT/ADVISOR

Engineering Manager with 18 years overall experience in R&D and manufacturing of semiconductor and solar products

4 patents, 7 patents pending, 10 contribu;ons to literature

Worked for General Electric on $500+ million project to commercialize GE’s first thin film solar product

Worked for mul;ple start-‐up companies from ground level to pilot demonstra;on to factory expansion

Expert at building and developing technical teams and resources, managing programs, managing projects, managing engineering opera;ons, developing products and processes

Skilled in product reliability, product tes;ng, regulatory compliance, supplier development, reducing cost, manufacturing process control, increasing yield

Directed global cross-‐funcIonal teams located within the US, Germany, China, and Taiwan

JOE FERNANDEZ FOUNDER/DIRECTOR SOLAGEO, TECHNICAL SOLAR ADVISOR/CONSULTANT

~20 years of internaIonal business experience working with clients on China manufacturing projects; 5 years in the solar sector on a global level

Developed all Quality Assurance procedures and documentaIon, and served as Lead Auditor and Quality Control Specialist serving major clients overseas, including leading importers and retailers in North America and Europe such as Tesco, Home Depot and Carrefour, as well as major importers and retailers in the Asia-‐Pacific region such as the Dairy Farm Group and Bajaj Electricals in India

Strong technical competencies to quickly grasp design, engineering and product development issues and conver;ng this knowledge into technically complex documents that can be easily understood

Expert advisor to a graduate Energy & Environment team at Columbia University

34

TROY BERENS Engineering Manager with 18 years experience in R&D and manufacturing of semiconductor and solar products

GEORGE ECONOMY Senior Investment Banker & Seasoned Entrepreneur and Investor

HANS MICHAEL HOELZ Former Global Head of CSR, Deutsche Bank MIRA INBAR Director of Strategic Solu;ons at NRG Energy

FREDERIC OTTESEN Senior Execu;ve, Storebrand

JOE POLIZZOTTO Former General Counsel, Deutsche Bank, Americas

RICHENDA VAN LEEUWEN Former Execu;ve Director, Energy and Climate, Energy Access, United Na;ons Founda;on

RICHARD WILCOX Former CEO of Unitrust Bank, London

ADVISORY COMMITTEE :


RISK MITIGATING FACTOR

Limited Performance History

Companies in our portolio have a proven track record of 2-‐3 years.

Major solar companies have demonstrated at least 2-‐3 years of successful performance history, and the basic demand-‐supply dynamics suggest that they will experience significant growth in coming years.

Insufficient Access to Capital

Solar companies con;nue to gain momentum as a viable soluIon in the development industry.

Increasingly, well-‐known venture capitalist, private equity, and impact investment firms are making significant investment in solar companies.

The Power Africa and Ligh;ng Africa ini;a;ves have aVracted the strong presence of mulIlateral development banks and government mandates.

QuesIon of Commercial Viability

Solar soluIons make good basic business sense: affordability of products is good, demand con;nues to increase, and customer delinquency is minimal.

Demonstrated less than 1% loan write-‐offs in portolios.

Solar products are priced such that they save the user money compared to tradi;onal ligh;ng methods of fuel or candles and offer added func;onality such as phone charging.

Growing Market CompeIIon

Demand strongly outweighs supply as the solar market con;nues to grow.

In Africa alone, 85% of the popula;on does not have access to grid electricity or experiences frequent outages leading to demand for other solu;ons.

Technology Becoming Obsolete

R&D is incorporated into the business models of our portolio companies.

Solar companies conInue to develop new products based on customer needs and industry trends while incorpora;ng new technology and ensuring for quality.

LiVle Product DiversificaIon Solar products conInue to diversify.

Most companies in our portolio offer several products geared for different household and business needs ranging from single lanterns to complete home systems while also catering to different income brackets.

O F F - G R I D S O L A R S E C T O R

R I S K S / M I T I G A N T S

36

RISK MITIGATING FACTOR BOTTOM LINE/EVIDENCE

Performance History

The Financial Access companies we target are well established with internal risk management systems but also are innovaIng by using financial technology to streamline their opera;ons.

Major microfinance and financial access companies have demonstrated ability to manage risk with at least 5 years of successful performance history, and the added efficiencies of financial technology suggest that they will experience significant growth in coming years. In addi;on, we require these companies to agree to codes of conduct and the SMART Campaign customer protec;on principles

Access to Capital Financial access companies are not banks but have solid capital structures.

Microfinance and financial access companies con;nue to aVract investment capital.

QuesIon of Commercial Viability

Microfinance and financial access companies con;nue to diversify their products and make them more affordable, demand con;nues to increase, and customer delinquency is minimal.

Demonstrated less than 1% loan write-‐offs in pordolios

Microfinance and financial access companies con;nue to improve efficiencies with high levels of customer saIsfacIon.

Growing Market CompeIIon

Microfinance and financial access companies, par;cularly those with digital finance, con;nue to experience strong demand, even in regions where commercial banks compete.

Commercial banks oten do not have the same customer orienta;on and reach as financial access companies.

Technology Becoming Obsolete

The Financial Access companies we target use financial technology to offer new products, become more efficient and improve customer level data.

Financial Access companies we target are developing efficient new products based on customer needs and ensuring for quality.

LiVle Product DiversificaIon

Financial Access companies we target use financial technology to offer new products.

Most companies are able to offer more differen;ated products geared for different customer needs. These innova;ve new products are based upon a long history of working with the specific customer base.

F I N A N C I A L A C C E S S

R I S K S / M I T I G A N T S

37

M A N A G E M E N T

Microfinance is an established, seasoned industry with excellent asset quality that will diversify and mi;gate our portolio risk

Leading solar companies are experiencing good asset quality

Experienced fund mangers with on ground experience

Quality-‐assurance of equipment financing

Structured to naturally match assets and liabili;es

Assets and liabili;es will be fixed rate instruments to avoid basis risk

Fund and its loans are of rela;vely short dura;on, which further limits the exposure to interest rate risk

Local monitoring

Loans to be made in USD or employ FX swaps; excep;ons approved by the investment commiPee on a case-‐by-‐case basis

Country and repatria;on risk assessed on an ongoing basis during the screening and due diligence phases

R I S K

ASSET QUALITY RISK

MARKET RISK CURRENCY RISK

38

Fenix Interna@onal

39

Asad Mahmood, CEO & Managing Partner Ph.: +1 (732) 713-‐4731 Email: [email protected] Michael Rauenhorst, Managing Partner Ph.: +1 (917) 750-‐5588 Email: [email protected] Xavier Pierluca, Managing Partner Ph.: +41 78 750 4706 Email: [email protected] Erin Davis, Vice President Ph.: +1 (203) 767-‐9957 Email: [email protected] Address: 157 Columbus Avenue New York, NY 10023 Website: www.simafunds.com

C O N T A C T U S

Documents

OFF-GRID SOLAR & FINANCIAL ACCESSsimafunds.com/.../uploads/2016/10/SIMA_PitchDeck_FundI_Oct10_Full.pdfoff-grid solar & financial access senior debt fund i photo:simpanetworks& 10/10/16