Investing in Microfinance – combining financial returns and sustainable development

1. Investing in Microfinance – combining financial returns and sustainable development responsAbility Global Microfinance Fund Klaus TischhauserManaging Director, responsAbility Luxemburg, October 14th, 2004

2. responsAbility Social Investment Services Ltd.A Social Investments company based on a unique cooperation Other partners Founders • Unique cooperation of different banks and institutions • Cooperation of private and public sector

3. responsAbility Global Microfinance Fund (rAGMF) Empower a better world to stand on its own two feet responsAbility Global Microfinance Fund

4. The responsAbility Global Microfinance FundKey fund characteristics • Stable capital appreciationthrough large portion of fixed income investments (refinancing of MFIs’ credit portfolios) • Additional growth potentialthrough limited share of equity (participations in MFIs) • Access to the best Microfinance expertise and investmentsthrough Partner Concept • 100 % Microfinance exposure • Reporting on social impact

5. The basis of a unique approachAnalysis of … • … investors’ needs • … financial market’s needs • … structure of the microfinance market • … needs of microfinance institutions • … microfinance market development • Definition of an adapted approach: Partner Concept

6. The structure of the Microfinance marketStructure and players IFIs & IFC, seco, SDC, FMO KfW, EBRD, Norfund, Opec Fund, Donors Finnfund, Swedfund, EIB, IADB, Ford Foundation, Open Society Institute ……. Specialized Alterfin, IPC, Triodos, CreditoSud, BlueOrchard, Oikocredit, Fides, WWB, Organisations, Networks Cyrano Mgmt, Integra, DID, Shore Bank, ECLOF, Acción, Vernius, FINCA …………….. Investment Vehicles ProFund, AfriCap, AIM, ShoreCap, LA-CIF, LFP, Oikocredit, ‘ & other products IMI, Dexia MCF, Triodos Funds, Sarona Global Investment Fund, MFI-Bonds…. Market Microfinance Institutions Microentrepreneurs

7. The Partner Concept of the rAGMFAdapted to the Microfinance market and investors‘ needs • Unique access • to specific know-how • local expertise • to instruments with specific focus and limited access • High degree of diversification • different asset classes • geographically over continents and regions • over styles and approaches • Absorption capacity IFIs and donors Specialized organisations and networks Investment vehicles and other products Microfinance Institutions Microentrepreneurs

8. The Partner Concept of the rAGMFAdapted to the Microfinance market and investors‘ needs Investors IFIs and donors Specialized organisations and networks Investment vehicles and other products DMCF ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■■■ ■ ■ ■ ■ ■■ ■ ■■ ■ Microfinance Institutions ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■■■ ■ ■ ■ ■ ■■ ■ ■■ ■ Microentrepreneurs

9. responsAbility Global Microfinance FundCurrent portfolio, performance and allocations(as of end of September 2004) Performance • NAV USD NAV CHF Asset allocation • Liquidity/other • Fixed income • Equity Geographical allocation • Latin America • Eastern Europe & Central Asia • Asia (South/Southeast/East) • Africa

10. Direct investments Pooled investments responsAbility Global Microfinance FundBroadly diversified portfolio (September 2004)

11. The responsAbility Global Microfinance FundWhy and how to report on impact? • Monthly report with basic data • Yearly Impact Report • No proof – qualitative and quantitative • Report about impact measurement initiatives Benchmark orientation – Millennium Development Goals (MDG) • Impact reports of rAGMF’s investments – MDG relevance • Continuous development and improvement • Start a dialogue

12. responsAbility Global Microfinance Fund (rAGMF) Empower a better world to stand on its own two feet responsAbility Global Microfinance Fund

13. The roles of responsAbility and its investment partnersBroad diversification and access to know-how and expertise due to Partner Concept • responsAbility • Investment Strategy, financial/social objectives • Selection and monitoring of investment partners • Selection of investment vehicles • Investment decision, veto resp. • Strategic and tactical allocations of sectors, countries and currencies • Risk management • Monitoring of all investments • Reporting to investor • Cash management Strategic AA TOP DOWN Tactical AA Investment-Partner • Local selection and monitoring • Investment proposals • Reporting to responsAbility BOTTOM UP „MFI Picking“

14. responsAbility Global Microfinance Fund Linking markets in an unique way Investors DMCF ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■■■ ■ ■ ■ ■ ■■ ■ ■■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■■■ ■ ■ Microentrepreneurs

15. The Partner Concept of the rAGMFAdapted to the Microfinance market and investors‘ needs Investors IFIs and donors Specialized organisations and networks Investment vehicles and other products DMCF ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■■■ ■ ■ ■ ■ ■■ ■ ■■ ■ Microfinance Institutions ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■■■ ■ ■ ■ ■ ■■ ■ ■■ ■ Microentrepreneurs