rodolfo fracassi-tbli nyc may 2014

Impact Investing: addressing the liquidity issue

Presentation for:

Created in 2008 to become a catalyst for sustainable investments in micro, small and medium businesses, MainStreet

Partners is an independent financial boutique that offers tailored solutions to Institutional Investors and Private Banks

that are willing to allocate financial resources in the Impact Investing space in order to achieve a mix of financial,

environmental and social returns.

MainStreet Partners’ team has developed a reliable methodology for the research and assessment of investment

opportunities in the different fields characterizing Impact Investing, both in developed and developing countries. Driven

by a real commitment to social and environmental Impact Investing, our team offers a full spectrum of services,

including:

- Research and Due Diligence

- Portfolio Structuring

- Asset Allocation and Investment Selection

- Monitoring

Our abilities to propose and implement innovative solutions with a long-term partnership approach is our added value,

while our in-depth on-going research effort represents a continual commitment to assess the fast growing impact

investing industry.

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MainStreet Partners

Bamboo Finance

Microfinance Alliance

Bamboo Finance

Oasis Fund

Incofin IM

Rural Impulse Fund II

responsAbility

Leaders Fund

Fund Raising

Headquartered in London, MainStreet Partners is regulated by the Financial Conduct Authority and is

member of the Sustainable Investment and Finance Association (UKSIF)

To date it has participated as an advisor for the structuring, investment selection and placement of the

following impact investment vehicles:

Fondazione Cariplo

Microfinanza Uno

Banca Fideuram

Fonditalia Ethical Investment

Uman Foundation

Uman Positive Impact Fund

Corporation Financière Européene

Sustainable Trade Finance Strategy

Structuring and Investment Selection

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Our credentials

Responsible investment strategies experienced high growth over the recent past among institutional

investors, but engagement of retail investors has been limited

Breakdown of assets by type of investor *

94%

6%

Institutional Retail

Within responsible strategies, impact

investments show a similar split:

• 92% Institutional

• 8% Retail

*Source: EuroSif SRI Study 2012, and team analysis 4

Institutional investors dominate the responsible

investments area

Number of Vehicles ≈380 ≈9

A recent research by JP Morgan GIIN* report estimates the size of the impact investing market globally

around USD 46 billion.

Vehicles available to

Qualified Investors

Vehicles available to

Retail Investors

Average AUM ≈100 ≈354

(1) Impact investment funds and notes distributable to retail investors (excluding themed bonds and social bonds): responsAbility Global Microfinance Fund,

responsAbility Mikrofinanz-Fonds, responsAbility Fair Trade Fund, ASN Novib Microcredit Fund, OikoCredit Fund, Calvert Foundation-Community Investment Notes,

Finca Notes, Threaneedle Social Impact Fund, Fideuram Fonditalia Ethical Investment

Source: Pacific Community Venture research 2012, and team analysis

*JP Morgan GIIN Report January 2014

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Impact investment vehicles(1) available to retail investors

21% 20%

12% 10%

6% 5%

4% 4% 4% 4% 3%

2% 2%

Pay Principal Back

Address a cause I care about

Business Model

Brand Other

Private investors are increasingly seeking investments that express their values beyond targeting a

financial return:

Impact investments create the emotional connection between investors and investees

Selected impact vehicles show solid track record and low correlation

Track Record

Source: Hope Consulting, Realising the Market Potential for the Impact Investing Market, May 2011 6

What drives private investors’ choice?

Impact investments are gaining momentum among

private investors

Small investments: 85% of private investors would invest less than USD 10,000

Engage Banks and Distribution Platforms: private investors prefer to learn and access impact

investments through their financial advisors

27%

12%

10% 10% 9%

7% 7% 7%

5% 4%

2%

Financial Advisors

Online research, direct dealing, other tools

Where do private investors learn and execute transactions?

Source: Hope Consulting, Realising the Market Potential for the Impact Investing Market, May 2011 7

Structures and Distribution Channels

Opportunities Challenges

Size

Reach a large number of investors

Quickly scale assets

Liquidity

Retail investors prefer liquid assets

Most impact investments lack liquidity

Stability

Private individuals invest long term

Especially in the impact investing area

Regulatory Framework

Impact vehicles are not authorised for

distribution in most countries

Branding

Brand awareness

Positioning

Structure / Distribution Channel

Develop new products and services

Engage the right distribution channels

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Opportunities and challenges of the retail market

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A spectrum of retail investment solutions

There is a growing availability on the market of retail investment vehicles offering daily to monthly liquidity, such as:

Information provided only for illustrative purposes, the same do not represent an incentive or promotion to the instruments presented. Past

returns do not guarantee future yields.

AuM ≈ USD 100 mln Loans’ average maturity:

90 days Fund liquidity: Monthly

Seeding Fertilization Harvest Export Consumer

Agricultural Producers’ Cooperative

Repayment of capital plus interests Financing



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Fair Trade example: responsAbility Fair Trade Fund

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Community Development example: CRA Qualified

Investment Fund

CRA Qualified Investment Fund Retail Shares has been launched by Community Capital Management

(CCM) in 2007:

• Investments have to be qualified under the Community Reinvestment Act (CRA)

• It invests in a) rental housing units, b) home mortgages for low- to moderate-income families, c)

affordable healthcare facilities either trough investments

1. in MBS backed by the US government, or

2. certificates of deposit issued by Community Development Financial Institutions

• Daily liquidity

Mortgage Backed Securities



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2



• Managed by Threadneedle and advised on social impact by Big Issue Invest

• Retail fund with daily liquidity authorized for distribution in the UK

• Invests in bonds issued by companies, governments, voluntary organisations

and/or charities that engage in socially beneficial activities and development

Fund’s investable universe and examples

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Social Bond example: Threadneedle Social Bond Fund

Housing

Healt & Social Care

Education

Financial Inclusion

Commuity Services

Environment

Transport



• Managed by Fideuram Asset Management with an AuM of USD30 million

• Retail fund allowed for distribution in the EU with weekly liquidity

• Invests in debt and equity instruments targeting a measurable social and

environmental impact

Fund’s strategic allocation

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Multi-strategy example: Fonditalia Ethical Investment

Equity investments Debt investments

Cash

Thematic Bonds &

Debt Impact Funds

Listed Impact

Equities

Green Bond

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Listed Stock example: Low Income Financial Institutions

Since its inception, Bank Rakyat has commitment to focus on banking services

in micro, small, and medium enterprises. This commitment is reflected in the

allocation of loans for the sectors that affect the livelihood of the population and

other financial services that the Bank offers to the community.

Market Cap. USD15 bln

Total Deposits USD41 bln

Total Assets USD51 bln

ROE* 32.61%

P/E 8.30

P/Book 2.43

Equity Bank was founded as Equity Building Society in 1984 and was originally a

provider of mortgage financing for the majority of customers who fell into the low

income population. Today the bank offers a full range of commercial banking

services, such as deposits, loans custody and investments.

Market Cap. USD1,5 bln

Total Deposits USD2,2 bln

Total Assets USD3,1 bln

ROE* 31.29%

P/E 10.36

P/Book 2.80

Source: Bloomberg – data as of November 28, 2013

*ROE at 31.12.2012

Investing in healthcare and social housing

International Finance Facility for Immunization

Vaccine bond

S&P Rating AA+

Since 2006 IFFIm has raised over USD 3.85 bln and

its programs have supported the vaccination of over

370 million children

Maturity: 3-10 years

Coupon: 1-8% (based on date of issue, maturity and

currency)

Currency: USD, GBP, AUD, BRL, ZAR, TRY

Mivivienda Fund Bonds

Housing Bond

Fitch Rating BBB

Since 1999 Mivivienda has enabled more than

80,000 Peruvian families to access over $ 2.1 billion

in loans for the acquisition or renovation of quality

homes

USD 500 million bond issue to finance the purchase

or renovation of quality homes

Maturity: 2023

Coupon: 3,5%

Currency: USD



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Investing in Green Bonds

European Bank for Investments (EBI)

Climate awareness bond

S&P Rating AAA

More than €1,4 billions in bonds issued by EBI to

finance renewable energy and energy efficiency

programs across Europe

Currency: EUR, ZAR, TRY, SEK

Maturity: 1-6 years

Coupon: 2-5% (based on date of issue, maturity and

currency)

Asian Development Bank (ADB)

Water Bond

S&P Rating AAA

Around 850 million people in Asia lack access to

drinkable water

In 2010, the ADB Water Bond has raised $ 638

million to finance projects supporting the production

and distribution of drinkable water in Asia

ADB has raised further $ 244 million through Clean

Energy Bonds

Through the capital raised ADB has financed about

200 water related projects in 2010 and 2011, for a

total of $ 1.5 billions



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This material is provided at your request for information purposes only and does not constitute a solicitation in any

jurisdiction in which such a solicitation is unlawful or to any person to whom it is unlawful. Opinions expressed in this

document are current opinions as of the date appearing in this material only. All data, number and figures in this document

are to be considered as purely indicative. There is no guarantee that sales and assets figures presented in this document

will be reached. There is no guarantee that data, figures and information provided in this document are authentic, correct or

complete. Neither MainStreet Capital Partners ltd, nor its affiliates and employees are liable for any damage, direct or

indirect, losses or costs caused by any incorrectness or incompleteness of this document.

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rodolfo fracassi-tbli nyc may 2014

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