Information for investors

Transcription

1 Information for investors

2 Access to Capital for Rural Enterprise (ACRE) is a not-for-profit consortium of international NGOs. It is led by Christian Aid and includes Traidcraft, Twin, Practical Action and Challenges Worldwide. Access to Capital for Rural Enterprises (ACRE) aims to overcome the time and cost barriers to impact-first in rural enterprises in developing markets. ACRE NGOs have long-term relationships with enterprises in over 100 agricultural value chains in over 50 countries. Through our extensive in-field presence, and existing or planned programme work we will work towards generating an pipeline so that enterprises needing 100,000 to 1m can connect to investors through an innovative syndicated financing model. We have already identified 40 enterprises in Africa, Asia and Latin America, which need patient equity alongside extensive technical assistance to develop their scope to expand sustainably, potentially lifting hundreds of thousands of people out of poverty and maximising the impact on the market systems in which they operate. Our unique impact: ACRE NGOs play a unique role in supporting enterprises prior to, supporting them via capacity building and in delivering the evaluation of their systemic and social impact. ACRE will target enterprises that have the potential to be strong and sustainable, directly contributing to improving the livelihoods of workers, producers and/or consumers at the bottom of the pyramid (BOP). ACRE will prioritise opportunities with potential impact beyond the specific enterprise and which may contribute to or facilitate a wider market change; the primary focus will be upstream enterprises which deliver a critical function in the smooth operation and scalability of rural value chains. It is hoped that s made through the syndicated finance model will complement more commercial deals being done downstream and lead to stronger market systems. It is hoped that ACRE s work will influence wider practice, encouraging investors in BOP markets to take a market system view of their participation in any particular value chain and proving the importance of early stage support to develop upstream inclusive enterprise solutions. The impact investing spectrum Impact-first investor Prioritises achievement of impact targets over low volatility and high liquidity Financial return-first investor Prioritises risk-adjusted returns and liquidity in achieving impact targets Philanthropy PRI Blended Commercial Grants Program-related Investments returning moderate risk-adjusted returns Investments generating a marketrate return with targeted liquidity Donations Innovative/growth ideas Expect low returns IRR Negative 0% Earlier-stage s More established initiatives where Emerging markets with higher cost to invest risk profile is better known and can be priced in Active social goal Market returns Embedded impact targets Low liquidity Volatile returns Impact investing Targeted liquidity Targeted returns Variable impact metrics/targets Investor profile The indicative volume of across the syndicate will be 1m in year 1 (2015). We plan to build this up to 3m p.a. by year 3. We are hoping to start with five to ten cornerstone investors who are prepared to initially invest at least 100,000 each per annum. Initial investors will be: patient, impact-first investors who wish to engage with the ACRE syndicate model over the mid to long term and help build a marketplace for early stage companies which have a potential pivotal role to play in market system development. able to leave their capital invested until a positive result has been achieved (10+ years) and willing to take a first loss position to create wider sustainable change rather than shorter-term financial returns. 2

3 Problem or gap in impact 1 Gap in financing to the rural sector Research shows s are currently going into large agricultural deals, with limited impact on the rural poor. Women produce 60% 80% of the food in developing countries and the majority of rural producers live on less than $2/day 2. Gap in funding to complement grants ACRE enterprises are in need of finance in addition to grant-based support. Lack of early stage patient capital Impact opportunities can take a long time to develop and are generally not profitable at the early development stage, with some businesses taking at least three years before they can attract commercial and years before they are able to operate at broad scale. Lack of capital due to low investor confidence One of the key limitations to the growth of the impact investing industry is the lack of transparency, consistency and credibility in how funds and investors define, track, and report on the social and environmental performance of their capital. What ACRE hopes to do Enterprises in the ACRE pipeline are selected for their potential to help rural producers and consumers to participate in value chains in a sustainable and inclusive way. ACRE aims to close the sustainability cycle by weaning enterprises off grants, enabling them to connect to capital where appropriate and facilitating their graduation to more commercial financing in due course. ACRE will provide accelerated business development through capacity building and the opportunity to connect to capital funds. The needs and objectives of the enterprise and its beneficiaries will be the prime focus. ACRE will build on existing reporting standards to add value and demonstrate the efficacy of investing for social good, increasing the profile of social impact investing. Measuring change ACRE will target enterprises that have a potentially pivotal effect on the efficiency or scalability of the value chain in which they operate. The and associated technical assistance, aligned with our broader programme activity in the market system, should deliver economic and social benefits beyond that enterprise to the wider communities. Understanding that transformation process and a commitment to measure, evaluate and learn about the process and its impacts is a central part of our offering. Impact will be measured in three areas: 1. Sustainability of the enterprise 2. Impact on the livelihoods of poor people 3. Impact on the market system Countries and sectors (please note this is not a definitive/exhaustive list) Countries Bangladesh Bolivia Brazil Burundi El Salvador Haiti Kenya Malawi Mali Nepal Nicaragua Zimbabwe Sectors where ACRE programmes are active Dairy, meat Cocoa Coffee and rice Coffee Shrimps Poultry, dairy Honey, African leafy vegetables Pigeon peas, honey, rice, nuts, cocoa, coffee Solar energy Solar energy, dairy Cocoa, hibiscus Herbs and medicinal plants, renewable energy 1. Adapted from: DFID (2010), The Business Case for IMPACT and JP Morgan (2010) Impact Investments: An emerging asset class 2. actionaid.it/filemanager/cms_actionaid/images/download/rapporti_donne_pdf/hermile_aaitaly.pdf 3

4 Snapshot: example enterprise In Nicaragua, Christian Aid has provided grant seed funding, then later a loan to help a hibiscus cooperative become a major player in the national market. This included training on financial management and business planning. The first year saw a 51% increase in sales and to date 225 families have benefited from access to credit, infrastructure, and fair pricing. 2,500 temporary jobs were generated during the production and harvest cycle in 2013, stimulating the local economy. The cooperative has now become the largest producer in Nicaragua. Investment process Our model will be run as an impact syndicate, which is ideal for early stage s (flexibility, ability to stay on mission). The NGOs will produce a pipeline of companies which are potentially pivotal to relevant market development. In combination with the expertise of our appointed Syndicate Administrator, Challenges Capital, we have developed a robust structure with full visibility: ACRE NGO Process ACRE Syndicate Administrator Process Country/sector review Outline preparation Detailed assessment Technical assistance Present to syndicate Investment agreement Exit/ additional Macro review Financial landscape review Identify key markets Market mapping and company ID Apply high level fi l te r s Create outline document Approve for detailed assessment Country manager site visit Detailed assessment completed Report created Approved for technical assistance Provide TA to create a business plan Approved for committee review Present to syndicate board and members who make decision to invest Agree high level terms Prepackaged due diligence Deal structure Agree Monitoring and Evaluation contract and indicators Evaluate potential exits according to principles of agreement Continuous performance and impact measurement by Syndicate Administrator and NGO NGO role ACRE NGO members propose the countries for and collaborate to create macro and financial landscape summaries. NGOs perform market mapping, consider whether prospects profiled in that process fit ACRE criteria and compile outline information. NGO members agree to proceed to the detailed assessment. NGO members visit the enterprise and gather information to complete a comprehensive detailed review and propose necessary technical assistance to complete pre- preparation. NGO members fundraise to cover the cost of this technical assistance and support the enterprise in the production of its business plan. Technical assistance will be sourced from a blend of long-term technical volunteers, pro bono consultants and in-house experts in addition to using external consultants where needs cannot be met from capabilities within the group. Post approved technical assistance, the prospect s business plan is passed to the Syndicate Administrator. 4

5 Syndicate Administrator (Challenges Capital) 1 4 Syndicate 2 ACRE Consortium Syndicate member (potential investor) 3 Investment opportunity Christian Aid Traidcraft Twin Challenges Worldwide Practical Action 1. Consortium notifies Challenges Capital of investible rural enterprises. 2. Consortium (with advice from Challenges Capital) assists identified rural enterprises to prepare business plan and Due Diligence materials. 3. Once Challenges Capital believes the rural enterprise is an attractive proposition it provides that enterprise with contact details of investors forming the syndicate and the enterprise may approach the investors. 4. Once any syndicate investor invests in a Consortium identified enterprise, Challenges Capital provide monitoring services. Track record ACRE NGOs have produced significant results from our individual and collective work supporting and scaling-up impact enterprises in the global south. Individual NGOs have to date served dozens of impact enterprises worldwide. For example, Christian Aid played an essential role in the establishment of the Fairtrade Foundation, providing a precedent for working together to achieve impact at great scale. Twin have demonstrated through the formation and incubation of Café Direct the potential for smallholder coffee producers to bring about change in the coffee market. Since then Twin and Christian Aid, with the Department for International Development, have facilitated a similar transformation of the chocolate and nut markets by supporting the formation of Kuapa Koko, Divine Chocolate and Liberation Foods. Twin has also initiated a Joint Marketing Initiative in partnership with African Arabica coffee cooperatives. Traidcraft comprises both a trading company (with product sales of almost 13 million in 2012/13) which buys products from poor producer groups on a fair trade basis and markets these in the UK, and a development charity which helps producers overcome the barriers that prevent them from selling their products and provides business skills training and information services, as well as influencing opinion and behavior across private, public and social sectors. Challenges Worldwide delivered on-site support to over 200 individual SMEs in 25 countries in 2012, unlocking several million dollars of and increasing annual performance by an average of 30%. Our Syndicate Administrator, Challenges Capital, an affiliate of Challenges Worldwide, is operating at cost and using pro-bono legal advice, which will facilitate direct and attract new impact investors to support our enterprises long-term. 5

6 Disclaimer IMPORTANT NOTICE This Information Summary is issued by the members of the ACRE Consortium (the ACRE Consortium ) [and Challenges Capital Limited ( Challenges Capital )] to a limited number of parties who have expressed an interest in becoming members of the syndicate of investors (the Syndicate ) that will be able to invest in enterprises sourced by the ACRE Consortium (the Enterprises ). Members of the ACRE Consortium and participants in the Syndicate may change from time to time and the ACRE Consortium and Syndicate may be brought to an end without notice to the recipient of this Information Summary. This Information Summary does not constitute or form part of an offer or invitation, or a solicitation of any offer, for the purchase or acquisition of securities, assets or any interest in an Enterprise or participation in the Syndicate and no legal relations shall be created by its issue. The information set out in this Information Summary will not form the basis of any contract and should not be relied on in relation to any contract or commitment. This Information Summary contains only summary information and does not purport to be comprehensive. Its content has not been independently verified. No representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by any member of the ACRE Consortium [or Challenges Capital] or by any of their members, affiliates, directors, officers, employees, agents or advisers in relation to the fairness, accuracy, sufficiency or completeness of this Information Summary. To the extent permitted by law, no member of the ACRE Consortium nor Challenges Capital, or their respective advisers, directors or employees shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in or omission from this Information Summary or in any other information or communications in connection with membership of the Syndicate or in an Enterprise. This Information Summary shall not exclude or limit any liability for, or remedy in respect of fraud. In the United Kingdom this communication is directed only at (i) persons having professional experience in matters relating to s who fall within the definition of professionals in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005; or (ii) high net worth bodies corporate, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order Any or activity to which this communication relates is only available to and will only be engaged in with such persons and persons within the United Kingdom who receive this communication (other than persons falling within (i) and (ii) above) should not rely on or act upon this communication. Distribution of this Information Summary in or from certain jurisdictions may be restricted or prohibited by law. Recipients are required by the members of the ACRE Consortium and Challenges Capital to inform themselves of and comply with all such restrictions or prohibitions. No member of the ACRE Consortium [or Challenges Capital] accepts any liability to any person in relation to the distribution or possession of the Information Summary in or from any jurisdiction. This Information Summary should not be considered as the provision of advice or a recommendation by any member of the ACRE Consortium [or Challenges Capital] that any recipient of it should participate in the Syndicate or acquire any interest in an Enterprise and it is not intended to form a basis of any decision. Each recipient should make its own independent assessment of the merits or otherwise of participating in the Syndicate or investing in an Enterprise and should take its own professional advice. The provision of information by members of the ACRE Consortium [and/or Challenges Capital] should not prevent the recipient carrying out its own enquiries in respect of the Syndicate or any Enterprise and information is provided on the basis that independent enquiries will be made by the recipient. Past performance is not a guide to future performance and the value of s and the income derived from those s can go down as well as up. Future returns are not guaranteed and a total loss of principal may occur. This document contains statements that are, or may be deemed to be forward-looking statements. In some cases these forward-looking statements can be identified by the use of forward-looking terminology including the terms targets, believes, estimates, anticipated, expects, intends, may, will or should or, in each case, their negative or other variations or comparable terminology. By their nature, forwardlooking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. By accepting receipt of this Information Summary you agree to be bound by the foregoing limitations. All enquiries relating to this Information Summary should be directed to: Kieran@challengescapital.com Access to Capital for Rural Enterprises (ACRE) is an platform that seeks to address the lack of tailored support and access to capital available to enterprises in the global south and overcome the time and cost barriers to impact-first. is a not-for-profit consortium of international NGOs: Christian Aid, Traidcraft, Practical Action, Twin and Challenges worldwide ACRE NGOs have long-term relationships with enterprises in dozens of value chains in Africa, Asia and Latin America identify enterprises which have the potential to make markets more inclusive, reduce poverty on a large scale and do not harm the environment 6