Page 1

Social Investment Funds

IN V E STORS RE P ORT www.globalpartnerships.org

First Quarter 2013 | Jan. 1 - Mar. 31, 2013

For more information, contact: Jason Henning, Director of Investor Relations jhenning@globalpartnerships.org | 206.456.7832

Photo c/o CESMACH 1932 First Avenue, Suite 400 | Seattle, WA 98101, USA | 206.652.8773 // De Enitel Villa Fontana 2c. Este, 30v. Norte | Edificio Opus Of. 205 | Managua, Nicaragua


| Letter from the CIOO |

May 15, 2013 Dear Investor, The beginning of the twenty-first century marked the start of a new social structure in Latin America. Poverty rates fell to 28 percent in 2010 from about 40 percent in 2000, even amid a global economic crisis1. Meanwhile, for the first time in history, one out of three individuals in the region belongs to the middle-class. As a result, the middle-class and the poor have roughly an equal share of Latin America’s population. Being middle-class in Latin America is not the same as being middle-class in the developed world. A key feature of middle-class status is having some degree of economic stability and resilience to shocks. Therefore, a typical middle-class worker in Latin America is reasonably educated, formally employed, lives in urban areas, and has fewer children. Using income thresholds, the World Bank calculates that a family of four would be middle-class in this region if their annual household income ranges between $14,600 and $73,0002. Economic growth cannot entirely explain what is behind this expanding middle-class. For example, while the Dominican Republic experienced a higher growth rate than Ecuador, its middle class shrank. By contrast, in Ecuador, the middle-class grew by more than 10 percentage points3. We note that economic mobility also correlates with factors such as public health and education spending. In particular, targeted and innovative social programs, like conditional cash transfers, are associated with higher income mobility in the region. Does this mean that Latin America is now a middle class society? No. From this social transformation also emerged a new class: those between the poor and the middle-class, who meet most of their basic needs, but have a higher risk of falling back to poverty. This group is now the largest social class in Latin America, accounting for 38 percent of the population. Therefore, Latin America is transitioning into a middle-class society, but the region is not there yet. Our mission at Global Partnerships to expand opportunity for people living in poverty remains unbroken during this social transformation. With around 60 percent of the population still poor or almost poor in Latin America, we will continue giving support to those partners that create sustainable solutions and truly serve the needs of the people at the bottom of the pyramid. We believe that this type of support will move more people permanently out of poverty and will transform Latin America into more of a middle-class society. Thank you for your ongoing interest and support in our work,

Mark Coffey Chief Investment and Operating Officer 1, 3: López-Calva, L. F. (2012, Fall). AQ Feature. Retrieved 04 11, 2013, from Quarterly Americas. 2: Francisco H. G. Ferreira, J. M.-F.-C. (2012). Economic Mobility and the Rise of the Latin American Middle Class. Washington, D.C.: The World Bank.

BY THE NUMBERS 11 COUNTRIES

where Global Partnerships works

38 PARTNERS with whom Global Partnerships works

97,344 PEOPLE

served by Global Partnerships through our partners

$45.4 MILLION fund capital at work

Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 2


| Microfinance Fund 2008 |

Fund Manager’s Comments

GROWTH TOTAL PARTNERLOAN LOANPORTFOLIO PORTFOLIO TOTAL PARTNER US in millions millions US dollars dollars in 600 500 400 300 200 100

FY09

FY10

FY11

FY12

FY13

TOTAL SERVED TOTAL BORROWERS BORROWERS SERVED In In thousands thousands 800 700 600 500 400 300

Portfolio performance remains strong and all partners in the Fund continue to make principal and interest payments in a timely manner. Generally speaking partners have shown expected earnings, consistent balance sheet strength and strong portfolio quality during the first quarter, which is traditionally a slow time of year. Due to the accumulation of retained earnings, the Fund was able to put an additional $250,000 to work through a local currency loan to an existing partner, FRAC, who has recently converted to a regulated entity known as Vision Fund Mexico. With less than two years until the Fund matures GP remains hard at work identifying and maintaining mission-aligned partners.

Fund Facts October 31, 2008 Inception Date FY09

FY10

FY11

FY12

FY13

Fund Manager Global Partnerships

$20,780,058

Investment Currency US$ and fully hedged local currency

Total expensesasasa a%% Total revenues/total revenues/total expenses

$20,000,000

150

Total Fund Capital

Type of Fund Debt

2008

Capital Invested

AVERAGE OPERATIONAL AVERAGE OPERATIONAL SELF SUFFICIENCY SELF SUFFICIENCY

120

Social Impact

90

FY09

FY10

FY11

FY12

FY13

17

Outstanding number of partners

$692

Average loan size

81%

Percentage of borrowers served who are women

49%

Percentage of borrowers served living in rural areas

PARTNER PORTFOLIO QUALITY

2008

AVERAGE PAR > 30

AVERAGE PAR >30 than 30 days as a % Loans past due greater Loans past due greater than 30 days as a %

10 8 6 4 2 0

FY09

FY10

FY11

FY12

FY13

AVERAGE WRITEOFFS AVERAGE WRITEOFFS

Asset charged to toloss lossas asaa%% Asset amount amount charged 4 3 2 1 0

FY09

FY10

FY11

FY12

FY13

Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 3


| Social Investment Fund 2010 |

Fund Manager’s Comments

GROWTH TOTAL PORTFOLIO TOTALPARTNER PARTNER LOAN LOAN PORTFOLIO US USdollars dollarsininmillions millions 800 600 400 200 0

FY11

FY12

FY13

TOTAL BORROWERS SERVED TOTAL BORROWERS SERVED In thousands In thousands

1000 800 600 400 200 0

The first quarter of 2013 was busy with due diligence and new disbursements. Fund performance remains strong with all partners continuing to make principal and interest payments in a timely manner. The Fund continues to have investment opportunities as a result of regularly scheduled amortizations and repayments. During the first quarter the Fund disbursed $1.65 million to three new partners that reflect the innovative and diverse nature of approaches within the SIF 2010 portfolio. Emprender is a Bolivian microfinance institution (MFI) that provides small, working capital loans coupled with health services while CESMACH and Triunfo Verde are 100% fair trade certified first-tier trade cooperatives in the southern highlands of Chiapas, Mexico.

Fund Facts FY11

FY12

FY13

October 21, 2010 Inception Date

AVERAGE OPERATIONAL AVERAGE OPERATIONAL SELF SUFFICIENCY

SELFrevenues/total SUFFICIENCY Total expenses as a %

$23,416,743

Investment Currency US$ and fully hedged local currency

$25,000,000

Type of Fund Debt

Capital Invested

Total revenues/total expenses as a %

Fund Manager Global Partnerships

150

120

90

Total Fund Capital FY11

FY12

FY13

PARTNER PORTFOLIO QUALITY

Social Impact 31

Outstanding number of partners

$825

Average loan size

78%

Percentage of borrowers served who are women

50%

Percentage of borrowers served living in rural areas

AVERAGE 30 AVERAGE PAR PAR > >30

Loans Loans past past due due greater greater than than 30 30 days days as as aa % % 4 3 2 1 0

FY11

FY12

FY13

AVERAGE AVERAGE WRITEOFFS WRITEOFFS

Asset Assetamount amountcharged chargedto toloss lossas asaa%% 4 3 2 1 0

FY11

FY12

FY13

Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 4


| Social Investment Fund 5.0 |

Fund Manager’s Comments

GROWTH TOTAL PARTNER PORTFOLIO TOTAL PARTNERLOAN LOAN PORTFOLIO US dollars dollars ininmillions US millions 100 80 60 40 20 0

FY13

TOTAL BORROWERS SERVED TOTAL BORROWERS SERVED In thousands In thousands

100 80 60 40 20 0

GP is pleased to welcome Social Investment Fund 5.0 (SIF 5.0) into its family of funds. The Fund issued its first capital call in late March for $11.95 million and quickly disbursed its first loan to Fundación Campo before the close of the quarter. The GP team has been busy at work building a robust pipeline of high performance partners and first call capital is on track to be fully deployed by early summer. As of the first capital call, SIF 5.0 had $31.4 million in commitments from 28 impact investors, including high net worth individuals, foundations, pension funds, faith-based institutions and development banks. The Fund will continue to accept new commitments as it scales to meet its target fund size of $50 million.

Fund Facts FY13

2008 AVERAGE OPERATIONAL AVERAGE OPERATIONAL SELF SUFFICIENCY

SELFrevenues/total SUFFICIENCY Total expenses as a % Total revenues/total expenses as a %

March 25, 2013 Inception Date

Fund Manager Global Partnerships

$1,000,000

Investment Currency US$ and fully hedged local currency

$11,950,000

Type of Fund Debt

Capital Invested

150

120

90

Total Fund Capital FY13

PARTNER PORTFOLIO QUALITY

2008

AVERAGE PAR > 30

Social Impact 1

Outstanding number of partners

$1,493

Average loan size

42%

Percentage of borrowers served who are women

61%

Percentage of borrowers served living in rural areas

AVERAGE PAR >30 than 30 days as a % Loans past due greater Loans past due greater than 30 days as a %

10 8 6 4 2 0

FY13

AVERAGE WRITEOFFS AVERAGE WRITEOFFS

Asset amount amount charged to loss as a % Asset 4 3 2 1 0

FY13

Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 5


Outstanding Positions | Distribution by Institution and Country | Note: All percentages have been rounded to the nearest whole number.

Microfinance Fund 2008

Percent of investable assets 1% Cash

14% Peru

25% Bolivia

15% Nicaragua

11% Mexico

1% Guatemala

30% Ecuador

ECUADOR (30%) FINCA Ecuador (10%) FODEMI (10%) Banco D-MIRO (5%) Fundación Alternativa (3%) Fundación Faces (2%) EL SALVADOR (5%) ENLACE (5%)

MEXICO (11%) Vision Fund Mexico (4%) Pro Mujer in Mexico (7%) NICARAGUA (15%) FDL (10%) Pro Mujer in Nicaragua (5%) PERU (14%) Credivisión (6%) Pro Mujer in Peru (6%) Arariwa (2%) CASH (1%)

GUATEMALA (1%) Friendship Bridge (1%)

5% El Salvador

Social Investment Fund 2010 Percent of investable assets 4% Cash

21% Bolivia 29% Peru

8%

BOLIVIA (21%) Pro Mujer in Bolivia (2%) Sembrar Sartawi (5%) IDEPRO (6%) CRECER (3%) FONDECO (2%) EMPRENDER (3%) New COLOMBIA (7%) Fundación Amanecer (4%) Contactar (3%)

7% Colombia

13% Mexico

5% Nicaragua

BOLIVIA (25%) CRECER (10%) Pro Mujer in Bolivia (10%) FONDECO (5%)

10% Ecuador

El Salvador

1% Dominican Republic

3% Honduras

DOMINICAN REPUBLIC (1%) Esperanza (1%) ECUADOR (10%) ESPOIR (4%) Banco D-MIRO (3%) Fundación Faces (3%) EL SALVADOR (8%) Fundación Campo (5%) ENLACE (3%)

HONDURAS (3%) COMIXMUL (3%) MEXICO (13%) CONSERVA (4%) Vision Fund Mexico (4%) Pro Mujer in Mexico (2%) CESMACH (3%) New Triunfo Verde (0%) New NICARAGUA (5%) Aldea Global (1%) FDL (2%) Pro Mujer in Nicaragua (2%) PERU (29%) ADRA (4%) Pro Mujer in Peru (6%) Crediflorida (5%) Los Andes (3%) NORANDINO (6%) Arariwa (3%) FONDESURCO (1%) APROCASSI (1%) CASH (4%)

Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 6


Outstanding Positions | Distribution by Institution and Country | Note: All percentages have been rounded to the nearest whole number.

Social Investment Fund 5.0 Percent of investable assets

EL SALVADOR (9%) Fundaci贸n Campo (9%)

9% El Salvador

91% Cash

BOLIVIA (22%)

All Funds

Percent of invested assets 1% Dominican Republic 4% Colombia

COLOMBIA (4%)

2% Honduras 1% Guatemala 8% El Salvador

DOMINICAN REPUBLIC (1%) ECUADOR (19%) EL SALVADOR (8%) GUATEMALA (1%)

12% Mexico

10% Nicaragua

HONDURAS (2%) MEXICO (12%)

19% Ecuador

NICARAGUA (10%)

22% Peru

PERU (22%)

22% Bolivia

Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 7


| Partner Organization Profile: CESMACH |

Farmers throughout the world rely heavily on the natural environment for their livelihoods; weather, tree canopies and soil quality all play a role in crop productivity. CESMACH, a trade cooperative operating in the coffee-rich southern highlands of Chiapas, Mexico, recognizes this relationship and works to improve the living conditions for coffee producing families in the region while simultaneously caring for the environment. The members of CESMACH are committed to organic farming not only for the better prices organic coffee receives, but also to protect the many endangered species living in nearby habitat.

A CESMACH member meets with a loan officer. Photo c/o CESMACH.

Mexico Country

1994 Year founded

8

Number of employees

478 Active Members

$440,121

Outstanding gross loan portfolio

Up to $2,300 Average loan size

25% Percent women

100%

Percent rural

CESMACH was founded in 1994 to improve the quality of life for its coffee-producing members through a sustainable business supplying high quality and certified coffee to specialty markets. To this day individual member-producers remain the legal owners of the organization and in turn are committed to not only the profitability of the organization but also that prices and services remain accessible, relevant, and of high quality. CESMACH maintains a team of technical assistance providers that is funded by the social premium received from Fair Trade buyers. The cooperative offers community-based trainings and individualized technical assistance that focus on improving crop quality and productivity. Additionally, because coffee is the only source of income for most members, CESMACH is conducting a project to promote diversification through the cultivation of Fair Trade palm fronds. Palm fronds grow year round, and the farmers are planting them as live barriers to prevent soil erosion as well as a secondary source of income. Members also receive commercialization services that provide access to specialty markets that pay higher prices for their coffee. CESMACH conducts two on-site certification visits with each of the nearly 500 farmers, and these meetings focus on crop quality and productivity, along with compliance with fair trade and organic requirements. Additionally, CESMACH offers access to a cupping laboratory, processing mill and storage facility, all aimed at increasing incomes for farmers. Indeed, it is estimated as a result of access to commercialization services, farmers earn approximately 18% more on their coffee than if they sold through a local intermediary. Global Partnerships’ loan to CESMACH allowed the cooperative to conduct vital pre-export activity, including planting, cultivation and harvesting of coffee beans, processing and storage of beans, and credit to individual producers. We are proud to support CESMACH’s efforts to increase incomes and improve lives of smallholder farmers. Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 8

GP Investors Report | Q1 | 2013  
Read more
Read more
Similar to
Popular now
Just for you