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GP Investors Report | Q2 | 2013
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Transcript of GP Investors Report | Q2 | 2013
Social Investment Funds
INVESTORS REPORTSecond Quarter 2013 | April 1 - June 30, 2013
www.globalpartnerships.org
1932 First Avenue, Suite 400 | Seattle, WA 98101, USA | 206.652.8773 // De Enitel Villa Fontana 2c. Este, 30v. Norte | Edificio Opus Of. 205 | Managua, Nicaragua
For more information, contact:
Jason Henning, Director of Investor Relations
[email protected] | 206.456.7832
Photo c/o Pro-Rural
NEW! To learn more about our partners, visit our interactive partner grid at www.globalpartnerships.org/partners
| Letter from the CIOO |
11 COUNTRIESwhere Global Partnerships works
37 PARTNERSwith whom Global Partnerships works
123,486 PEOPLEserved by Global Partnerships through our partners
$48.4 MILLIONfund capital at work
Global Partnerships | Q2 2013 | As of June 30, 2013 | Page 2
BY THE NUMBERS
August 15, 2013
Dear Investor,
Global Partnerships’ mission is to expand opportunity for people living in poverty. To advance our mission, we rely on a growing portfolio of partners that help impoverished people earn a living and improve their lives.
While all of our partners are classified as social enterprises – mission-driven organizations which apply market-sustained strategies to achieve a social purpose – each employ different business models that catalyze the flow of essential goods and services to people living in poverty.
Pro Mujer International, with operations in Mexico, Nicaragua, Peru, Bolivia and Argentina, utilizes a village bank model to integrate credit with health education
and services. The village bank channel helps Pro Mujer mitigate credit risks, as a system of cross-guarantees strengthens repayment rates. This model also allows Pro Mujer to conduct its loan collection and deliver non-financial services in an efficient, cost-effective manner.
Our partners within our Rural Livelihoods impact area make use of a variety of business models to provide credit, technical assistance and commercialization services to smallholder farmers throughout the region. Los Andes, structured as a credit and savings cooperative, delivers credit, education and health services to its members; because members own the entity, the cost of these services is affordable and tailored to meet their needs. NORANDINO, also a credit and savings cooperative, serves smaller fair trade and organic certified cooperatives with credit and savings products, while its member-cooperatives provide certification training and access to specialty markets to NORANDINO’s member-farmers
Within our Green Technology impact area, we’re exploring models that enable access to solar-powered products for last mile, non-electrified communities. While some of our cooperative and MFI partners provide financing for solar products, we are also looking at models of social enterprises that design, manufacture and/or distribute solar light and power products in the developing world.
From our observation, the best models protect against excessive credit risk, are market-sustained, scalable, and serve as efficient distribution platforms for services beyond credit. As a nonprofit impact investor, we will continue to uncover and invest in a variety of business models that improve lives and expand opportunity.
We again thank you for your trust and support of our work. Your investments continue to perform well from both a financial and social performance point of view.
Mark Coffey Chief Investment and Operating Officer
| Microfinance Fund 2008 |
Global Partnerships | Q2 2013 | As of June 30, 2013 | Page 3
Fund Manager’s Comments
Partner performance remains strong and all partners in the Fund continue to make principal and interest payments in a timely manner. Generally speaking partners have shown responsible growth, expected earnings, and consistent balance sheet strength during the first half of the year. With a little over a year until the Fund matures GP remains hard at work identifying and maintaining mission-aligned partners. To that end the Fund renewed loans with three existing partners during the second quarter, closed an additional loan with an existing partner shortly after quarter-end, and is in the process of conducting due diligence on another partner whose loan is scheduled to mature in September.
October 31, 2008Inception Date
$20,519,250Capital Invested
$20,000,000Total Fund Capital
17 $710 81% 48%
Fund Manager Global Partnerships
Investment CurrencyUS$ and fully hedged local currency
Type of FundDebt
Fund Facts
Social Impact
Current number of partners
Average loan size
Percentage of borrowers served who are women
Percentage of borrowers served living in rural areas
In thousandsTOTAL BORROWERS SERVED
300400500600
800
700
FY09 FY10 FY11 FY12 FY13
2008
90
120
150
Total revenues/total expenses as a %
AVERAGE OPERATIONALSELF SUFFICIENCY
FY09 FY10 FY11 FY12 FY13
Loans past due greater than 30 days as a %AVERAGE PAR >30
02468
10
FY09 FY10 FY11 FY12 FY13
Asset amount charged to loss as a %AVERAGE WRITEOFFS
0
1
2
3
4
FY09 FY10 FY11 FY12 FY13
US dollars in millionsTOTAL PARTNER LOAN PORTFOLIO
100
200
300
400
500
600
FY09 FY10 FY11 FY12 FY13
GROWTH
PARTNER PORTFOLIO QUALITY
TOTAL PARTNER LOAN PORTFOLIOUS dollars in millions
TOTAL BORROWERS SERVEDIn thousands
AVERAGE OPERATIONAL SELF SUFFICIENCYTotal revenues/total expenses as a %
AVERAGE PAR > 30Loans past due greater than 30 days as a %
AVERAGE WRITEOFFSAsset amount charged to loss as a %
| Social Investment Fund 2010 |
Global Partnerships | Q2 2013 | As of June 30, 2013 | Page 4
Fund Manager’s Comments
Social Investment Fund 2010’s performance remains strong with all partners continuing to make principal and interest payments in a timely manner. The Fund continues to have investment opportunities as a result of regularly scheduled amortizations and repayments. During the second quarter the Fund renewed roughly $2.75 million in fund loans to existing partners, and disbursed an additional $.55 million to APROCASSI, a 100% fair trade certified cooperative serving small coffee producers, in northern Peru. The Fund’s loan will help APROCASSI meet its members’ needs for short-term working capital prior to the harvest as well as pre-pay producers upon delivery of their coffee during the harvest.
October 21, 2010Inception Date
$21,942,026Capital Invested
$25,000,000Total Fund Capital
29 $875
75%
55%
Fund Manager Global Partnerships
Investment CurrencyUS$ and fully hedged local currency
Type of FundDebt
Fund Facts
Current number of partners
Average loan size
Percentage of borrowers served who are women
Percentage of borrowers served living in rural areas
Social Impact
In thousandsTOTAL BORROWERS SERVED
0200400600800
1000
FY11 FY12 FY13
Total revenues/total expenses as a %
AVERAGE OPERATIONALSELF SUFFICIENCY
90
120
150
FY11 FY12 FY13
Loans past due greater than 30 days as a %AVERAGE PAR >30
0
1
2
3
4
FY11 FY12 FY13
Asset amount charged to loss as a %AVERAGE WRITEOFFS
0
1
2
3
4
FY11 FY12 FY13
US dollars in millionsTOTAL PARTNER LOAN PORTFOLIO
FY11 FY12 FY130
200
400
600
800
GROWTH
PARTNER PORTFOLIO QUALITY
TOTAL PARTNER LOAN PORTFOLIOUS dollars in millions
TOTAL BORROWERS SERVEDIn thousands
AVERAGE OPERATIONAL SELF SUFFICIENCYTotal revenues/total expenses as a %
AVERAGE PAR > 30Loans past due greater than 30 days as a %
AVERAGE WRITEOFFSAsset amount charged to loss as a %
| Social Investment Fund 5.0 |
Global Partnerships | Q2 2013 | As of June 30, 2013 | Page 5
Fund Manager’s Comments
The second quarter of 2013 was busy with due diligence and new disbursements as the deployment of Social Investment Fund 5.0 picks up speed. At quarter end the Fund had deployed $5.7 million to five mission-aligned partners in four countries, and it subsequently closed two additional loans just after quarter end. Six additional loans have been approved and are in the documentation stage, while GP’s team remains busy at work building a robust pipeline of high performance partners. The Fund issued its second capital call for $4 million at the close of the quarter, at which point it had $31.9 million in commitments from 29 impact investors, including high net worth individuals, foundations, pension funds, faith-based institutions and development banks. The fund will continue to accept new commitments as it scales to meet its target fund size of $50 million.
March 25, 2013Inception Date
$5,700,000Capital Invested
$15,950,000Total Fund Capital
5 $1,115
69%
71%
Fund Manager Global Partnerships
Investment CurrencyUS$
Type of FundDebt
Fund Facts
Current number of partners
Average loan size
Percentage of borrowers served who are women
Percentage of borrowers served living in rural areas
Social Impact
In thousandsTOTAL BORROWERS SERVED
04080
120160200
FY13
2008
90
120
150
Total revenues/total expenses as a %
AVERAGE OPERATIONALSELF SUFFICIENCY
FY13
2008AVERAGE PAR >30Loans past due greater than 30 days as a %
0
2
4
6
8
10
FY13
Asset amount charged to loss as a %AVERAGE WRITEOFFS
0
1
2
3
4
FY13
US dollars in millionsTOTAL PARTNER LOAN PORTFOLIO
0
40
80
120
160
200
FY13
GROWTH
PARTNER PORTFOLIO QUALITY
TOTAL PARTNER LOAN PORTFOLIOUS dollars in millions
TOTAL BORROWERS SERVEDIn thousands
AVERAGE OPERATIONAL SELF SUFFICIENCYTotal revenues/total expenses as a %
AVERAGE PAR > 30Loans past due greater than 30 days as a %
AVERAGE WRITEOFFSAsset amount charged to loss as a %
Outstanding PositionsDistribution by Institution and Country
Global Partnerships | Q2 2013 | As of June 30, 2013 | Page 6
| |
Microfinance Fund 2008Percent of investable assets
Social Investment Fund 2010Percent of investable assets
Note: All percentages have been rounded to the nearest whole number.
BOLIVIA (23%)CRECER (9%)Pro Mujer in Bolivia (9%)FONDECO (5%)
ECUADOR (27%)FINCA Ecuador (9%)FODEMI (8%)Banco D-MIRO (5%)Fundación Alternativa (3%)Fundación Faces (2%)
EL SALVADOR (5%)ENLACE (5%)
GUATEMALA (1%)Friendship Bridge (1%)
MEXICO (11%)Vision Fund Mexico (4%)Pro Mujer in Mexico (7%)
NICARAGUA (14%)FDL (9%)Pro Mujer in Nicaragua (5%)
PERU (14%)Credivisión (6%)Pro Mujer in Peru (6%)Arariwa (2%)
CASH (3%)
BOLIVIA (18%)Sembrar Sartawi (5%)IDEPRO (6%)CRECER (2%)FONDECO (2%)EMPRENDER (3%)
COLOMBIA (10%)Fundación Amanecer (4%)Contactar (6%)
DOMINICAN REPUBLIC (1%)Esperanza (1%)
ECUADOR (10%)ESPOIR (4%)Banco D-MIRO (3%)Fundación Faces (3%)
EL SALVADOR (6%)Fundación Campo (4%)ENLACE (2%)
HONDURAS (2%)COMIXMUL (2%)
MEXICO (9%)CONSERVA (4%)Vision Fund Mexico (4%)Pro Mujer in Mexico (1%)CESMACH (0%) Triunfo Verde (0%)
NICARAGUA (4%)Aldea Global (0%) FDL (2%)Pro Mujer in Nicaragua (2%)
PERU (28%)ADRA (4%) Pro Mujer in Peru (5%)Crediflorida (5%)Los Andes (3%)NORANDINO (6%)Arariwa (2%)APROCASSI (3%)
CASH (11%)
5% El Salvador
1% Guatemala
3% Cash
23% Bolivia
27% Ecuador
11% Mexico
14% Nicaragua
14% Peru
1% Dominican
Republic
4% Nicaragua2% Honduras
18% Bolivia
10% Colombia
10% Ecuador
6% El
Salvador
9% Mexico
28% Peru
11% Cash
Outstanding PositionsDistribution by Institution and Country
Global Partnerships | Q1 2013 | As of June 30, 2013 | Page 7
| |
BOLIVIA (7%)FONDECO (7%)
ECUADOR (17%)ESPOIR (10%)Fundación Alternativa (7%)
EL SALVADOR (7%)Fundación Campo (7%)
HONDURAS (8%)COMIXMUL (8%)
CASH (62%)
All FundsPercent of invested assets
Note: All percentages have been rounded to the nearest whole number.
BOLIVIA (22%)
COLOMBIA (5%)
DOMINICAN REPUBLIC (1%)
ECUADOR (22%)
EL SALVADOR (7%)
GUATEMALA (1%)
HONDURAS (4%)
MEXICO (9%)
NICARAGUA (9%)
PERU (21%)
Social Investment Fund 5.0Percent of investable assets
7% Bolivia
62% Cash
7% El Salvador
17% Ecuador
8% Honduras
5% Colombia
1% Dominican
Republic4% Honduras
1% Guatemala
21% Peru
9% Nicaragua
22% Bolivia
22% Ecuador
9% Mexico
7% El Salvador
BoliviaCountry
2000Year founded
90Number of direct partners
8,637Number of direct beneficiaries
$4,099,306Outstanding gross loan portfolio
$475Average investment
per end beneficiary
100%Percent rural
| Partner Organization Profile: Pro-Rural |
Global Partnerships (GP) has a long history of investing in innovative, market-sustained business models that help improve lives and expand opportunity for people living in poverty. Within our Rural Livelihoods impact area, we have invested in a variety of approaches, including microfinance institutions that provide working capital to various actors along the value chain, as well as first-tier agricultural cooperatives that provide education and credit to smallholder farmers.
One unique model we’re particularly intrigued with is that of Pro-Rural, a Bolivian non-governmental organization that provides credit and technical assistance to 90 small institutional borrowers, including cooperatives, small enterprises and producer associations. Pro-Rural’s financing is provided by a joint-venture capital model in which capital commitments – and any returns on investment – are split between Pro-Rural and the borrower. Pro-Rural’s pre-harvest finance product provides partners with the capital necessary to purchase products from participating producers and sell to specialty, higher-priced markets.
In addition to its capital contribution, Pro-Rural provides technical assistance and market access for its producer groups. In an effort to improve the enterprises that serve individual farmers, Pro-Rural provides assistance to strengthen administrative, legal, production and commercialization processes. Additionally, individual producers are receiving certification training from Pro-Rural partners; 86% of farmers work with organic crops, and 29% have received fair trade certification. The lender facilitates improved market access through deep relationships with a national network of producers across a variety of crop categories, including quinoa, coffee, dairy, cacao, sesame, and wood.
Pro-Rural’s model helps mitigate many risks farmers face every day. For example, the model reduces the uncertainty around price volatility since these are fixed when the investment is closed. The model also connects farmers with buyers as Pro-Rural helps to triangulate payments using sales contracts as collateral. Moreover, the model allows Pro-Rural to give farmers top technical assistance given its premium access to information about what is moving prices and crop yields coming from its deep relationship with national networks of producers.
Small producer organizations and associations in the developing world have long struggled to access the capital requirements to reach the millions of smallholder farmers who rely on agricultural production for their livelihoods. Pro-Rural has developed an innovative, sustainable model to serve these producer groups and provide market access. GP is keen on this hands-on approach to funding small agricultural entities that are helping impoverished farmers expand their incomes and improve their lives.
Global Partnerships | Q2 2013 | As of June 30, 2013 | Page 8
A Pro-Rural member refines wood as one part of the wood value-chain. Photo c/o Pro-Rural.