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Impact Investing: addressing the liquidity issue
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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
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.
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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
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.
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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.
• 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
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.
• 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
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.
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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
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.
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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
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