INVESTMENTS FOR DEVELOPMENT - SWISS INNOVATION FOR A SUSTAINABLE

WORLD

TBLI CONFERENCE ZURICH

20. November 2015

SIFEM – SWISS INVESTMENT FUND FOR EMERGING MARKETS

• SIFEM is the Swiss Development Finance Institution (DFI) − Instrument of Switzerland’s public development cooperation − Invests via PE funds and financial institutions in emerging markets and

transitioning economies with a view to provide SMEs and fast growing companies with long-term growth capital

− Focus on partner countries of the Swiss Agency for Development Cooperation as well as the Division for Economic Cooperation and Development within SECO

− Asset base of USD 600m − Within the scope of the Strategic Objectives fixed by the Swiss Government,

SIFEM’s Board of Directors determines the investment strategy and is supervising its operations

− Managed by Obviam, a Switzerland based investment advisor

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HOW SIFEM WORKS

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SIFEM

Regional/Local PE Funds

Financial Institutions SME Banks Microfinance Banks

Company 1 Company 2 Company 3 Company 1 Company 2 Company 3

Equity Debt

100% owned by Swiss Confederation

OBVIAM SIFEM BoD SIFEM IC

Manager of SIFEM

SIFEM’S APPROACH TO RESPONSIBLE INVESTMENT

• Obviam applies its Responsible Investment Policy to all SIFEM investments: − Responsible Investment Policy

(Rationale, scope and objectives of responsible investing)

− Exclusion List − Obivam’s ESG Requirements:

describing on how ESG is fully integrated into the investment process (investment decision making, execution, exit)

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DEVELOPMENT IMPACT MEASUREMENT

−Art or science? −What is impact?

−Challenge of measuring

−Comparable data?

−Cost vs. benefit −Communication

−Harmonisation

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• Obviam uses a combination of quantitative and qualitative indicators − DEG’s GPR is applied to all of

SIFEM’s investment since 2005 − Since 2013: tracking of a set of

additional quantitative indicators (sub-set of the harmonised indicators)

− Qualitative case studies to make positive impact visible that is not captured by the more quantitative indicators/tools

• Nunc viverra imperdiet enim.

SIFEM – GUIDING PRINCIPLES & THEMES

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subsidiarity leveragerisk sharing

Risk/return

additionality

counter-cyclical

impact

ESG

exclusion list

innovation

active ownership

sustainability

profit

LEVERAGE - SIFEM PPP OPPORTUNITY

• «Leverage» is one of the four guiding principles of SIFEM’s mandate: “SIFEM will mobilise optimum additional capital from other private and institutional investors for the target countries or the beneficiary companies.”

• Broad range of different investments in the SIFEM portfolio (not all investments contribute evenly to all of SIFEM’s strategic objectives)

• SIFEM’s portolio as a whole not really attractive to private investors • Different private investors are interested in different parts of SIFEM’s

portfolio – not one size fits all • Investor interest driven by risk appetite, investment objectives, return

expectations, geographic focus ... Hence tailored approach needed in order to achieve «leverage»

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LEVERAGE - OBVIAM’S INSTITUTIONAL MANDATES

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1998 2005 2007 2012 2013

Managed Account B

Managed Account A

2015

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Job creation is a key objective of SIFEM

SIFEM invests in sector specific funds

SIFEM adheres to stringent ESG standards

SIFEM and Sustainable Development Goals

QUESTIONS?

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Thank you