Easy Does It: Sourcing Deals Through Collaboration

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Easy Does It Sourcing Deals Through
Collaboration

• PRI Makers Network New Orleans, LA
• Jean Pogge
• January 29, 2008

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PRI Advantages

• PRIs offer grant-makers indispensable tools
• Opportunity to align mission and investments
• Opportunity to deploy capital to assist charities
  access credit markets
• Opportunity to recover the original principal and
  re-grant

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PRIs Can be Simple

• Off-the-shelf PRI opportunities exist
• PRIs can be made across asset classes
• Can be high risk (equity) or little/no risk
  (cash)
• Many require no underwriting and low investment
  thresholds

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PRI Flexibility

• Can approach PRIs as a lender
• Underwrite
• Staff
• Monitor
• Collect
• Can approach PRIs as a grant-maker
• Collaboration
• Leverage
• Impact

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ShoreCap International, Ltd.

• Product Features 3.5 management fee, 6
  preferred return, mandatory distributions after
  6th anniversary of first closing.
• Risk Political risks of investing in places like
  Afghanistan, Kenya and Tajikistan, combined with
  foreign exchange rate risk.
• Return Fund has now invested in 15 institutions
  and produced net returns of 25 per year.
• Convenience Requires underwriting.

• Type Capital commitment to an international
  private equity fund.
• Purpose Created in 2003, the Fund invests in
  microfinance institutions and small business
  banks in developing and emerging economies in
  Africa, Asia and Eastern Europe.
• Investors ShoreBank Corporation committed 2.5
  million and serves as the sponsor and manager of
  the 28 million fund. 14 total investors,
  including IFC, ABN AMRO Bank, Ford Foundation,
  Skoll Foundation, European Investment Bank and
  Asian Development Bank.

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Equity
Global Commercial Microfinance Consortium

• Type Equity, junior and senior notes in 80
  million structured investment vehicle.
• Investors 30 investors including international
  development agencies, foundations, individuals
  and institutional investors. Managed by Deutsche
  Bank.
• Purpose Established flexible debt financing to
  select microfinance institutions around the
  world, expanding financial opportunities to the
  economically active poor.
• Product Features 5-year tenor.

• Risk 40 risk protection to senior investors by
  Deutsche Bank, DFID, USAID and other subordinated
  investors.
• Closed September 2005
• Returns Expected up to 11 depending on
  investment position.
• Convenience Low transaction costs, variety of
  investor options and minimal complexity.

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First German Fund for Microfinance

• Product Features 7-year tenor.
• Risk 40 risk protection provided to senior
  investors by Deutsche Bank and other subordinated
  investors.
• Returns Expected between 6-12 depending on
  type of investment.
• Convenience Low transaction costs, variety of
  investor options and minimal complexity
• Closed July 2007

• Type Equity, junior, mezzanine and BBB-rated
  senior notes in 60 million special purpose
  vehicle.
• Purpose Established to provide subordinated
  debt financing to microfinance institutions
  worldwide, enabling these institutions to
  strengthen their balance sheets for regulatory
  purposes. Firstever microfinance fund marketed
  to German investors.
• Investors Firstever microfinance fund marketed
  to German investors. Deutsche Bank, KFW (German
  Development Agency) and private individuals.
  Managed by Deutsche Bank..

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Eye Fund 1

• Type Equity and notes in 20 million debt fund.
• Purpose Provide low cost debt financing to eye
  care hospitals that serve the poor in the
  developing world. 160 million people live with
  visual impairments globally 75 of these cases
  can be prevented. Eye Fund 1 will allow
  hospitals to scale up their operations and expand
  their social mission.
• Investors Sponsors are Deutsche Bank,
  International Agency for the Prevention of
  Blindness and Ashoka. Deutsche Bank has committed
  half of the funds equity (1MM).

• Product Features 7 year tenor.
• Risk Subordinated fund structure, with a 36
  credit protection provided to senior investors by
  Deutsche Bank, foundations and development
  agencies.
• Return On junior tranches 1 fixed Senior
  LIBOR.05

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DB Micro-credit Development Fund

• Type Notes in 2.5 million fund (capitalized
  through grants and PRIs).
• Purpose Created to provide access to local
  currency financing (partial guarantees and
  subordinated loans) to small/newly established
  microfinance institutions internationally.
• Investors Funded by Deutsche Bank, foundations
  and individuals. Managed by Deutsche Bank.
• Product Features Flexible tenors.
• Risk PRIs tied to a specific pool of loans
• Returns 1 return.
• Convenience Low transaction costs, variety of
  investor options and minimal complexity.

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Common Ground

• Type of Transaction 2 million in subordinated
  notes of 10 million debt fund to provide capital
  to Common Ground Community to help finance the
  construction of 3,000 supportive housing units in
  New York.
• Managed by Common Ground Community a leading
  nonprofit provider of supportive housing to
  street homeless persons in the U.S. PRI
  investors include Robin Hood, Metlife, Altman,
  AXA-Equitable foundations

• Mission to provide flexible, timely capital to
  enable Common Ground to successfully compete with
  for sites with for-profit market rate developers.
  
• Product features 5-year tenor. Return of 1-2.
• Risk Dimension Subordinated position
• Transaction Dimensions Low transaction costs,
  variety of investor options and minimal
  complexity
• Closed 2006

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Guidestar

• Type Loan Syndicate
• Purpose Well known nonprofit resource in sector
  with a stellar board and sound management team,
  Guidestar is in development.
• Investors Calvert Social Investment Foundation
  (Calvert Foundation).
• Product Features Option of 3, 5, or 7 year
  terms.
• Risk General recourse by Guidestar. Sinking fund
  structure to support investor exit.
• Returns Yields between 0-4.
• Convenience Calvert Foundation structuring
  investment across all PRI makers, common
  documents, and inter-creditor Agreement

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CAEL

• Type PRI loan syndication.
• Purpose CAEL is seeking funds to grow adult
  education support programs throughout the
  country. CAEL is a national non-profit leader in
  the field of adult learning with successful track
  record over three decades is coordinating
  educational services for working adults.
• Investors Calvert Social Investment Foundation.
• Product Features 2.0 million (25,000 min.
  investment), 5-10 year terms.
• Risk General recourse (2007 total net assets
  18.7MM total revenues 22.4MM).
• Returns Interest rates paying 0-6
• Convenience Promissory note and inter-creditor
  agreement. Product just coming to market,
  closings scheduled on a rolling basis.

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ECo

• Type Loan
• Purpose ECo is US nonprofit focused on
  alleviating energy poverty and climate change in
  Africa, Asia, and Latin America. ECo offers a
  focused path for foundations to realize a Triple
  Bottom Line financial, social and environmental
  benefits.
• Investors ShoreBank has approved a 1.5 million
  loan. Grants and/or PRIs from 18 US Foundations.
  Other major funders include the International
  Finance Corporation, the Dutch, German and
  British governments and members of the socially
  responsible investment and faith based
  communities.

• Product Features Unsecured 5, 8 year loan 6
  10 year loan
• Risk Political risks associated with investing
  in small businesses in Africa, Asia and Latin
  America Requires success in carbon monetization
  and securing grants to support business
  development services.
• Return ECos Portfolio has an 8 return, before
  the cost of services
• Convenience Private Offering Memorandum for
  Accredited Investors only.

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Calvert Community Investment Note

• Type Fixed income debt.
• Purpose Capital raised is invested in Housing,
  Community Development, Social Enterprise,
  Micro-Finance, Fair Trade, Independent Media,
  Social Enterprise. Investors can target
  geographies (including international options.)
• Product Features 1,3,5,7 or 10 year maturities
  available. Early redemption available.
• Investors Foundations, individuals
• Risk While general recourse, unsecured,
  substantial credit enhancements provided by
  Calvert and other philanthropic supporters. 10
  Year track record. 125 Million Outstanding.
• Returns Financial yields between 0 3, special
  targeting as per investor interests.
• Convenience Simple Note form.

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ShoreBank

• Type Below market certificate of deposit.
• Purpose Supports specialized loan funds to
  create pools of below market financing accessible
  to ShoreBank borrowers seeking loans for
  conservation projects, nonprofit working capital,
  renovation of affordable rental housing, and
  refinancing sub-prime homes loans into
  affordable, fixed rate mortgages.
• Investors Foundations, individuals.
• Product Features CDs available for 1 - 5 year
  terms. Yields vary according to term and are
  negotiable, at least 100 bps below market value
  for term selected. Interest differential placed
  into internal loan funds to create pools of below
  market financing.

• Risk None - FDIC insurance available up to 50
  MM.
• Return Yields vary according to term and are
  negotiable, at least 100 bps below market value
  for term selected.
• Convenience Simple CD application with deposit
  agreement stipulating terms of use. Reporting
  provided on annual basis.

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Federation Nominee Program

• Type Certificate of Deposits.
• Purpose The Federation is an association of 225
  low-income credit unions in 46 states that offers
  a wide range of advocacy, educational, training,
  capital, marketing, and outreach programs to
  support and assist CDCUs. Federation also
  provides loans (secondary capital), grants and a
  secondary mortgage market in addition to
  deposits. CDs support deposit program that
  channels 15 MM to Federation on behalf of 27
  institutional investors.
• Investors National Federation of Community
  Development Credit Unions (held by NFCDCU on
  behalf of investors).

• Product Features CDs available for one, two,
  three and five years.
• Risk While underlying Certificates of Deposits
  are federally insured, investors look to the
  Federation and their balance sheet for repayment.
  25 Year track record. Presently services 27
  institutional investors.
• Returns Yields vary according to term and are
  negotiable. Presently pays 2.0 for 3 years.
• Convenience Standard promissory note provided by
  the Federation.

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West Texas, Credit Union

• Type Certificate of deposit.
• Purpose CD deposits assist 80 million dollar
  credit union that services over 22,000 primarily
  Latino members with over 71 of the membership
  residing in designated low-income areas. Combats
  predatory lenders in El Paso, which is the
  leading sub-prime lender in the nation.
• Investors West Texas, Credit Union, El Paso, TX.
• Product Features CDs available for 30, 60,90
  days 1,3,5 year terms. Also available through
  Nominee program.
• Risk FDIC insurance up to 100,000.
• Returns Yields vary according to term.
• Convenience Simple CD application.

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ASI Federal Credit Union

• Type Certificate of Deposit.
• Purpose Chartered in 1961 to serve the
  employees, immediate families and organization of
  the Avondale Shipyards. One in four of their
  72,000 members live below the federal poverty
  line. Nearly 300 million in assets. Considered
  one of the premier financial institutions in
  Louisiana, serving many customers that banks
  dont want. Reaching vulnerable communities in
  the Gulf Coast.
• Investors ASI Federal Credit Union (lead).
• Product Features 30, 60,90 days, one, three and
  five year terms available.
• Risk Federally guaranteed up to 100,000. Also
  available through Nominee program.
• Returns Yields vary according to term (presently
  pays 3.4 on 60 days, 4.25 for one year and
  5.05 for 5 years).
• Convenience Simple CD application.

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Thank you! For more information contact

• Debbie Kobak
• deborah_kobak_at_sbk.com
• Tel [phone]