Global Partnerships INVESTORS REPORT Fourth Quarter 2017 October 1 - December 31,

Transcription

1 Global Partnerships INVESTORS REPORT Fourth Quarter 2017 October 1 - December 31, 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 President & CIO February 15, 2017 Dear Investor: 2017 was a year of strong and sound growth for Global Partnerships portfolio of debt investments. We deployed $51.5M to 43 partners across 17 countries, ending the year with roughly $95M in assets under management and continued strong credit quality. However, growth for growth s sake is not our focus; rather, we seek growth that pushes markets to work for those who are traditionally excluded. This commitment informs our strategy - from geographic expansion, to the definition of our investment initiatives and our partner selection. When we expanded into sub Saharan Africa (SSA) over two years ago, we did so knowing that poverty was both pervasive and pronounced. According to the latest World Bank estimates, 663 million people in SSA live below the $3.20 international poverty line, including 390 million in extreme poverty below the $1.90 international poverty line, and poverty reduction has been slowest in rural areas. While overall rates are declining, the number of people in SSA living in poverty is on the rise due to rapid population growth. In short, there is a large and growing need for the basic products and services we finance thorough our investments. In addition to informing our geographic expansion, our commitment to inclusion helps define our investment initiatives. Through research we identify products and services that have demonstrated capacity to reach those who are traditionally excluded. In doing so we maintain a consistent focus on poverty, while identifying other key dimensions of exclusion, such as gender and geography. We seek partners who are reaching our target market with an aligned set of products and services. To do so, we rely on proxies like loan size and price, but we also leverage macro data including the International Poverty Line (IPL) and the Multidimensional Poverty Index (MPI) to understand not only the prevalence, but also the nature of poverty in the regions where our partners operate. When available we compare this data with household survey data, such as that captured by the Progress out of Poverty Index (PPI), which tells us the probability that clients are living under the national or international poverty lines. Pre-investment, this analysis helps GP screen for the most inclusive partners. Post-investment, it provides valuable insight into where markets are and are not yet working, as well as how value is created at the edge of the market. For example we have found that many of our Women Centered Finance with Education partners in Latin America continue to leverage the group lending platform to onboard new clients (many of whom live under the World Bank s current $3.20 international poverty line) and deliver broad based education. However, they are increasingly developing individual loan products, more robust training, and health offerings to meet the needs of borrowers who are still poor, but may have started to earn slightly higher incomes. By contrast in SSA we see organizations like BRAC (featured in this report), which operates in Tanzania where 79% of the population lives under the $3.20 international poverty line and only 17% of women have an account at a financial institution. To address these issues, they exclusively leverage the group lending platform to provide small working capital loans and basic pre-credit training. Both models are reaching and creating value for clients living in poverty, but are unique to the regional context and are tailored to meet the needs of the borrowers. Learnings such as these continue to provide benefit to our work. As always, we are grateful for your support in helping us achieve greater and more meaningful impact. Mark Coffey President & Chief Investment Officer BY THE NUMBERS* 8.9 MILLION LIVES IMPACTED (estimated number of lives impacted as a result of GP s investments in partners) *Cumulative since inception $287.2 MILLION cumulative capital deployed 118 PARTNERS with whom Global Partnerships has worked 19 COUNTRIES where Global Partnerships has worked Global Partnerships Q As of December 31, 2017 Page 2

3 Partner Profile: BRAC Tanzania In Tanzania, only 40% of the population have an account at a formal financial institution. Women are disproportionately excluded as only 17% of women have accounts at formal institutions. WHO BRAC Tanzania is a microfinance institution that delivers loans alongside education to people living in poverty, primarily women. BRAC has established an extensive network of more than 130 branches across Tanzania in order to reach the very poor who live in remote areas of the country. WHAT BRAC provides easily accessible and affordable loans, primarily via the group lending model. In addition to working capital loans, BRAC also provides education and training covering topics such as basic financial literacy, agriculture, hygiene and empowerment. WHY The aim of Global Partnerships impact-led investment in BRAC is to empower women, the majority of whom live in rural areas. With access to financial services and education, women clients become agents of change to improve household resiliency. Partner: BRAC Tanzania Year Founded: 2006 Number of Clients: 203,091 : $198 % Women Clients: 75% Global Partnerships Q As of December 31, 2017 Page 3

4 Social Investment Fund 5.0 FUND AT A GLANCE $100.7MM Cumulative Capital Deployed 44 Current Partners 2.4MM Cumulative Lives Impacted FINANCIAL PERFORMANCE Fund Manager s Comments In calendar year 2017, SIF 5.0 made more loans throughout Latin America than in any prior year. The fund invested more than $9 million in the fourth quarter alone, which brought the cumulative investments made in 2017 to $25.5 million. The majority of the funds were invested in Global Partnerships Women-Centered initiatives, which focus on empowering women in poverty by providing access to credit plus business and health education. SIF 5.0 is performing well as it continued to earn positive net income in the first half of the fiscal year, and as it maintains its maximum fund size of $50 million with only three non-performing loans. Fund management continues to be active in working with the three partners that are in arrears with their payments. Additionally, the fund reserves an allowance for any losses that may result from the loans to these partners, which include a small savings and credit cooperative and two agricultural businesses.. Fund Overview $51.5MM Current Capital Deployed $100.7MM Cumulative Capital Deployed WEIGHTED AVERAGE RISK RATING Cumulative Number of Loans 2.4MM Cumulative Lives Impacted (Estimated number of lives impacted as a result of SIF 5.0 s investments in partner organizations) 44 Current Number of Partners 53 Cumulative Number of Partners Inception Date March 25, 2013 Fund Manager Global Partnerships Type of Fund Debt Investment Currency US$ and fully hedged local currency 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2-5 = Investable Credit, 6 = Watch List Credit, 7 = Possible Loss, 8 = Doubtful, 9 = Write-off FUND RETURN vs. DURATION-MATCHED TREASURIES 1.42% 3.31% Global Partnerships Q As of December 31, 2017 Page 4

5 Social Investment Fund 5.0 IMPACT PERFORMANCE Percent of Invested Capital by Initiative 36% Women-Centered Finance with Education 29% Rural-Centered Finance with Education 21% Women-Centered Finance with Health 5% Smallholder Farmer Market Access w/ TA 5% Home Improvement Finance 2% Solar Lights 1% Artisan Market Access Women-Centered Finance with Education These partners provide financial services and education for female microentreprenuers. 16 Partners 937,187 63% Rural Clients 88% Female Clients $760 Women-Centered Finance with Health These partners deliver financial services, preventive health education and access to health services for female microentrepreneurs and their families. 10 Partners* 580,017 Smallholder Farmer Market Access w/ TA These partners provide access to markets, technical assistance, and better pricing for smallholder farmers. 8 Partners* 11,596 48% Rural Clients 82% Female Clients 100% Rural Clients 27% Female Clients $1,053 Crops Financed: Coffee, Sesame, Peanuts Rural-Centered Finance with Education These partners provide working capital loans and education for rural microentreprenuers. 12 Partners* 206,574 68% Rural Clients 47% Female Clients $1,755 Home Improvement Finance These partners provide financial services and construction assistance for home improvements. 3 Partners* 98,523 71% Rural Clients 51% Female Clients $1,402 These partners supply solar lights and small solar home systems to rural households living beyond the grid. 1 Partner* Solar Lights 647,943 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* 19,228 44% Female Clients Global Partnerships Q As of December 31, 2017 Page 5

6 Social Investment Fund 5.0 PORTFOLIO COMPOSITION Percent of Invested Capital by Country 3% Paraguay 1% Panama 13% Nicaragua 12% Mexico 5% Honduras 3% Global 1% Haiti 1% Cash 6% Peru 21% Bolivia 11% Guatemala 16% Ecuador 4% El Salvador Note: All percentages have been rounded to the nearest whole number. 2% Colombia BOLIVIA (21%) CRECER (6%) IDEPRO (5%) ProMujer Bolivia (6%) Sembrar Sartawi (5%) COLOMBIA (2%) Amanecer (2%) ECUADOR (16%) CEPESIU (1%) D-MIRO (3%) ESPOIR (6%) Fundación Alternativa (<1%) Fundación FACES (3%) VisionFund, Ecuador (4%) EL SALVADOR (4%) ASEI (1%) CrediCampo (3%) FADEMYPE (<1%) GUATEMALA (11%) CDRO (<1%) Friendship Bridge (1%) FUNDEA (6%) SHARE (2%) Vision Fund Guatemala (2%) HAITI (<1%) Fonkoze (<1%) MEXICO (12%) Cesmach (0%) Pro Mujer, Mexico (6%) SOFIPA (1%) VisionFund, Mexico (5%) NICARAGUA (13%) Aldea Global (0%) COPROEXNIC (1%) FDL (4%) Fundenuse (2%) MiCrédito (1%) Pro Mujer, Nicaragua (5%) PANAMA (1%) Procaja (1%) PARAGUAY (3%) Arasy (3%) Bioexport (<1%) PERU (6%) ADRA (2%) Alternativa (Peru) (1%) APROCASSI (<1%) CenfroCafe (<1%) Coop Sol y Café (<1%) Norandino (1%) GLOBAL (3%) Greenlight Planet (2%) NOVICA (1%) CASH (1%) 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 HONDURAS (5%) ADEPES (1%) IDH (2%) Vision Fund Honduras (2%) Global Partnerships Q As of December 31, 2017 Page 6

7 Social Investment Fund 6.0 FUND AT A GLANCE $58.2MM Cumulative Capital Deployed 37 Current Partners 2.4MM Cumulative Lives Impacted FINANCIAL PERFORMANCE Fund Manager s Comments 2017 was a year of growth for SIF 6.0 in both its volume and geographical scope. The fund invested nearly $26 million during the calendar year to increase its total outstanding balance to $43.6 million as of December 31, In addition to growing its loan portfolio, SIF 6.0 expanded Global Partnerships geographical reach by investing its first loans in four new countries in Sub-Saharan Africa: Ghana, Tanzania, Uganda and Zambia. The fund expects to start 2018 off strong with investments in its global portfolio and loans to new partners in East Africa. The existing portfolio is performing well and all scheduled payments of interest and principal were made on time, with the exception of a small trade finance loan that is behind in its payment. The fund continues to accept new commitments to grow to its target size of $75 million. Fund Overview $43.6MM Current Capital Deployed $58.2MM Cumulative Capital Deployed WEIGHTED AVERAGE RISK RATING 9 61 Cumulative Number of Loans 2.4MM Cumulative Lives Impacted (Estimated number of lives impacted as a result of SIF 6.0 s investments in partner organizations) 37 Current Number of Partners 37 Cumulative Number of Partners Inception Date October 8, 2015 Fund Manager Global Partnerships Type of Fund Debt Investment Currency US$ and fully hedged local currency 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FUND RETURN vs. DURATION-MATCHED TREASURIES Q4 2-5 = Investable Credit, 6 = Watch List Credit, 7 = Possible Loss, 8 = Doubtful, 9 = Write-off 1.40% 3.30% Global Partnerships Q As of December 31, 2017 Page 7

8 Social Investment Fund 6.0 IMPACT SNAPSHOT Percent of Invested Capital by Initiative 44% Women-Centered Finance with Education 24% Rural-Centered Finance with Education 14% Women-Centered Finance with Health 10% Solar Lights 7% 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. 15 Partners* 1,933,323 70% Rural Clients 89% Female Clients Rural-Centered Finance with Education $629 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* 486,911 41% Rural Clients 84% Female Clients $1,039 These partners supply solar lights and small solar home systems to rural households living beyond the grid. 4 Partners* Solar Lights 412,269 Units Sold in Quarter These partners provide working capital loans and education for rural microentreprenuers. 11 Partners* 403,620 65% Rural Clients 33% Female Clients $1,159 Home Improvement Finance These partners provide financial services and construction assistance for home improvements. 3 Partners* 101,178 66% Rural Clients 52% Female Clients $1,403 These partners provide access to markets, technical assistance, and better pricing for smallholder farmers. 3 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 December 31, 2017 Page 8

9 Social Investment Fund 6.0 PORTFOLIO COMPOSITION Percent of Invested Capital by Country <1% Peru 1% Zambia 5% Uganda 10% Tanzania 7% Global 17% Nicaragua 3% Cash 9% Mexico 12% Bolivia 8% Kenya Note: All percentages have been rounded to the nearest whole number. Artisan Market Access 8% Guatemala Home Improvement Finance 1% Colombia 11% Ecuador 2% Dominican Republic Rural-Centered Finance with Education Smallholder Farmer Market Access w/ TA Solar Lights 2% Haiti Women-Centered Finance with Education Women-Centered Finance with Health 5% El Salvador 1% Ghana BOLIVIA (12%) CRECER (7%) IDEPRO (2%) Sembrar Sartawi (3%) COLOMBIA (1%) ECLOF Colombia (1%) DOMINICAN REPUBLIC (2%) ECLOF Dominican Republic (2%) ECUADOR (11%) D-MIRO (3%) ESPOIR (2%) Fundación Alternativa (<1%) Vision Fund Ecuador (6%) EL SALVADOR (5%) ENLACE (5%) GHANA (1%) PEG Africa (1%) GUATEMALA (8%) CDRO (1%) FUNDEA (2%) Manos Campesinas (1%) PROFASA (<1%) SHARE (4%) HAITI (2%) FINCA Haiti (2%) KENYA (8%) ECLOF Kenya (2%) Juhudi Kilimo (2%) KWMB (3%) Sollatek (<1%) MEXICO (9%) Conserva (3%) Pro Mujer, Mexico (3%) VisionFund, Mexico (3%) NICARAGUA (17%) Aldea Global (1%) FDL (7%) FUNDENUSE (1%) Pro Mujer, Nicaragua (6%) Serfigsa (2%) PERU (<1%) ADRA (<1%) TANZANIA (10%) BRAC Tanzania (6%) FINCA Tanzania (4%) UGANDA (5%) BRAC Uganda (3%) Fenix (2%) NuCafe (<1%) ZAMBIA (1%) Agora Microfinance (1%) GLOBAL (7%) Greenlight Planet (7%) CASH (3%) Global Partnerships Q As of December 31, 2017 Page 9

10 Aggregate Distribution by Country and Impact ALL FUNDS Percent of Invested Capital by Country 2% Paraguay 1% Panama 3% Peru 2% Uganda 1% Zambia 4% Tanzania 5% Global 4% Cash 17% Bolivia 2% Colombia 1% Dominican Republic 15% Nicaragua 14% Ecuador 10% Mexico 4% Kenya 10% Guatemala 3% 1% Haiti Honduras 4% El Salvador 1% Ghana Percent of Invested Capital by Initiative 40% Women-Centered Finance with Education 6% Solar Lights 27% Rural-Centered Finance with Education 18% Women-Centered Finance with Health 6% 3% Home Improvement Finance Smallholder Farmer Market Access w/ Technical Assistance 1% Artisan Market Access Note: All percentages have been rounded to the nearest whole number. Global Partnerships Q As of December 31, 2017 Page 10

11 Global Partnerships INVESTORS REPORT Fourth Quarter 2017 October 1 - December 31, 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