LGT Venture Philanthropy

Q3 2013

LGT Venture Philanthropy: Our team

Our global team is based in six regions and passionate about creating societal impact

LGT Venture Philanthropy is supported by different competence centers within LGT Group such as HR, accounting, marketing, legal department and asset management.

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Board members

Countries with local team members

LGT Venture Philanthropy: Our impact

Since inception, our over 25 portfolio organizations improved the quality of life of more than 7 million less advantaged people

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2007/08 2009 2010 2011 2012 Time

*Most organizations have several donors/investors; therefore, the # of people reached is not only correlated with our donations or investments.

Portfolio organizations

Impact * (cumulative)

1‘100 lives improved

1.7m lives improved

4.2m lives improved

5.5m lives improved

7.9m lives improved

USD allocated (cumulative)

USD 2.2m

USD 5.3m

USD 8.3m

USD 12m

USD 16m

# of organizations 1 10 13 19 26

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LGT Venture Philanthropy: Our approach

Venture Philanthropy

Focus on few organizations

Financing combined with management know-how

and networks

Intense local due diligence to build knowledge and

relationship

Continuous controlling

Long-term engagement

Tailored financing: Equity, debt

and grants

Optimization of long-term social & environmental return

Young, rapidly growing organizations

“We want to be as efficient

and transparent as possible in

our impact investing /

philanthropic efforts.

With this objective in mind we

have applied many proven

principles and processes from

the venture capital and

consulting industry to our

impact investing /

philanthropy approach.”

H.S.H. Prince Max von und zu

Liechtenstein

Applying the Venture Philanthropy approach, we provide more than just financing: Management know-how and access to relevant networks can be even more important to achieving sustainable growth.

We use 8 Principles of Venture Philanthropy: Long-term, deep engagement; growth orientation; customized support

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LGT Venture Philanthropy: Our approach

Our investment process uses deep analysis to select the best organizations, as the number we can work with at once is limited

Due Diligence 6 – 12 months

Main activities

Preliminary review

Deal execution

Portfolio controlling & reporting

Exit

Tools/

Documents

Process

Timing 5 – 10 years 1 week – 3 months

Deal sourcing

Monthly reports

Quarterly KPI

Annual report

Post investment monitoring

Business, risk and capabilities assessment

Depth and scale of Impact assessment

Continuous support/meeting (management know-how and networks)

Each investment manager covers on average 5 investments, spending min. 0.5 day/week with each organization

Business, risk and capabilities assessment

Depth and scale of impact assessment

Termsheet

Investment Memo (~30 pgs)

Contract(s)

Intensive on-site due diligence

Reference calls for each management team member of investee

KPI and milestones determination

Final investment decision board/client

Preliminary Review (~7 pgs)

Evaluation of business plan/ proposal

Intensive discussions with senior mgt team members

Stop-go decision board/client

Factsheet (~2 pgs)

Capabilities Assessment (light)

Screening of organizational information

Gathering of basic information

Calls or first meeting with senior mgt members

Stop-go decision team/partners

Tracking database

Quick-screen checklist

Sourcing of potential deals

Information exchange with cooperation partner/ reference calls

Stop-go decision partners

Contract(s)

Options for exit are: MBO Sell to social

strategic buyer Sell to social

investor Exit is clarified

and agreed on with the organization upon deal execution (pre-investment)

# deals to date 700 70 40 26* 5* 5‘000

Deal screening

* 26% grants, 19% debt, 6% convertible debt, 49% equity (including SWAP deals with average deal size USD 50k ) ** Exit: 1 debt, 4 grants

LGT Venture Philanthropy: Our approach

We typcially invest $200k - $5mm in the early growth stage, using the following criteria

Sectors: Education, Health, ICT, Agriculture, Renewable Energy

Growth stage: Early to growth phase At least 1-2 years old

Funding need: USD 200K to 5M

Track record: Not pre-revenue Team / legal entity should exist

Org. & Mgt. Quality: Relevant experience / track record of CEO + mgt. team

Effectiveness of solution: Proof of solution / business model?

Growth potential: Potential / ability to scale ops. across regions / countries?

Efficiency of implementation: Focus; presence of systems / processes; plans

Impact: Potential to reach a high number of beneficiaries?

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LGT Venture Philanthropy: Sample investments

Impact Measurement: Varthana India

IMPACT

Varthana’s loans help in increasing schools’ capacity by constructing new classrooms, putting additional benches etc., and thereby increasing the access to education for low-income household students

Financing by Varthana also helps in improving the quality of education by enhancing school infrastructure and adding key learning resources such as a computer/science lab or expanding a library

Improved material well-being: Increase in education is directly proportional to increase in income

Improved physical well-being: Better education increases awareness about sanitation, nutrition etc.

Improved social well-being: Increase in self-esteem as well as more respect in the society

Improved security: NA

Improved freedom: Increased freedom to choose an occupation depending on the education

PROBLEM

Lack of expansion capital is a major hurdle to the progress of affordable private schools that offer low cost (avg. monthly fee of USD 5 to 20 per student) high quality education to low-income household children

These schools are not viewed as business entities by banks; their typical loan requirement (~USD 15’000) is too small for banks and too big for Micro Finance Institutions

As a result, they cannot access the right type of financing, and therefore have to compromise on quality of infrastructure as well as the capacity to enroll students

SOLUTION

Varthana aims to fill the current gap of financing affordable private schools by providing loans to help school proprietors grow and improve their schools’ infrastructure

Varthana offers loans ranging from USD 2’000 to USD 80’000 at interest rates ranging from 20% to 25% with monthly repayments over a 2 – 5 year period

ENGAGEMENT OF LGT VENTURE PHILANTHROPY

USD 200’000 investment through compulsorily convertible zero coupon debentures

Varthana has access to LGT Venture Philanthropy’s iCats Program, its network as well as ongoing mentoring support

2013e 2014e 2015e 2016e 2017e

# schools funded p.a. 150 1’191 3’924 9’876 20’940

# students (‘000) p.a. 75 595 1’962 4’938 10’470

pablosalgado.com

Depth

Reach

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LGT Venture Philanthropy: Sample investments

Impact Measurement: M-Kopa Solar Kenya

IMPACT

M-Kopa’s inaugural product makes clean and renewable solar energy available to low-income households, thus potentially increasing productive work days, improving income opportunities and reducing health-related hazards .

Through pre-payments, low-income households can re-direct daily energy expenditures from inefficient, wasteful and unsafe sources such as kerosene lamps towards purchase and ownership of affordable solar home systems.

M-Kopa will bring energy access to a considerable portion of Kenya’s un-electrified households.

Improved material well-being: Increases household productivity and income

Improved physical well-being: Reduced health risk though cleaner energy and light sources

Improved social well-being: Increased social interactions due to micro-enterprise activities

Improved security: Secure access to electricity and light

Improved freedom: Greater freedom of choice of products through pay-per-use system

PROBLEM

Over 63% of Sub-Saharan Africa’s population are rural, lower-end consumers with small inconsistent incomes/revenue streams. They can barely afford basic services but end up allocating up to 70% of their household expenditures on poor, inefficient and potentially hazardous energy sources e.g. kerosene.

Studies show that 110 million households across Africa spend USD 160 or more every year on kerosene for lighting and cooking despite the poor quality of light provided by kerosene lamps and related health risks of smoke fumes.

SOLUTION

M-KOPA Solar enables low-income households purchase quality d.light solar home systems through an affordable and convenient pay-as-you-go payment plan using the renowned mobile payment system M-PESA.

The d.light solar home system has 3 bright lights and mobile charging abilities. Customers pay a USD 15 deposit followed by 85 US cents daily for up to one year; owning the product outright after completing payments.

M-Kopa plans to reach over 300’000 households with clean energy by 2015.

ENGAGEMENT OF LGT VENTURE PHILANTHROPY

LGT VP invested USD 500’000 debt and USD 37’500 equity to fund initial roll-out of M-Kopa Solar commercial product targeting low-income households

M-Kopa has access to LGT Venture Philanthropy’s iCats Program, LGT Venture Philanthropy’s network as well as ongoing mentoring support

Depth

M-KOPA Solar seeks to address energy needs of up to 300’000 low-income households across Kenya with its solar home system and could introduce new products for micro-entrepreneurs. To date over 20’000 have been sold in just over one year.

Reach

LGT Venture Philanthropy: Industry insights

Suggestions for working with impact investors

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CAPTIAL RAISING PROCESS: Find a lead investor, negotiate terms with the lead first, the rest will follow. Understand the different types of investment and the terms that go with them – or find an attorney to

consult Choose investors that share your values and approach – whether debt, equity or grant, impact investors

will see themselves as your partner and be heavily engaged in your business…it’s like a marriage

KEY INVESTOR CRITERIA: Quality management with proven track record/expertise to execute Ability to scale Impact Financial Sustainability

USE OF FUNDS: Know precisely how much capital you need, how you’re going to use it, and how it’s going to

grow your business and impact

IMPACT: Have at least a few relevant key impact metrics including lives improved

EXIT: Be able to articulate possible exits or payback period – loan repayment, share buybacks, strategic sale, IPO

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LGT Venture Philanthropy: Contact

Contact information

It all starts with a personal conversation. Contact us to arrange a meeting. We are looking forward to meeting you. En Lee Phone: +65 9868 8820 Co-Head, Asia Pacific Email: en.lee@lgtvp.com Raya Papp Phone: +65 8103 2780 Co-Head, Asia Pacific Email: raya.papp@lgtvp.com Joan Yao Phone: +63 917 811 5831 Investment Manager Email: joan.yao@lgtvp.com Website: www.lgtvp.com

Support LGT Venture Philanthropy is funded through substantial contributions from each of the following LGT Group companies: LGT Bank Ltd., LGT Bank (Switzerland) Ltd., LGT Bank (Austria) Ltd., LGT Bank (Singapore) Ltd., LGT Capital Management Ltd. and LGT Capital Partners Ltd.

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Legal Information

This document is intended solely for the recipient and may not be duplicated, distributed or published either in electronic or any other form without the prior written consent of LGT Group Foundation. This publication is for your information only and is not intended as an offer, solicitation of an offer, public advertisement or recommendation to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any undertaking or guarantee as to it being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published, therefore, information shall not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax or other consulting matters, nor should any investment or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Forecasts are not a reliable indicator of future value developments. The risk of price and foreign currency losses and of fluctuations in return as a result of unfavorable exchange rate movements cannot be ruled out. There is a possibility that investors will not recover the full amount they initially invested. We disclaim without qualification all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. It is up to potential investors to obtain comprehensive information and appropriate advice in their home country, country of residence or country of domicile about the applicable legal requirements and any tax consequences, foreign currency restrictions or foreign exchange controls and any other aspects that are of relevance prior to any decision to subscribe to, purchase, own, exchange or redeem such investments, or enter into any other transaction in relation to same. The securities and rights mentioned in this document may not be purchased or held by investors or for investors domiciled in the USA and/or with US citizenship, nor may such securities and rights be transferred to them.