ALFI panel Investing in microfinance as a channel for other impact finance themes challenges and opportunities

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Valerie Ford
6 years ago
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1 ALFI panel Investing in microfinance as a channel for other impact finance themes challenges and opportunities Moderator: Patrick Goodman Innpact and representative of the ALFI Microfinance and Inclusive Finance Working Group Panelists: Sylvia Wisniwski Finance in Motion Frederik Jan van den Bosch FMO Tim Radjy AlphaMundi Guillaume Bonnel Lombard Odier Sachin Vankalas LuxFlag

2 Sylvia Wisniwski Finance in Motion (1/2) MFI competences and skill-set BoP focus Social mission driven institutions Open to innovation Experts in transacting very small amounts, particularly lending Social & physical proximity to clients Premier lender to micro and small businesses and low-income population In principle potentially interesting counterpart for addressing other social topics: Water Health Energy Education but

3 Sylvia Wisniwski Finance in Motion (2/2) addressing other social topics often requires different financial investments than traditional cash-flowbased lending Renewable energy project finance Savings-cum-long term credit student loan Insurance products is not fully matching with MFIs traditional clientele can be politically sensitive and bear reputational risks be associated with subsidies cannibalization of existing products? may require new partnerships engagement with new stakeholders, e.g. with (re-)insurance companies, state guarantee systems, etc.

(Economic) Growth - MFIs have good knowledge of their markets and great networks - of value to other players (Energy, Agri, ) - Crucial is to combine new

4 Frederik J. van den Bosch Netherlands Development Bank FMO (1/2) - By 2020, FMO aims to Double our Impact and Halve our (eco) Footprint, by supporting Green, Inclusive, (Economic) Growth - MFIs have good knowledge of their markets and great networks - of value to other players (Energy, Agri, ) - Crucial is to combine new techniques of Renewable Energy and Energy Efficiency with available knowledge, networks and new regulation - Increased demand for Fair Trade / Reponsible products impacts the producers of raw materials - On more social side of (health, education, etc.) still huge dependency on grant funding (sometimes too much)

their (i) business Knowledge (for professional development, E/S/G topics, Risk Management,

) - Important to properly Target, Measure, Disclose and Report what we finance (also

5 Frederik J. van den Bosch Netherlands Development Bank FMO (2/2) - FMO can support our clients to improve their (i) business Knowledge (for professional development, E/S/G topics, Risk Management, etc.) (ii) and Networks (client exchanges, leadership courses, sector wide initiatives, etc.) - Important to properly Target, Measure, Disclose and Report what we finance (also non-financials), including Evaluation and Lessons Learned Thank you! Manager Micro & Small Enterprise Finance Frederik J. van den Bosch f.van.den.bosch@fmo.nl

6 Guillaume Bonnel, Lombard Odier (1/2) How? - An open ended fund of funds - with a monthly liquidity - Available in USD, EUR and CHF share classe - Built around two pockets CORE POCKET Established asset managers Large-scale funds Monthly NAV 60-90% of the portfolio SATELLITE POCKET Innovative strategies Smaller AuM Less liquid instruments Higher perf potential 10-40% of the portfolio

7 Guillaume Bonnel, Lombard Odier (2/2) THEMATIC DISTRIBUTION Diversified strategies within the Development Finance space 4.3% 7.0% 39.4% Microfinance Debt Hard Currency Microfinance mix Debt % Equity Microfinance Local Currency Rural Development 26.4% Fair Trade ASSET CLASS DISTRIBUTION Predominantly a Private Debt fund 3.2% 0.7% 14.4% 81.3% Private Debt Liquidity Equity Quasi Capital & subordinated debt GEOGRAPHIC DISTRIBUTION OF INVESTMENTS No single country weight over 10% of the portfolio Africa and Middle East 7.2% Eastern Europe and Russia 4.5% Asia 12.3% Latin America 26.9% Worldwide 0.3% Other 2.3% Central Asia 33.3% LOCAL CURRENCY EXPOSURE No hedging of local currencies (max. 30% of portfolio), but managed through diversified basket strategy - see Appendix. 19.8% 80.2% Hard or hedged currencies Unhedged local currencies

8 LuxFLAG Microfinance Label Sachin S VANKALAS Head of Operations and Sustainability

9 About LuxFLAG LuxFLAG Microfinance Label Eligibility Criteria Why a Label?

10 LuxFLAG Microfinance Label Launched in labelled MIVs representing approx. USD 3.9 billion AuM More than 50% of worldwide AuM are covered by the labelled MIVs 7/10 largest MIVs hold the Label

11 Microfinance Labelled funds Access Africa Fund Advans SA Azure Global Microfinance Fund Capital Gestion Microfinance Fund Dexia Micro-Credit Fund- Blue Orchard Debt sub-fund Dual Return Fund-Vision Microfinance Dual Return Fund - Vision Microfinance Local Currency Etimos Fund Global Microfinance Debt European Microfinance Platform Fund Finethic Microfinance SCA Fonds Européen de Financement Solidaire (FEFISOL), S.A. KCD Mikrofinanzfonds I KCD Mikrofinanzfonds II Luxembourg Microfinance and Development Fund Microfinance Enhancement Facility SA Microfinance Initiative for Asia Regional MSME Investment Fund for Sub-Saharan Africa SA responsability Global Microfinance Fund responsability Financial Inclusion Fund responsability Mikrofinanz-Fonds responsability Microfinance Leaders Rural Impulse Fund SA Rural Impulse Fund II SA Symbiotics (SICAV) SEB Microfinance Fund I Symbiotics (SICAV) SEB Microfinance Fund II (new label) The European Fund for Southeast Europe SA Triodos Microfinance Fund Wallberg Global Microfinance Fund

12 LuxFLAG Label offers To Investors: LuxFLAG Labels help investors identify investment funds that are active in Responsible Investment LuxFLAG seeks to encourage transparency by investment funds on environmental, social and governance (ESG) performance LuxFLAG regularly shares with investors relevant information on investment funds active in Responsible Investment To Asset Managers: LuxFLAG Labels enhance the visibility of investment funds and reflect the asset managers commitment to Responsible Investment The LuxFLAG Labels help managers to demonstrate that they are committed to investing in Responsible Investment The LuxFLAG Labels help managers to attract investors interested in Responsible Investment

13 Thank you

CGAP 2010 MIV Survey Report. Market Data & Peer Group Analysis

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