Download - GP Investors Report | Q2 | 2015
Global Partnerships
INVESTORS REPORTSecond Quarter 2015 | April 1 - June 30, 2015
www.globalpartnerships.org
Seattle Headquarters: Global Partnerships, 1932 First Avenue, Suite 400, Seattle, WA 98101, USA | Tel: 206.652.8773 | Website: www.globalpartnerships.org
For more information, contact:
Jason Henning, VP, Investor and Donor Relations
[email protected] | 206.456.7832
Featuring: Alternativa Peru on p.3
Photo courtesy of Alternativa Peru
| Letter from the CIOO |
13 COUNTRIESwhere Global Partnerships has worked
83 PARTNERSwith whom Global Partnerships has worked
3.3 MILLION LIVES IMPACTED (estimated number of lives impacted as a result of GP’s contribution to the meaningful opportunities delivered by partner organizations)
$168.4 MILLIONcumulative capital deployed
Global Partnerships | Q2 2015 | As of June 30, 2015 | Page 2
BY THE NUMBERS
August 14, 2015
Dear Investor,
Within the impact investing industry, microfinance has long been viewed as a fine example of an investable, market-sustained solution to poverty. Hundreds of millions of dollars have flowed to microfinance institutions (MFIs) and microfinance investment vehicles—across asset classes—generating social impact alongside consistent and stable financial returns.
Yet despite the popularity of microfinance as an investment sector, recent press has questioned its social impact in the lives of the people being served. For example, a recent article in The Guardian argues that most microfinance loans are used for consumption—not income generation—and therefore “end up making poverty worse.”
While Global Partnerships invests into many types of channels, such as agricultural organizations and solar light businesses, our roots are in microfinance institutions (MFIs), and we continue to selectively invest through this channel. Over our 20+ year history, we have learned many lessons, and one guiding principle has been “it takes more than a loan.” We observed, for example, that extending credit to someone living in poverty that led to over-indebtedness clearly had a negative social impact, and providing a loan for consumption or non-productive purposes or at unnecessarily high costs did not lift people out of poverty.
On the other hand, the combination of women-centered credit and tailored education—especially when delivered through the group lending platform at a reasonable cost—can have a meaningful impact at the household level. Clients become empowered and informed decision makers and are able to smooth their incomes and consumption, build assets and increase their capacity to anticipate and deal with major expenses.
So, the question should not be whether microfinance as a whole results in positive or negative outcomes, but rather “what MFI models are most effective at the household level?” As with any product or service, we believe that the most positive impact occurs when the provider has the best interests of the household in mind. We work with a relatively select portfolio of MFIs, but have examined hundreds with which we have chosen not to work. We begin our process by understanding whether the institution is more focused on the household or on their own growth and financial return, and to what extent their model delivers value in a sustainable and scalable way. We are wary of institutions that cannot provide meaningful metrics of how they evaluate impact, or that seem to serve the owners and managers more than their clients.
GP seeks out small and mid-size MFIs that have a combination of solid financial performance and positive impact at the household level, implementing business models that have carefully been built to leverage and integrate various services that a person in poverty needs. Alternativa Peru, featured in this quarter’s report, represents this sweet spot where we seek to invest for highest impact and a well-managed fund investment.
Thank you for your continued support of our work,
Best regards,
Mark Coffey Chief Investment and Operating Officer
Peru’s economic growth has helped reduce poverty levels but a wide poverty gap persists. In rural areas, 53% live in poverty versus 17% in urban areas.
Country: PeruYear Founded: 1979
Number of Employees: 17 Clients served: 2,951 Average Loan Size Per Client: $361
| Featured Partner: Alternativa Peru |
Global Partnerships | Q2 2015 | As of June 30, 2015 | Page 3
WHO Alternativa Peru is a microfinance institution whose mission is to contribute to the development of low-income people, families and communities in the region of Lima. The organization principally serves women entrepreneurs at the low end of the market, providing credit and broad based education through a group lending platform.
WHAT Alternativa Peru provides microcredit loans to its clients through village banks and takes advantage of the regularly scheduled credit meetings to deliver education on topics such as gender, health and the environment as well as focusing on issues that pertain to personal, business and organizational development. Alternativa Peru also works with the National Cancer League to conduct early detection campaigns in remote communities, providing clients and their families with access to discounted screening.
WHY Alternativa Peru stands out from its peers in the region of Lima due to its commitment to serve the low end of the market in a very client-centered approach. The broad based education program is designed to capture client feedback and GP believes Alternativa Peru is striving to provide best-in-class services to our target demographic of those in greatest need of financial inclusion and education services.
Budgeting is one of the education topics taught during Alternativa Peru’s village bank meetings. Photo c/o Alternativa Peru.
Click to see all partner profiles
| Social Investment Fund 2010 |
Global Partnerships | Q2 2015 | As of June 30, 2015 | Page 4
Fund Manager’s Comments
During the second quarter of 2015, SIF 2010 made one trade finance disbursement and extended the amortization of one other partner loan. In August the Fund will pre-pay $1.7 million in principal, plus interest, to senior debt investors, with a principal payment of $8.8 million, plus interest, to be made as scheduled at the first investor maturity in October. The final scheduled investor payments will be made in June 2016.
All principal and interest payments from the Fund’s partners were once again made on time during the second quarter, reflecting the strength of the underlying investments.
$24.4MM Capital Invested
$25.0MM Total Fund Capital Called
$67.4MM Cumulative Capital Deployed
119 Cumulative Number of Loans
19 Number of Consecutive
Quarters PAR=0
898K Lives Impacted (Estimated number of lives impacted as a result of SIF 2010’s contribution to the meaningful opportunities delivered by partner organizations.)
31Current Number of Partners
$945 Average Loan Size
77%Percentage of People Served Who are Women
56%Percentage of People Served Living in Rural Areas
Fund Overview
Inception DateOctober 21, 2010
Fund Manager Global Partnerships
Type of FundDebt
Investment CurrencyUS$ and fully hedged local currency
Portfolio Overview
In millionsTOTAL PEOPLE SERVED
00.20.40.60.81.01.2
FY11 FY12 FY13 FY14 FY15
Loans past due greater than 30 days as a %AVERAGE PAR >30
0
2
4
6
FY11 FY12 FY13 FY14 FY15
Asset amount charged to loss as a %AVERAGE WRITEOFFS
0
1
2
3
4
FY11 FY12 FY13 FY14 FY15
US dollars in millionsTOTAL PARTNER LOAN PORTFOLIO
FY11 FY12 FY13 FY14 FY150
200400600800
1000
SCALE
PARTNER PORTFOLIO QUALITY
TOTAL PARTNER LOAN PORTFOLIOUS dollars in millions
TOTAL PEOPLE SERVEDIn millions
AVERAGE PAR > 30Loans past due greater than 30 days as a %
AVERAGE WRITEOFFSAsset amount charged to loss as a %
As a %
0.55%
3.64%
FUND RETURN v. DURATION-MATCHED TREASURIES
0 1 2 3 4 5
Fund
UST
FUND RETURN v. DURATION-MATCHED TREASURIES
Outstanding PositionsDistribution by Institution and Country
Global Partnerships | Q2 2015 | As of June 30, 2015 | Page 5
| |
Social Investment Fund 2010Percent of investable assets
Note: All percentages have been rounded to the nearest whole number.
BOLIVIA (20%)Crecer (4%)EMPRENDER (3%) FONDECO (2%)IDEPRO (6%)Pro Rural (1%)Sembrar Sartawi (4%)
ECUADOR (16%)Banco D-MIRO (3%)ESPOIR (4%)Fundación Faces (3%)Vision Fund Ecuador (6%)
EL SALVADOR (9%)ENLACE (6%)CrediCampo (3%)
GUATEMALA (2%)Friendship Bridge (2%)
HAITI (<1%) Fonkoze (<1%)
HONDURAS (2%)IDH (2%) RAOS (0%)
MEXICO (8%)CESMACH (0%)CONSERVA (4%)Triunfo Verde (0%) VisionFund Mexico (4%)
NICARAGUA (14%)Aldea Global (3%)FDL (3%)MiCrédito (4%) Pro Mujer in Nicaragua (4%)
PERU (26%)ADRA (8%)Alternativa (Peru) (2%) APROCASSI (3%)Crediflorida (1%)FONDESURCO (3%)NORANDINO (3%) Pro Mujer in Peru (6%)
CASH (5%)
20%Bolivia
5% Cash
2% Guatemala<1% Haiti
2% Honduras
16%Ecuador
8%Mexico
14%Nicaragua
26%Peru
9%El
Salvador
20%Bolivia
| Social Investment Fund 5.0 |
Global Partnerships | Q2 2015 | As of June 30, 2015 | Page 6
Fund Manager’s Comments
SIF 5.0 disbursed over $4.3 million to eight partners and renewed one additional loan. Three of those disbursements were to new partners in Nicaragua, Peru and Guatemala, respectively. During the quarter, all SIF 5.0 partners made payments as agreed and are aligned with one or more of GP’s impact areas.
The Fund is continuing to accept new commitments from investors and will be calling additional capital during the third quarter. It is anticipated that the Fund will reach its $50 million target in total capital commitments in the third or fourth quarter.
$35.7MM Capital Invested
$37.6MM Total Fund Capital Called
$43.0MM Cumulative Capital Deployed
50 Cumulative Number of Loans
9 Number of Consecutive
Quarters PAR=0
411K Lives Impacted (Estimated number of lives impacted as a result of SIF 5.0’s contribution to the meaningful opportunities delivered by partner organizations.)
28Current Number of Partners
$1,113 Average Loan Size
55%Percentage of People Served Who are Women
72%Percentage of People Served Living in Rural Areas
Fund Overview
Inception DateMarch 25, 2013
Fund Manager Global Partnerships
Type of FundDebt
Investment CurrencyUS$ and fully hedged local currency
Portfolio Overview
As a %
0.83%
3.28%
FUND RETURN v. DURATION-MATCHED TREASURIES
0 1 2 3 4 5
Fund
UST
SCALE
PARTNER PORTFOLIO QUALITY
US dollars in millionsTOTAL PARTNER LOAN PORTFOLIO
0
120
240
360
480
600
FY13 FY14 FY15
TOTAL PARTNER LOAN PORTFOLIOUS dollars in millions
In millionsTOTAL PEOPLE SERVED
00.20.40.60.81.01.2
FY13 FY14 FY15
TOTAL PEOPLE SERVEDIn millions
AVERAGE PAR >30Loans past due greater than 30 days as a %
0
2
4
6
8
10
FY13 FY14 FY15
AVERAGE PAR > 30Loans past due greater than 30 days as a %
Asset amount charged to loss as a %AVERAGE WRITEOFFS
0
1
2
3
4
FY13 FY14 FY15
AVERAGE WRITEOFFSAsset amount charged to loss as a %
FUND RETURN v. DURATION-MATCHED TREASURIES
Outstanding PositionsDistribution by Institution and Country
Global Partnerships | Q2 2015 | As of June 30, 2015 | Page 7
| |
Social Investment Fund 5.0Percent of investable assets
Note: All percentages have been rounded to the nearest whole number.
BOLIVIA (23%)Emprender (4%)FONDECO (3%)Idepro (5%)PRO RURAL (4%)Sembrar Sartawi (7%)
COLOMBIA (3%)Fundación Amanecer (3%)
ECUADOR (17%)Banco D-MIRO (5%)ESPOIR (4%)Fundación Alternativa (4%)Vision Fund Ecuador (4%)
EL SALVADOR (3%)CrediCampo (3%)
GUATEMALA (7%)CDRO (1%) NEWFundea (5%)FECCEG/ECEG (0%) PROFASA (1%)
MEXICO (10%)Pro Mujer Mexico (5%)Vision Fund Mexico (5%)
NICARAGUA (12%)COOPEFACSA (1%) NEWFDL (5%)Fundenuse (1%)Pro Mujer in Nicaragua (5%) PARAGUAY (9%) Arasy (5%) BioExport (4%)
PERU (8%) Cenfrocafe (2%)Coop Sol y Café (1%) NEW Pro Mujer in Peru (5%)
LATIN AMERICA (MULTICOUNTRY) (2%)Greenlight Planet (1%) Tecnosol (1%)
CASH (2%)
3% Colombia
3% El Salvador2% Latin America
2% Cash
7% Guatemala
23% Bolivia
10% Mexico
12% Nicaragua
8% Peru
9% Paraguay
17% Ecuador
Outstanding PositionsDistribution by Institution and Country
Global Partnerships | Q2 2015 | As of June 30, 2015 | Page 8
| |
All FundsPercent of investable assets
Note: All percentages have been rounded to the nearest whole number.
BOLIVIA (22%)
COLOMBIA (2%)
ECUADOR (17%)
EL SALVADOR (5%)
GUATEMALA (5%)
HAITI (<1%)
HONDURAS (1%)
MEXICO (9%)
NICARAGUA (13%)
PARAGUAY (6%)
PERU (16%)
LATIN AMERICA (MULTICOUNTRY) (1%)
CASH (3%)
1% Honduras3% Cash
2% Colombia
<1% Haiti
1% Latin America
6% Paraguay
5% Guatemala
5% El Salvador
13% Nicaragua
16% Peru
22% Bolivia
17% Ecuador
9% Mexico