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Social Investment Funds
INVESTORS REPORTFirst Quarter 2013 | Jan. 1 - Mar. 31, 2013
www.globalpartnerships.org
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
For more information, contact:
Jason Henning, Director of Investor Relations
jhenning@globalpartnerships.org | 206.456.7832
Photo c/o CESMACH
| Letter from the CIOO |
11 COUNTRIESwhere Global Partnerships works
38 PARTNERSwith whom Global Partnerships works
97,344 PEOPLEserved by Global Partnerships through our partners
$45.4 MILLIONfund capital at work
Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 2
BY THE NUMBERS
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.
| Microfinance Fund 2008 |
Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 3
Fund Manager’s Comments
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.
October 31, 2008Inception Date
$20,780,058Capital Invested
$20,000,000Total Fund Capital
17 $692 81% 49%
Fund Manager Global Partnerships
Investment CurrencyUS$ and fully hedged local currency
Type of FundDebt
Fund Facts
Social Impact
Outstanding number of partners
Average loan size
Percentage of borrowers served who are women
Percentage of borrowers served living in rural areas
In thousandsTOTAL BORROWERS SERVED
300400500600
800700
FY09 FY10 FY11 FY12 FY13
2008
90
120
150
Total revenues/total expenses as a %
AVERAGE OPERATIONALSELF SUFFICIENCY
FY09 FY10 FY11 FY12 FY13
2008
02468
10
AVERAGE PAR >30Loans past due greater than 30 days as a %
FY09 FY10 FY11 FY12 FY13
Asset amount charged to loss as a %AVERAGE WRITEOFFS
0
1
2
3
4
FY09 FY10 FY11 FY12 FY13
US dollars in millionsTOTAL PARTNER LOAN PORTFOLIO
100
200
300
400
500
600
FY09 FY10 FY11 FY12 FY13
GROWTH
PARTNER PORTFOLIO QUALITY
TOTAL PARTNER LOAN PORTFOLIOUS dollars in millions
TOTAL BORROWERS SERVEDIn thousands
AVERAGE OPERATIONAL SELF SUFFICIENCYTotal revenues/total expenses as a %
AVERAGE PAR > 30Loans past due greater than 30 days as a %
AVERAGE WRITEOFFSAsset amount charged to loss as a %
| Social Investment Fund 2010 |
Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 4
Fund Manager’s Comments
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.
October 21, 2010Inception Date
$23,416,743Capital Invested
$25,000,000Total Fund Capital
31 $825
78%
50%
Fund Manager Global Partnerships
Investment CurrencyUS$ and fully hedged local currency
Type of FundDebt
Fund Facts
Outstanding number of partners
Average loan size
Percentage of borrowers served who are women
Percentage of borrowers served living in rural areas
Social Impact
In thousandsTOTAL BORROWERS SERVED
0200400600800
1000
FY11 FY12 FY13
Total revenues/total expenses as a %
AVERAGE OPERATIONALSELF SUFFICIENCY
90
120
150
FY11 FY12 FY13
Loans past due greater than 30 days as a %AVERAGE PAR >30
0
1
2
3
4
FY11 FY12 FY13
Asset amount charged to loss as a %AVERAGE WRITEOFFS
0
1
2
3
4
FY11 FY12 FY13
US dollars in millionsTOTAL PARTNER LOAN PORTFOLIO
FY11 FY12 FY130
200
400
600
800
GROWTH
PARTNER PORTFOLIO QUALITY
TOTAL PARTNER LOAN PORTFOLIOUS dollars in millions
TOTAL BORROWERS SERVEDIn thousands
AVERAGE OPERATIONAL SELF SUFFICIENCYTotal revenues/total expenses as a %
AVERAGE PAR > 30Loans past due greater than 30 days as a %
AVERAGE WRITEOFFSAsset amount charged to loss as a %
| Social Investment Fund 5.0 |
Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 5
Fund Manager’s Comments
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.
March 25, 2013Inception Date
$1,000,000Capital Invested
$11,950,000Total Fund Capital
1 $1,493
42%
61%
Fund Manager Global Partnerships
Investment CurrencyUS$ and fully hedged local currency
Type of FundDebt
Fund Facts
Outstanding number of partners
Average loan size
Percentage of borrowers served who are women
Percentage of borrowers served living in rural areas
Social Impact
In thousandsTOTAL BORROWERS SERVED
020406080
100
FY13
2008
90
120
150
Total revenues/total expenses as a %
AVERAGE OPERATIONALSELF SUFFICIENCY
FY13
2008AVERAGE PAR >30Loans past due greater than 30 days as a %
0
2
4
6
8
10
FY13
Asset amount charged to loss as a %AVERAGE WRITEOFFS
0
1
2
3
4
FY13
US dollars in millionsTOTAL PARTNER LOAN PORTFOLIO
0
20
40
60
80
100
FY13
GROWTH
PARTNER PORTFOLIO QUALITY
TOTAL PARTNER LOAN PORTFOLIOUS dollars in millions
TOTAL BORROWERS SERVEDIn thousands
AVERAGE OPERATIONAL SELF SUFFICIENCYTotal revenues/total expenses as a %
AVERAGE PAR > 30Loans past due greater than 30 days as a %
AVERAGE WRITEOFFSAsset amount charged to loss as a %
Outstanding PositionsDistribution by Institution and Country
Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 6
| |
Microfinance Fund 2008Percent of investable assets
Social Investment Fund 2010Percent of investable assets
Note: All percentages have been rounded to the nearest whole number.
BOLIVIA (25%)CRECER (10%)Pro Mujer in Bolivia (10%)FONDECO (5%)
ECUADOR (30%)FINCA Ecuador (10%)FODEMI (10%)Banco D-MIRO (5%)Fundación Alternativa (3%)Fundación Faces (2%)
EL SALVADOR (5%)ENLACE (5%)
GUATEMALA (1%)Friendship Bridge (1%)
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%)
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%)
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%) NewTriunfo 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%)
1% Dominican
Republic5% Nicaragua
3% Honduras
4% Cash
21% Bolivia
7% Colombia
10% Ecuador
8% El
Salvador
13% Mexico
29% Peru
5% El Salvador
1% Guatemala
1% Cash
25% Bolivia
30% Ecuador
11% Mexico
15% Nicaragua
14% Peru
Outstanding PositionsDistribution by Institution and Country
Global Partnerships | Q1 2013 | As of March 31, 2013 | Page 7
| |
EL SALVADOR (9%)Fundación Campo (9%)
All FundsPercent of invested assets
Note: All percentages have been rounded to the nearest whole number.
BOLIVIA (22%)
COLOMBIA (4%)
DOMINICAN REPUBLIC (1%)
ECUADOR (19%)
EL SALVADOR (8%)
GUATEMALA (1%)
HONDURAS (2%)
MEXICO (12%)
NICARAGUA (10%)
PERU (22%)
Social Investment Fund 5.0Percent of investable assets
2% Honduras
4% Colombia
1% Dominican
Republic 1% Guatemala
22% Peru
10% Nicaragua
22% Bolivia
19% Ecuador
12% Mexico
8% El Salvador
9% El
Salvador
91% Cash
MexicoCountry
1994Year founded
8Number of
employees
478Active Members
$440,121Outstanding gross loan portfolio
Up to $2,300Average loan size
25%Percent women
100%Percent rural
| 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.
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
A CESMACH member meets with a loan officer. Photo c/o CESMACH.
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