First Impact Investment Bond Issuance Platform for Institutional Investors
Geneva, Switzerland, December, 16 2010 -
Symbiotics Closes Two Pioneer Deals with LOMC and MUCAP. Symbiotics, a leading microfinance investment services company, launched on Thursday December 16th Micro, Small & Medium Enterprise Bonds SA (MSME Bonds), an issuance platform based in Luxembourg dedicated to impact investing for institutional investors. Its two first bonds include a USD 10 million refinancing of MUCAP and a USD 11.5 million refinancing of LOMC.
MUCAP stands out as a reference housing microfinance institution and the leader in housing finance in Costa Rica, with a mission dedicated to community development. LOMC is the leading microfinance institution in Sri Lanka with a multi-sector approach ranging from energy efficiency products (home solar systems and water pumps), to agriculture and rural business as well as small urban and rural transportation.
“We are proud of this important achievement for our current strategy, growing vertically into small enterprise finance and horizontally into new impact investing themes such as housing, energy and agribusiness,” comments Roland Dominicé, CEO of Symbiotics.
Institutional investors are increasingly interested in microfinance and impact investments. They provide for interesting portfolio diversification metrics with additionally a double or triple bottom line impact. They have nevertheless faced challenges in addressing this new asset class. Volumes are often small, liquidity is rare, pricing still opaque and both legal and investment processes not standardized. MSME Bonds aims to address these technical challenges while providing access to first tier financial institution focused on refinancing activities which contribute to sustainable social and economic development. MSME Bonds is a supervised vehicle in Luxembourg, offering a standard bond syndication programme, settled through Euroclear/Clearstream, making investments easy and simple, with transparent market-driven pricing and standardized legal, financial and social documentation. MSME Bonds also offers the infrastructure for secondary market transactions thanks to electronic clearing – so far a rare exception for the largely “buy and hold” impact investors.
“The attractiveness of the setup is in its simplicity, providing plain vanilla bonds to investors”, comments Philipp Jung, architect of the platform at Symbiotics. “It allows institutional investors to take microfinance exposure in an easy and convenient way.”
The launch bonds were sold to eight different investment funds and institutional investors. Symbiotics will aim to grow this offering in 2011 for the benefit of both the impact investors’ arena and emerging market financial institutions focusing on impact finance. It recently setup Symbiotics Brokerage & Structuring SA, an affiliate company regrouping the deal origination team at Symbiotics which has disbursed over 850 transaction to MFIs and MIV over the past five years and have enabled the originating of these two first bonds.
LOMC’s vision is to be the private sector catalyst in promoting sustainable development in Sri Lanka by empowering people to achieve their dreams through the provision of access to finance and related services. LOMC is a subsidiary of LOLC Group incorporated in 1980 by ORIX Corporation of Japan, with the support of the IFC, as the largest leasing company in Sri Lanka. In 2008, FMO became a minority shareholder of the company. LOMC operates in all 9 Sri Lankan provinces through 40 LOLC branches, 12 gas station centers and 40 post office centers. With 90% of its portfolio in rural areas and 40% in agriculture, the company currently serves about 40,000 micro- and small enterprises for a total portfolio of over USD 50 million.
MUCAP’s mission is to create financial opportunities to help families build their houses, improve their businesses and build a base for a better future. Setup in 1970 as one of the first Costa Rican mutual associations, it became in 1995 a regulated financial institution. Today MUCAP is present in all departments of the country through 14 branches and 17 Wal-Mart points of sale, providing a full range of competitive and innovative products. With over 80% of its portfolio in housing projects, the company currently serves about 11,000 households for a total portfolio of over USD 200 million, largely funded through more than 55,000 savings accounts.
Symbiotics’ mission is to contribute to the democratization of access to capital and globally to an economic development which is more inclusive, socially responsible and sustainable. The company links socially responsible investors with micro, small and medium enterprises in low income economies by creating value through innovative investment services bridging those two audiences. Overall, Symbiotics has been working with twenty investment funds and a dozen institutional investors, providing USD 850 million of capital to about half a million micro, small and medium enterprises through 150 financial institutions in 35 emerging economies.