Global Partnerships INVESTORS REPORT Third Quarter 2017 July 1 - September 30,

Transcription

1 Global Partnerships INVESTORS REPORT Third Quarter 2017 July 1 - September 30, 2017 For more information, contact: Jason Henning, VP, Investor and Donor Relations jhenning@globalpartnerships.org Seattle Office: Global Partnerships, 1932 First Avenue, Suite 400, Seattle, WA 98101, USA globalpartnerships.org

2 Letter from the CIOO November 15, 2017 Dear Investor: As we look to expand opportunity for people living in poverty, we have been examining opportunities in artisan labor and goods, which encompasses workers in skilled trades, especially making things by hand and is the second largest employer in the developing world, second only to agriculture. Since less-developed economies produce two-thirds of the world s handicraft goods, and many of those are produced in the markets we serve, this is a natural area of investment for Global Partnerships. Adding to the appeal, we ve seen heightened awareness around environmental and social issues by wholesale and retail customers, leading to a spike in ethical consumerism. That said, the vast majority of artisans around the globe don t generate sustainable and living wage income from their work, with incomes typically ranging from $2-10/day. Most are forced to sell at low prices to local markets, and don t have access to the types of training that could lead to higher income. Fortunately a growing number of enterprises are working to provide artisans access to markets, resulting in higher and guaranteed prices. This market access is often complemented with technical assistance, helping artisans with product design and development, skills upgrading, business training and certification. Within this context, this quarter we made our first investment in our recently-defined Artisan Market Access investment initiative. For this initiative we are looking to invest in companies that reach informal laborers largely women and under-educated or unemployed artisans with market access in the form of purchase contracts with price premiums for artisan products matching demand specifications. Our ideal investees will combine market access with training, helping workers understand and match products to market demands, upgrade skills, access machinery and materials, and obtain fair trade or similar certifications. We believe these types of services will lead to an increase in the net incomes of artisan families due to: Higher and/or more stable prices and/or volume sold; Diversification of income sources; Increased awareness of product-market fit; and Access and use of improved production techniques. Our first investment is a $2 million working capital facility to NOVICA, an innovative marketplace that sources Fair Trade artisan goods from over 19,000 artisans across 13 countries. NOVICA connects artisans with consumers, supporting marketing efforts and providing technical assistance around best practices, product development and market feedback, along with access to credit. We look forward to making additional investments in this space in the months and years ahead. As always, thank you for your interest in and support of our work. Mark Coffey Chief Investment & Operating Officer BY THE NUMBERS 7.8 MILLION LIVES IMPACTED (estimated number of lives impacted as a result of GP s investments in partners) $266 MILLION cumulative capital deployed 112 PARTNERS with whom Global Partnerships has worked 17 COUNTRIES where Global Partnerships has worked Global Partnerships Q As of September 30, 2017 Page 2

3 Partner Profile: NOVICA Artisan enterprise is the second largest employer in the developing world. Yet most artisans the majority of whom are women do not have access to international markets that would enable them to charge higher prices and reach more customers. WHO WHAT WHY NOVICA is a fair trade social enterprise that purchases artisan goods (e.g. textiles, woodworks, ceramics and jewelry) directly from artisans in developing countries worldwide. NOVICA sells the goods internationally through online retail sites and partnerships with National Geographic, Kiva and UNICEF. NOVICA provides international market access, premium pricing, interest-free loans, and larger margins to low-income and impoverished artisans. NOVICA also provides detailed data to their artisan clients on how to improve their prod-ucts and trends about which products are selling. The aim of Global Partnerships impact-led investment in NOVICA is to increase and stabilize net income of artisan households. Clients see boosts in pricing and volume sold, diversification of income sources, increased awareness of productmarket fit, and access and use of improved production techniques. Partner: NOVICA Country: Global Year Founded: 1999 Number of Employees: 160 Number of Artisans: 19,227 Global Partnerships Q As of September 30, 2017 Page 3

4 Social Investment Fund 5.0 FUND AT A GLANCE $91.4MM Cumulative Capital Deployed 44 Current Partners 2.1MM Cumulative Lives Impacted FINANCIAL PERFORMANCE Fund Manager s Comments In the third quarter of 2017, SIF 5.0 invested $6.9 million in ten social enterprises including microfinance institutions, agricultural cooperatives and a new partner that connects artisans across Latin America with international consumers. This was GP s first investment in its Artisan Market Access initiative. During the quarter, nearly all SIF 5.0 partners with fixed date payments due made them as agreed, with the one exception being a small savings and credit cooperative in Ecuador. The two outstanding trade finance loans that have been in arrears since the first quarter of 2017 continue to experience liquidity issues preventing them from making any payments. With the exception of these loans, for which the fund reserves a healthy allowance for losses, SIF 5.0 continues to perform well with positive net income and retained earnings. SIF 5.0 reached its target loan size of $50 million in 2016 and continues to maintain an outstanding balance of nearly the same amount. Fund Overview $50MM Current Capital Deployed $91.4MM Cumulative Capital Deployed 143 Cumulative Number of Loans 2.1MM Cumulative Lives Impacted (Estimated number of lives impacted as a result of SIF 5.0 s investments in partner organizations) 44 Current Number of Partners 52 Cumulative Number of Partners WEIGHTED AVERAGE RISK RATING 3.79 (Arrow indicates change from previous quarter.) 2-5 = Investable Credit, 6 = Watch List Credit, 7 = Possible Loss, 8 = Doubtful, 9 = Write-off FUND RETURN vs. DURATION-MATCHED TREASURIES 1.47% 3.31% Inception Date March 25, 2013 Fund Manager Global Partnerships Investment Currency US$ and fully hedged local currency Type of Fund Debt Global Partnerships Q As of September 30, 2017 Page 4

5 Social Investment Fund 5.0 IMPACT PERFORMANCE Percent of Invested Capital by Initiative 33% Women-Centered Finance with Education 29% Rural-Centered Finance with Education 23% Women-Centered Finance with Health 8% Smallholder Farmer Market Access w/ TA 3% Home Improvement Finance 2% Solar Lights 2% Artisan Market Access Women-Centered Finance with Education These partners provide financial services and education for female microentreprenuers. 16 Partners 903,966 66% Rural Clients 89% Female Clients $690 Women-Centered Finance with Health These partners deliver financial services, preventive health education and access to health services for female microentrepreneurs and their families. 12 Partners* 580,583 56% Rural Clients 85% Female Clients Smallholder Farmer Market Access w/ TA $929 These partners provide access to markets, technical assistance, and better pricing for smallholder farmers. 8 Partners* 62, % Rural Clients 27% Female Clients Crops Financed: Coffee, Sesame Rural-Centered Finance with Education These partners provide working capital loans and education for rural microentreprenuers. 12 Partners* 197,630 6 Rural Clients 43% Female Clients $1,792 Home Improvement Finance These partners provide financial services and construction assistance for home improvements. 3 Partners* 89,854 71% Rural Clients 4 Female Clients $1,312 Solar Lights These partners supply solar lights and small solar home systems to rural households living beyond the grid. 1 Partner* 381,079 Units Sold in Quarter * Some partners work in more than one impact area. ** Total number of clients served by partner enterprises. Artisan Market Access These partners provide market access and price premiums to artisans. 1 Partner* 19,227 4 Female Clients Global Partnerships Q As of September 30, 2017 Page 5

6 Social Investment Fund 5.0 PORTFOLIO COMPOSITION 3% Paraguay 1% Panama Percent of Invested Capital by Country 11% Peru 11% Nicaragua 3% Global 12% Mexico Honduras Cash 9% Guatemala 1% Haiti 20% Bolivia 16% Ecuador El Salvador Note: All percentages have been rounded to the nearest whole number. Artisan Market Access Home Improvement Finance Rural-Centered Finance with Education Smallholder Farmer Market Access w/ TA Solar Lights Women-Centered Finance with Education Women-Centered Finance with Health 2% Colombia BOLIVIA (20%) CRECER (6%) IDEPRO (5%) ProMujer Bolivia () Sembrar Sartawi (5%) COLOMBIA (2%) Amanecer (2%) ECUADOR (16%) CEPESIU (1%) D-MIRO (3%) ESPOIR (6%) Fundación Alternativa (<1%) Fundación FACES (3%) VisionFund, Ecuador (3%) EL SALVADOR () ASEI (1%) CrediCampo (3%) FADEMYPE (<1%) GUATEMALA (9%) CDRO (<1%) Friendship Bridge (1%) FUNDEA (6%) Vision Fund Guatemala (2%) HAITI (1%) Fonkoze (1%) HONDURAS () ADEPES (1%) IDH (2%) Vision Fund Honduras (2%) MEXICO (12%) Cesmach (0%) Pro Mujer, Mexico (6%) SOFIPA (1%) VisionFund, Mexico (5%) NICARAGUA (11%) Aldea Global (0%) COPROEXNIC (1%) FDL (2%) Fundenuse (1%) MiCrédito (2%) Pro Mujer, Nicaragua (5%) PANAMA (1%) Procaja (1%) PARAGUAY (3%) Arasy (3%) Bioexport (<1%) PERU (11%) ADRA (3%) Alternativa (Peru) (1%) APROCASSI (1%) CenfroCafe (2%) Coop Sol y Café (1%) Norandino (1%) Pro Mujer, Peru (2%) GLOBAL (3%) Greenlight Planet (2%) NOVICA (1%) CASH () Global Partnerships Q As of September 30, 2017 Page 6

7 Social Investment Fund 6.0 FUND AT A GLANCE $46.8MM Cumulative Capital Deployed 32 Current Partners 1.7MM Cumulative Lives Impacted FINANCIAL PERFORMANCE Fund Manager s Comments During the third quarter of 2017, SIF 6.0 invested $7.5 million across six existing partners in East Africa and Latin America which deliver products and services through a variety of GP s investment initiatives including Solar Lights, Rural-Centered Finance with Education and Women-Centered Finance with Education and Health. At the end of the quarter, the fund had more than $36 million in loans outstanding and anticipates making additional new investments in East Africa, Latin America and the Caribbean to reach more than $46 million in capital outstanding by the end of the calendar year. All scheduled payments of principal and interest were made on time during the quarter, except one small outstanding trade finance loan that is in arrears as of the end of the quarter. The fund has more than $53 million in commitments and will continue to accept commitments as it scales to meet its target size of $75 million. Fund Overview $36.2MM Current Capital Deployed $46.8MM Cumulative Capital Deployed 47 Cumulative Number of Loans 1.7MM Cumulative Lives Impacted (Estimated number of lives impacted as a result of SIF 6.0 s investments in partner organizations) WEIGHTED AVERAGE RISK RATING 3.77 (Arrow indicates change from previous quarter.) 2-5 = Investable Credit, 6 = Watch List Credit, 7 = Possible Loss, 8 = Doubtful, 9 = Write-off FUND RETURN vs. DURATION-MATCHED TREASURIES 32 Current Number of Partners 33 Cumulative Number of Partners 1.48% 3.27% Inception Date October 8, 2015 Fund Manager Global Partnerships Investment Currency US$ and fully hedged local currency Type of Fund Debt Global Partnerships Q As of September 30, 2017 Page 7

8 Social Investment Fund 6.0 IMPACT SNAPSHOT Percent of Invested Capital by Initiative 41% Women-Centered Finance with Education 27% Rural-Centered Finance with Education 15% Women-Centered Finance with Health 11% Solar Lights 5% Home Improvement Finance 1% Smallholder Farmer Market Access w/ TA Women-Centered Finance with Education These partners provide financial services and education for female microentreprenuers. 13 Partners* 1,838,283 73% Rural Clients 89% Female Clients Rural-Centered Finance with Education $623 Women-Centered Finance with Health These partners deliver financial services, preventive health education and access to health services for female microentrepreneurs and their families. 7 Partners* 450,015 53% Rural Clients 83% Female Clients Solar Lights $947 These partners supply solar lights and small solar home systems to rural households living beyond the grid. 3 Partners* 412,269 Units Sold in Quarter These partners provide working capital loans and education for rural microentreprenuers. 10 Partners* 326,982 66% Rural Clients 3 Female Clients $1,182 Home Improvement Finance These partners provide financial services and construction assistance for home improvements. 3 Partners* 92,602 65% Rural Clients 46% Female Clients $1,311 These partners provide access to markets, technical assistance, and better pricing for smallholder farmers. 2 Partners* 7,153 Smallholder Farmer Market Access w/ TA 100% Rural Clients 29% Female Clients Crops Financed: Sesame, Coffee * Some partners work in more than one impact area. ** Total number of clients served by partner enterprises. Global Partnerships Q As of September 30, 2017 Page 8

9 Social Investment Fund 6.0 PORTFOLIO COMPOSITION Percent of Invested Capital by Country 7% Global 5% Uganda 9% Tanzania 13% Nicaragua Cash 8% Mexico 15% Bolivia 9% Guatemala 9% Kenya 1% Colombia 2% Dominican Republic 10% Ecuador Note: All percentages have been rounded to the nearest whole number. 7% El Salvador Artisan Market Access Home Improvement Finance Rural-Centered Finance with Education Smallholder Farmer Market Access w/ TA Solar Lights Women-Centered Finance with Education Women-Centered Finance with Health BOLIVIA (15%) CRECER (8%) IDEPRO (2%) Sembrar Sartawi (5%) COLOMBIA (1%) ECLOF Colombia (1%) DOMINICAN REPUBLIC (2%) ECLOF Dominican Republic (1%) ECUADOR (10%) D-MIRO (3%) ESPOIR (3%) Fundación Alternativa (<1%) Vision Fund Ecuador () EL SALVADOR (7%) ENLACE (7%) GUATEMALA (9%) CDRO (1%) FUNDEA (3%) PROFASA (<1%) SHARE (5%) KENYA (9%) ECLOF Kenya (1%) Juhudi Kilimo (3%) KWMB () Sollatek (1%) MEXICO (8%) Conserva (1%) Pro Mujer, Mexico () VisionFund, Mexico (3%) NICARAGUA (13%) Aldea Global (2%) FDL (5%) FUNDENUSE (1%) Pro Mujer, Nicaragua () Serfigsa (1%) TANZANIA (9%) BRAC Tanzania (3%) FINCA Tanzania (5%) UGANDA (5%) BRAC Uganda (2%) Fenix (2%) NuCafe (<1%) GLOBAL (5%) Greenlight Planet (7%) CASH () Global Partnerships Q As of June 30, 2017 Page 9

10 Aggregate Distribution by Country and Impact ALL FUNDS Percent of Invested Capital by Country 2% Uganda Tanzania 5% Cash Global 18% Bolivia 2% Paraguay 1% Panama 6% Peru 12% Nicaragua 13% Ecuador 2% Colombia 1% Dominican Republic 10% Mexico 9% Guatemala 5% El Salvador Kenya <1% Haiti 2% Honduras Percent of Invested Capital by Initiative 36% Women-Centered Finance with Education 6% Solar Lights 28% Rural-Centered Finance with Education 5% Smallholder Farmer Market Access w/ Technical Assistance 20% Women-Centered Finance with Health Home Improvement Finance 1% Artisan Market Access Note: All percentages have been rounded to the nearest whole number. Global Partnerships Q As of September 30, 2017 Page 10

11 Global Partnerships INVESTORS REPORT Third Quarter 2017 July 1 - September 30, 2017 For more information, contact: Jason Henning, VP, Investor and Donor Relations jhenning@globalpartnerships.org Seattle Office: Global Partnerships, 1932 First Avenue, Suite 400, Seattle, WA 98101, USA globalpartnerships.org