impact investment report 2016 - finance in...

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1 IMPACT INVESTMENT REPORT 2016FINANCE IN MOTION

Impact Investment Report 2016

IMPACT INVESTMENT REPORT 2016FINANCE IN MOTION

INDEX

03

09

28

05

24

29

07

26

31

Facts Welcome Preface

Projects CSR Fimshare

About us Portfolio Contact us

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Facts

KEY FIGURES

1.7 billion EUR assets under management

262.3 million EUR committed private institutional capital

1.5 billion EUR committed public sector capital

3.1 billion EUR investments made since inception of all funds

1.5 billion EUR investment portfolio outstanding

112 partner institutions

Subordinated debt

13 subordinated debt

157.9 million EUR

224 senior debt

Senior debt

Portfolio outstanding by type of investment

FUNDS ADVISED BY FINANCE IN MOTION

1.3 billion EUR

494 investments made since inception of all funds

24 countries with investments

As of 31 December 2016

TECHNICAL ASSISTANCE (TA) FACILITIES MANAGED BY FINANCE IN MOTION

20.6 million EUR of TA project volume under management

653 projects managed since inception of all TA facilities

34.5 million EUR of TA project volume approved since inception of all TA facilities

297 projects under management

Equity

13 equity investments

9.4 million EUR

Term deposits

5 term deposits

52.2 million EUR

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FUNDS ADVISED BY FINANCE IN MOTION –KEY BREAKDOWN


PORTFOLIO BY REGION

Southeast Europe53.9 %Eastern Europe and Caucasus25.4 %Middle East and North Africa13.6 %Latin America3.8 %Cross country3.3 %

FINANCIAL INSTRUMENTS

Senior debt85.4 %Subordinated debt10.5 %Equity investments0.6 %Term deposits3.5 %

SOURCE OF FUNDING

Public Investors36,9 %International Financial Institutions47,9 %

Private Investors 15,2 %

THEMATIC DISTRIBUTION

Micro, small and medium enterprise finance

72.0 %

Green finance28.0 %

PARTNER INSTITUTIONS

Commercial banks68.1 %Microfinance institutions11.8 %Non-bank financial institutions18.0 %Others2.1 %

TECHNICAL ASSISTANCE PROJECT VOLUME BY REGION

Southeast Europe38.0 %Middle East and North Africa29.0 %Eastern Europe and Caucasus10.0 %Latin America2.0 %Cross country21.0 %

Facts

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Welcome

This being our third Impact Investment Report, it is a good opportunity to reflect on our progress:

As far as the world goes, 2016 was a challenging year. We entered the year with great enthusiasm stemming from the climate declarations of Paris, and a sense of urgency fueled by the European refugee wave of 2015. It turned out to be a year of mixed signals, one that starkly illustrated the complexities of interven-ing in either internal strife or where geopolitical interests are at stake. Even in the so-called “developed world,” the topic of inclusive development entered the political agenda, indicating mounting dissatisfaction among newly and traditionally marginalized groups concerned about not only their economic well-being, but also their ability to influence policy.

On the positive side, investors – both private and leading international banks – provided strong, root-level demand for impact investing pro ducts, a trend also supported by legislative and voluntary sector initiative frameworks in individual countries such as France and the Netherlands. At the same time, consumer interest grew for stories about the sustain able products they buy at a premium to conventional products, allowing for greater support for the value chains of sustainable production. And large corporations, reacting to these trends, placed “green products” higher on their agendas than ever before.

For Finance in Motion and our funds, 2016 was a year of stability in our core busi-ness, yet we undertook many efforts to keep the funds at the forefront in terms of impact. Since 2014, the year of our first impact report, our funds for both small business in the Middle East and North Africa (MENA) (SAN AD) and climate action in Southeast Europe and the European Neighbourhood region (GGF) have now fully arrived in the marketplace, and been proven sustainable with a combined EUR 500 million in size. The success in addressing key development and impact topics with these funds has been further evidenced by the GGF

FINANCE IN MOTION LETTER FROM THE MANAGING DIRECTORS

Sylvia Wisniwski, Florian Meister, Elvira Lefting

investors’ decision to expand the fund into MENA, and by the new sizeable investments in SAN AD by the Dutch Development Bank FMO and the Austrian Development Bank OeEB. Importantly, Finance in Motion has shown with the success of the eco.business Fund, which became profitable in only its second year of operation, that the company can address a key topic of impact – the role of agriculture in shaping sustainable landscapes – while at the same time entering a new growth region: Latin America.

All of this came, of course, without losing momentum in our flagship fund, the European Fund for Southeast Europe, which despite a continuous slowdown in the economies of Southeast Europe and the European Eastern Neighbourhood region, managed to keep its level of assets, but importantly tapped into new areas of impact: November’s financial inclusion competition for fintech start-ups serves as a sterling example. The event, called Fincluders, featured close to 100 applicants, 15 passionate pitches about advancing financial inclusion from the finalists, and outstanding prize winners from Kenya, Turkey and Mexico, along with an excellent reception from the public.

So are we happy with the overall impact achieved? In the face of millions of displaced people, rising sea levels, frequent extreme weather incidents, and forest clearing going ahead at unseen pace in many African and Asian countries, one could say, “No”. But to do so would ignore many aspects of our work: Our assets under management of EUR 1.7 billion are tiny compared to the trillions invested around the planet, yet our funds regularly achieve or exceed the annual impact goals set by investors. Our technical assistance operations managed nearly 300 projects in 2016 alone, projects involving tens of thousands of clients and end-clients. These partners learned about subjects like energy efficiency, the dangers of hard currency debt, how to increase agricultural productivity, better underwriting standards in remote rural areas, producing bird studies around windmill sites, and a range of other topics that help our partners effect increased impact. By applying the highest standards

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of scrutiny, documentation, and follow-up for the use of financing, our funds contribute daily to increasing professionalism in our target countries, both among investees and their ecosystems.

Our efforts in 2017 will concentrate on impacting new areas of investment, continued preparations for launching our sustainable forestry fund, broaden-ing our investment channels from mainly financial institution debt to more direct debt and equity, and additional investments in visionary startups like those we have made in AquaSpark (sustainable aquaculture) and Oradian (cloud-based core banking software for microfinance institutions). And con-tinuing to broaden access for investors to the ever-expanding field of impact investing will always be one of our priorities.We wish to thank the dozens of investors, including the German Develop-ment Bank KfW and the European Investment Bank as initiators of many of

SYLVIA WISNIWSKI

Managing DirectorFinance in Motion

FLORIAN MEISTER


ELVIRA LEFTING


our funds, the European Union, the German and other governments as key providers of risk capital, and our visionary investors, which include churches, sustainable banks and pension funds. We wish to thank our investees and financing partners through whom we achieve the impact our investors expect and who deal with our sometimes difficult questions and expectations. In this our seventh year of operation, we’d like to thank our staff of more than 180 for ensuring the funds we have been entrusted with are put to good use.

Welcome

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Preface

FINANCE IN MOTION – WHERE AND HOW WE ACHIEVE IMPACT

The impact investment market has grown to become an increasingly impor-tant sector with a diverse range of players.

According to the Global Impact Investing Network, worldwide investments classified as impact investments rose from EUR 23.8 billion in 2013 to EUR 33.2 billion in 2015. This is a promising development in a world where public and private players urgently need to join forces to solve some of the most pressing social and environmental challenges. The situation has also created an ecosystem with many different actors: On one hand, asset owners or investors seek promising impact investment opportunities through direct investments in companies, institutions and projects, or indirectly via funds. On the other hand, investees, companies, and project developers rely on support from impact investors for responsible growth. Finance in Motion, an impact asset manager focused exclusively on development finance, promotes this process of matchmaking between supply and demand. We are convinced our impact is greatest when we focus our efforts in terms of themes, regions, asset classes, and return profiles. The table on the next page illustrates our focus areas.

Creating impact has been a key requirement for each and every one of the EUR 3.1 billion in investments we have made since our funds first started op-erations. Generating impact remains the overarching theme that dictates our work and our engagements, and it is the principle that guides our employ-ees. The term “impact investing” might have been coined back in 2007, but two years prior, our team had already launched the world’s first public-pri-vate partnership impact fund, the European Fund for Southeast Europe. By the end of 2016, we were advising four funds with around EUR 1.7 billion assets under management.

At Finance in Motion, impact is achieved by our agents of change at three different levels. First and foremost, we create impact via the funds we struc-ture and advise. Our funds invest in MSMEs, housing, and green finance, with an exclusive focus on low- and middle-income countries. It is not by chance that most funding reaches the final beneficiary via local financial institutions, namely microfinance institutions, banks, leasing companies, and other quali-fied lenders that are all key players in their respective markets. This approach allows us to reach scale and maximize systemic changes, thereby contrib-uting to the development of sustainable and inclusive financial systems in the regions we serve. In addition, we are increasing the number of our direct investments in renewable energy projects and greenfield institutions, many of which serve as lighthouse projects in their respective markets.

We support our partner institutions with capacity building to leverage the impact of our investments. To offer tailor-made financing and capacity-build-ing solutions to our investees, investment professionals work with dedicated teams of experts in energy efficiency, renewable energy, and sustainable agriculture, and with project managers from the technical assistance depart-ment.

Themes

Access to financial services

Education

Energy efficiency & renewable energy

Healthcare

Housing

Natural resources

Sustainable agriculture

Sustainable forestry

Sustainable infrastructure & consumer goods

Regions

Asia & Oceania

Eastern Europe & Caucasus

Latin America & Caribbean

Middle East & North Africa

North America

Southeast Europe

Sub-Saharan Africa

Western Europe

Asset Classes

Impact bonds

Private debt

Private equity

Public debt

Public equity

Real assets

Venture capital

FINANCE IN MOTION FOCUSES ON THE FOLLOWING IMPACT AREAS

Return Profiles

Risk-adjusted market rate returns

Near market rate returns

Below market rate returns

Capital preservation

Grant

Technical assistance is also deployed at the sector level to further strengthen local financial markets that cater to MSMEs and promote green finance. In all instances, we ensure impact is built into our diligent investment process. Finally, we proactively address the challenges of measuring the impact of our investments and technical assistance, and report to our stakeholders tangible achievements such as CO2 emission reductions, our outreach to microborrowers, and job creation.

The second level of impact encompasses Finance in Motion’s activities as a company, especially our direct investments. In 2016, we started to invest directly in visionary startups, notably AquaSpark, an investment vehicle for sustainable aquaculture, and Oradian, which offers a cloud-based core banking system for microfinance institutions. We also devoted staff time and resources to other initiatives, such as fostering know-how on impact investing among young people by cooperating with universities and busi-ness schools, and by organizing and sponsoring a startup challenge with a focus on financial inclusion. While maintaining our focus on our core impact themes, we have invested in the exploration of other important impact areas, such as sustainable forestry and social entrepreneurship.

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Our third level of impact comes from our employees and their collective and individual commitments to our goals. To channel some of their initiative, staff members have created fimshare, an in-house charity supporting projects in low- and middle-income countries across the world. Our company employs people from 40 different countries, which provides deep knowledge on impactful projects worth supporting. In 2016 alone, 11 projects totaling EUR 109,000 received financial support from Finance in Motion and its employ-ees.

Impact can be difficult to effect. It takes dedication, hard work, local knowledge, a hands-on approach, and most importantly, great people. Seen through the eyes of these agents of change, our projects highlighted in this report illustrate the success of our impact strategy: delivering impact via our funds, the company, and its employees.

As an impact asset manager, Finance in Motion focuses on contributing to the following Sus-tainable Development Goals (SDG) as set out by the United Nations:

To read about our landmark impact projects as seen through the eyes of our agents of change, go towww.finance-in-motion.com/IIR2016 or scan

Preface


FIMEFSEGGFSANADeco.business Fund



Projects

LANDMARK IMPACT PROJECTS 2016

Finance in Motion serves as an agent of change on five continents. The funds we advise are expanding green finance, protecting biodi-versity, creating employment, supporting small businesses, increasing access to housing, and promoting rural enterprise and agriculture. Our company continuously explores new areas of impact, and Finance in Motion employees offer support to those in need through the company’s in-house charity.

The Netherlands Back to School

Croatia Spreading Financial Access from the ‘Core’

Germany Fintech for Impact: The Fincluders Diaries

Germany A Partnership Against Fear

Lebanon Four Loans in Lebanon

Turkey Pitching in Istanbul

Georgia Wind in the Caucasus

Egypt, Jordan, Lebanon, Morocco, Tunisia, Palestinian Territories Greening New Markets

Serbia The Sisters Petrovic Help Their Hometown

KenyaChanging Minds in ‘Codetown’

Costa Rica Greening the Big League

Hong-KongPick a Winner

Egypt Leasing for the ‘Mittelstand’

Egypt The First Five in Cairo


EFSEGGFSANADeco.business Fund



FIM

BACK TO SCHOOL

When Simon Sonnekalb and Bela Paproth returned to Maastricht University, theirs was a homecoming with a twist. The former students were on campus to teach. Specifically, they were showing potential impact investment fund managers how to hone proposals and attract skeptical investors, skills the two had learned from one of the world’s leading impact investing advisors.Sonnekalb (M.Sc., International Business, 2008) and Paproth (M.Sc., Sustaina-ble Finance, 2015) work at Finance in Motion, one of the world’s leading im-pact asset managers. With around €1.5 billion in assets under management, the company advises impact investments on five continents. In 2016, the two Maastricht grads joined company colleagues in a new initiative called “FiMovation.” This outreach program works with university students hoping to enter impact investing by teaching them how to create sustainable impact funds that turn a profit while generating measurable impact.

Maastricht offered a proving ground of sorts for the initiative. Paproth had studied under Professor Paul Smeets, and Sonnekalb had studied with him. Smeets coordinates the course “Sustainable and Responsible Investments” required for Maastricht’s master’s degree in International Business with a specialization in Sustainable Finance.

When former students return to face the latest collection of information-hun-gry minds, various feelings can surface. Sonnekalb remembered a turning point the last time he was at school. “I had learned about traditional finance in that very room.” Already walking a typical career path into consulting, he realized he wanted to switch to a sector he’s passionate about. “That’s why it was an especially fulfilling experience to be teaching young students about impact investing. A completing the circle of sorts.”

After explaining to the students how earning a profit and creating impact can be combined, the company staffers charged the class with finding origi-nal ideas for development funds that tackle a social or environmental prob-lem. FiMovation required students to provide and analyze their investment

thesis, potential investees, the geographic focus, the target investors, and the fund’s impact. Then they needed to address feasibility, scalability, profitabili-ty and innovative factors.

“We hope we were able to successfully share our expertise,” Sonnekalb says, citing his appreciation for an unexpected information exchange “At the same time it was very enriching to receive such fresh input from students with such highly relevant ideas.”

The class pitched a range of innovative fund ideas, including solutions for refugee finance, off-grid electricity, recycling of e-waste, and urban mobility in low- and middle-income countries. “Some of the proposals may trigger even ideas within our company,” Sonnekalb adds.

Finance in Motion’s first such cooperation with a university was also an excel-lent proof of concept. The company will send another team to Maastricht to train a new class in 2017, an indication of how Finance in Motion gives back to society showing young people how to spread sustainable development and prosperity. The program also exposed interest in the company: A student who helped create one of FiMovation’s best fund ideas has since joined Sonnekalb’s team.

Funds Company Employees

LEVEL OF IMPACT

Projects

THE NETHERLANDS






LEVEL OF IMPACT

FIM

THE SISTERS PETROVIC HELP THEIR HOMETOWN

Jasmina Petrovic is lucky. Her job in Germany’s financial capital Frankfurt may be far from where she grew up, but it’s still close enough for a quick visit. So when she’s off the clock at Finance in Motion, one of the world’s leading im-pact investing advisors, Jasmina sets out for Pancevo, her hometown located some 20 kilometers north of the Serbian capital Belgrade.

Jasmina enjoys the trips and hanging out with her sister Olivera. One day they were chatting about work, and Olivera, a chemistry teacher at Pance-vo’s May 23 Technical High School, mentioned a daunting new challenge. In addition to her teaching duties, she had been tasked with the welfare and supervision of a class of some 30 students, a small part of the nearly 900 enrollees at the school.

All was not well with Olivera, Jasmina recalls. “She told me about some of the problems she had scheduling meetings with parents. One father couldn’t even afford a bus ticket to get to the school.” The sisters continued to talk, and Olivera revealed that poverty was keeping many students away, too. Listening to her sister, Jasmina recognized the added difficulties facing kids lacking money for lunch, gym clothes or even a bus ticket to school. “I started thinking, ‘These are really basic things they can’t afford.’ ”

The sisters wanted to know more, and the numbers were sobering: one in five come from a single-parent home, and nearly one-third live below the poverty line. “Serbia has a lot of problems,” Jasmina says, “but you don’t see that much poverty.” And when people work internationally, the negative aspects of life back home can easily slip one’s mind.

Talking to Olivera revived Pancevo’s struggles in Jasmina’s thoughts. The region still suffers from the closing of plants that produced metal parts, light-bulbs, glass and, most importantly, salaries. The shutdowns hit the city hard, and the outlying villages even harder.

Jasmina Petrovic is lucky. She turned to her employer’s in-house charity fim-share for help. Fimshare has been set up by the company’s employees to sup-port development projects around the world. The Sisters Petrovic prepared a project proposal with school officials and secured a fimshare grant.

Now, scores of students from economically strapped families can focus on their studies for the next two terms instead of scrounging for money for daily commutes, food and sports shoes. The project even made the local paper.When asked about what she has done for the high-schoolers in her home-town, Jasmina realizes the bittersweet nature of the grant. “There are many towns like this one – I’m just doing what I can to help.”Again, Jasmina Petrovic is lucky.

Projects

SERBIA






LEVEL OF IMPACTSPREADING FINANCIAL ACCESS FROM THE ‘CORE’

Finance in Motion buys into the concept of financial inclusion. Literally.At the end of 2016, you and roughly 7.4 billion other people were living on Earth. Of the total, 5.5 billion of us were 15 or older, an important distinction when paired with this chilling fact: According to the World Bank, last year some 2 billion adults had no access to the financial system. The UN lender painted an even more dire picture of developing countries, where half of adults could not apply for a loan, draw cash at an ATM, or even deposit a paycheck because they didn’t have a bank account.

Finance in Motion, a leading impact investment asset managers, has always believed in increasing access to financial services in quality and quantity. In 2016, this policy of financial inclusion led to the purchase of the firm’s second equity stake, and its first in the financial technology, or “fintech” sector. It bought into a company that has helped deliver financial services in some pretty tough regions.

Over the past few years, fintech has become one of Finance in Motion’s foci, according to Matteo Snidero, who heads the company’s IT department. Sec-tor growth has been explosive, and the company remains on the lookout for technologies with the potential to create more inclusive and more efficient financial systems. While Snidero was conducting some desk research in 2016, he stumbled upon Oradian. “They had won a few awards, and their product sounded attractive.” His interest piqued, Snidero did some research on the company. “The presentation quality was that of a technology firm from the Silicon Valley, while the focus of the company was unabashedly in support-ing for the bottom of the wealth pyramid.”

After considering the mission overlap between his company and Oradian, Snidero convinced his colleagues that the software house is worth a closer look. Due diligence soon commenced, and later that year Oradian Managing Director Antonio Separovic joined the fintech panel at the SANAD Fund’s five year anniversary celebration in Cairo. He also met with Finance in Motion

leadership in the Egyptian capital, and the deal was, as they say, sealed.

The Oradian investment illustrates Finance in Motion’s ongoing pursuit of methods and technologies that expand access to financial services in low- and middle-income regions. Through the Development Facility of the European Fund for Southeast Europe, the company has helped bolster finan-cial inclusion by organizing the inaugural Fincluders challenge for fintech start-ups, by hosting a fintech workshop with the Central Bank of Armenia, and supporting a mobile loan app in Serbia Oradian’s pioneering product Instafin is a core banking solution for microfinance institutions and banks allowing them to avoid large initial costs and improve current performance. Thanks to Instafin, one if its first users, a microfinance institution in a region of Nigeria plagued by armed conflict, managed to more than double its client base to 200,000 in just two years.

Stories like these drew Finance in Motion to Oradian, and the attraction was mutual. As Separovic put it, “We are excited to partner with one of the world’s leading impact investors because it shares our vision for helping microfi-nance institutions and rural banks to catalyse economic growth and give people access to financial tools that improve their lives.”

Projects

FIM

CROATIA






LEVEL OF IMPACTCHANGING MINDS IN ‘CODETOWN’

iHub, Nairobi’s public co-working space for the city’s tech set, is famous for two reasons: Great coffee, and great coders, the people who write software. Since all the software programmers at Finance in Motion’s office in the Ken-yan capital were once regular visitors to iHub, the company decided to give back to the local coder community by dispelling the myth that the corporate environment — especially in the financial sector — is where IT innovation and creativity fade away.

Henry Muholo and Irene Mweu develop software for Finance in Motion, one of the world’s leading impact asset managers, and iHub has played an impor-tant role in both their career paths. Muholo would drop in to see the latest product rollouts from industry leaders, and both he and Mweu attended a range of seminars there during and after their studies. When Finance in Mo-tion was deciding on what it could offer the crowd at Nairobi’s tech watering hole, those planning the workshop selected a favorite media trope: It says the only way for developers to express true creativity and innovation is by coding in a dark room on a steady diet of Coke, pizza, and unemployment checks.

“Most students believe that if you want to be a developer, you don’t need to be employed,” Muholo says. He points out that only a few people are success-ful with startups, but being outside of the system can still be an advantage. “Many companies outsource work because they don’t believe they can have innovation in-house.”

That’s not always the case, as Finance in Motion’s one-day workshop at iHub showed. Muholo and Mweu explained to participants the latest trends in software development methodologies, quality assurance, web technologies, and innovations, and how they can spur creativity and innovation within a company.

“Some of the audience came from other companies and were surprised to hear that we could be nimble in our corporate environment,” Muholo says with a note of satisfaction. “It felt great to inspire people in the corporate world by showing you can be innovative, creative and agile.” He adds that students were especially interested to hear that working for a company does not mean they can’t be creative. Some attendees even asked to visit the Finance in Motion office to see this “agile development” in action.

Mweu says one participant lauded the company’s attitude about helping others in community, and discussing the concepts with the crowd had a surprising personal impact. “It was really an eye-opener. I felt we were clearly empowering the young students, especially the women.” Much of the audi-ence stayed well after the time allotted for the workshop, and the interest in the subject matter and those who presented it remains, she says. “It has also opened a lot of doors because we have been asked to do more presenta-tions.” These have included additional workshops at iHub for new audiences and a seminar on Jira software for students at Kenyatta University.

And with that, Finance in Motion is well on its way to continue serving yet another community.

Projects

FIM

KENYA






LEVEL OF IMPACTPICK A WINNER

How do you uncover the most viable proposals for sustainable investment strategies at the world’s top business schools? You can offer prizes for the best ideas, but someone has to pick the winners.

By providing two top decision makers for the regional and final juries of the 2016 Morgan Stanley Sustainable Investing Challenge, Finance in Motion was granted rare insight into the ideas of competing graduates from elite univer-sities across the globe. The company, one of the world’s leading impact asset managers, also sponsored the event, which is organized by the Sustainable Investing Institute of the U.S. investment bank Morgan Stanley and Kellogg Business School at U.S.-based Northwestern University. The annual com-petition invites MBA students from around the world to pitch sustainable investment strategies for a chance to win prize money and access to possible investors.

The 2016 finalists would try to sell their ideas in Hong Kong, but the teams would need to survive the first round. Finance in Motion’s Marco Kaiser had worked on structuring impact investing funds, making him a prime candi-date to judge proposals. He says, “The organizers were looking for people ex-perienced in defining investment strategies and developing innovative fund structures.” Kaiser and other members of the jury examined their allotment of 10-odd pitches, and he quickly realized the students were facing challenges quite common to the industry. “A lot of them needed better scalability and a more balanced mix between profitability and impact.”

The first round judges winnowed the around 100 participating teams to 10 finalists. In Hong Kong, these remaining teams were to face the scrutiny of judges from a who’s who of investment industry heavyweights: Morgan Stanley, Warburg Pincus, Blackrock, Dutch pension fund APG, the NZ Super-annuation Fund, U.S. asset manager T. Rowe Price, and Finance in Motion jury member Managing Director Florian Meister.

First prize went to a proposal for creating value by clearing landmines on ag-ricultural land in Angola that is currently unusable and thus inexpensive. The project would clear the mines so farmers can then work the land with the goal of buying plots later with earnings held in an automatic savings model, an idea with great potential for one of the world’s poorest countries. Second prize went to a pay-for-performance instrument to support improved treat-ment adherence for people with HIV in the United States. The project would initially target Washington, D.C., and by ensuring those infected remain un-der treatment and at viral load zero, which all but eliminates the chances of further transmission, one result could be significantly lower costs for treating new cases, each of which can total several hundreds of thousands of dollars. Hearing the proposals was an enlightening experience, Meister says. “What struck me about the ideas was the variety of subjects and the wide range of locations where the projects were based.” Meister explains that his career experience suited the task of selecting ideas with the best chances in the real world. “After setting up and managing similar funds and becoming quite familiar with their cost structures, I was able to tell what pitches were likely to succeed and attract investors.”

Meister and his fellow judges were forced into difficult deliberations due to the high quality of the pitches. Top placement in the competition offers a cash prize and increased access to leading philanthropists. Previous finalists have remained in fund-raising or even implemented their proposals.More tough calls could be in the cards for Finance in Motion staffers this year as the company plans to again support the competition. For Finance in Motion, involvement in the event also provides an opportunity to help a new generation learn more about impact investing. “We look forward to hearing the next batch of proposals,” Meister says, “and learning how business stu-dents from leading universities are trying to make the world a better place.”

Projects

FIM

HONG-KONG


FIM

GGFSANADeco.business Fund




LEVEL OF IMPACT

EFSE

PITCHING IN ISTANBUL

In late 2016, social media was abuzz with claims that the year was the worst in human history. Such exaggerations were often based on a perception of excessive catastrophic events and violent attacks. Pessimism, like black smoke, far too often clouds the whole picture.

During this so-called annus horribilis, Finance in Motion, one of the world’s leading impact asset managers, was sending its staff out to organize training for the next generation of business leaders. Company employees working for the Development Facility of the European Fund for Southeast Europe spent much of 2016 supporting young entrepreneurs (see more here [link to Fincluders section]). Acting as the technical assistance arm of the fund, the development facility partnered with representatives from Child and Youth Finance International and its Ye! Community of young entrepreneurs to organize mentoring seminars for youth-run businesses in Kosovo, Ukraine, and Turkey. These sessions, or “Ye! BoostCamps,” taught some 120 young en-trepreneurs financial and marketing skills important for helming a business.

The seminars culminated in select participants pitching business ideas to expert juries. In Kosovo, Architecture for Humans, the youthful creators of furniture for the disabled, topped the 20 other camp attendees at an event that also had a surprising impact on one Finance in Motion staffer. Of 70 Kiev participants, first prize went to the Department Action, which arrays Ukrainian journalists, lawyers, and public organizations for legal proceed-ings when investigations expose criminal activity. Finance in Motion sees these high-workload events not as revenue drivers but as key development initiatives to promote youth employment and create income generating opportunities.

In Istanbul, the final Boostcamp of 2016 in December was nearly over when deadly violence struck the city. Two bombs blasts around Istanbul’s Voda-phone Arena killed 46 people and injured more than 160. The Boostcamp organizers had to discuss the fate of the next day’s pitching event.

The setting, Istanbul’s Impact Hub, lies 10 kilometers from the stadium. Finance in Motion’s Viktoria Popova helped organize the event: “We felt confi-dent we should proceed. We didn’t feel any specific danger.”

Others did: The next day, a handful of young BoostCampers stayed home. “Their parents were worried about security,” Viktoria explained. The shock of the bombings also shook the temperament of remaining participants, at least in the beginning. But they began talking to each other, and once they realized everybody’s friends and family were safe, the campers faced the task at hand. “The mood improved and everyone was super-excited and concen-trated on making good pitches,” Viktoria said.

Finance in Motion’s Oguz Bardak, an investment manager at the Istanbul of-fice, and the rest of the jury found a winner: Personal Gene Lab, which seeks to introduce children to science and technology at primary and high schools. After the previous night’s events, there were no losers at this BoostCamp.

Projects

TURKEY


FIM

GGFSANADeco.business Fund




LEVEL OF IMPACTFINTECH FOR IMPACT: THE FINCLUDERS DIARIES

The following excerpts are from the diary of Petar Chavdarov, an analyst at Finance in Motion, one of the world’s leading impact investment advisors.A hot Monday in August: We’re mulling a high-impact technical assistance project for the Development Facility of European Fund for South East Europe (EFSE). We want to help our investees and end-clients take advantage of the Fintech Revolution. Several coffees later, we find the answer: Let’s create a commu-nity of fintech start-ups committed to financial inclusion. But how to bring them together? A competition for fintech start-ups that can cater to the EFSE region as part of a larger program to identify and accelerate the best players in this area. We’re looking for real “superheroes” of financial inclusion through technology. This helped us hit on a name: “Fincluders!”

1 September: A long to-do list. Which start-ups, mentors, investors and judg-es to target, how to involve our EFSE partners? Defining the venue, agenda, participants, invitation channels, website all takes time. Exciting to see it take shape. We set an event date. Three months is heaps of time, right?

20 September: Eight weeks to go. Approval from the EFSE Development Facility Committee. Website is live and applications stream in. Our teams in the FIM regional offices are on the case and reaching out to Fintech start-ups. 30 September: Fantastic news: the German Ministry for Economic Coop-eration and Development will generously support the project with a EUR 100,000 donation. And PwC agreed to sponsor a prize.

10 October: Just hit 30 applications from great start-ups and more are com-ing. Starting to realize it will be very tough to select just 15 finalists.

25 October: Mentors confirmed: Ameya Upadhyay from Omidyar Network, key VC impact investors. Aiaze Mitha, Chief MFS Officer of Tiaxa with his wealth of emerging markets experience in mobile financial services including with IFC. And Nasir Zubairi, CEO of the Luxembourg House of Financial

Technology (LHoFT). A successful Fintech entrepreneur, his expertise and contacts will be extremely valuable to finalists.

5 November: Almost 100 applications, and now it’s analysis time. We look at the business models, the team compositions, and the potential for real impact in financial inclusion.

28 November: We’re in Berlin and energy levels are stratospheric as men-torship sessions begin at the Space Shack, Schöneberg. Later there’s a safari at Berlin startups, Mambu, Republica and ServiceOne. Networking opportu-nities in a cool bar where Nasir has assembled half the fintech scene of the German capital. Good luck for tomorrow!

29 November: Event day. The 14 Fincluders finalists have honed their pitches before gathering at the Academie Lounge in the Kreuzberg section of the German capital. Investors on hand including Commerzventures and Omidyar along with KfW – define what they do – EFSE Board members and the EFSE DF Committee, and EFSE partners. Excellent show of interest.

Our judges: Christoph Freytag from ProCredit Bank, Sadina Bina from EFSE partner EKI Foundation, Nasir Zubairi, and Uwe Schober, Director at Finance in Motion.

Later: Prizes! Third place for Mexico’s Quotanda and its platform for student loan management. Second is Kenyan start-up Farmdrive, which uses alterna-tive data to allow cheaper, low-risk lending to remote farmers. First prize for Turkey’s Tarfin, which combines invoice factoring and farmer credit scoring to improve farmers’ and input suppliers’ cashflows. Extra prize for the EFSE region goes to Georgian startup OptioAI which offers bank customers an interactive financial planning tool.2 December: We are already planning a boot camp for eight start-ups, and to connect some of the start-ups with our EFSE partners.

EFSE

Projects

GERMANY


FIMEFSE

SANADeco.business Fund




LEVEL OF IMPACT

GGF

WIND IN THE CAUCASUS

When dignitaries and international guests marveled at the stately turbines during the opening ceremony for a new wind power facility outside Gori, Georgia, a group from Finance in Motion could finally breathe easier. The team had worked on funding the construction of the 20.7 MW Qartli Wind Farm, the building of which was shown in time-lapse on the ceremony’s big screen. The wind farm was ready to generate sustainable power for Georgia thanks to financing from the Green for Growth Fund (GGF).

Advised by Finance in Motion, a leading impact investing company, the fund invests in measures to reduce energy use and CO2 emissions in 19 countries. The Qartli facility, the first wind farm in both Georgia and the Caucasus, signifies the GGF’s commitment and engagement in the sector. For Carrie Walczak, who leads the project finance team at Finance in Motion, helping develop the financing plan and seeing the project come to fruition increased the fund’s expertise for future ventures in sustainable energy. Analyst Danyal Altunay had another perspective: For him, the wind farm represented some-thing he had been chasing for years.

The European Bank for Reconstruction and Development (EBRD) led the Qa-rtli project investment with a USD 10 million commitment; the GGF and two other partners lined up with USD 4 million each. Starting in early 2016, Wal-czak, Altunay, and their colleagues pored through project data and reports, discussed matters with advisors, and negotiated the transaction documenta-tion. Little time was wasted because there was little to waste, Walczak notes: “It only took 10 months from the team’s first site visit to the hills where the plant would be built to the inauguration ceremony in October 2016.”

Walczak had already been on the ground in Georgia in 2014 to assess a hy-dropower investment, a project that proved important to the GGF for at least two reasons: it was the first project in Georgia and the first in partnership with the European Bank for Reconstruction and Development (EBRD). While Walczak was digging deeper into the Georgian market that year, Altunay was

doing homework. Still at university, he had tracked into a Climate Finance curriculum after a trip to Hawaii helped him come to appreciate the un-tapped power of wind and other natural sources. A year later, he was working with Walczak and the GGF team to bring those types of power to the people. Investments in the Qartli wind farm and other renewable projects have prov-en invaluable to the project finance portfolio at the GGF, Walczak explains.

“These were difficult, ground-breaking projects on many fronts. Our support certainly facilitated the development of the projects through the contribu-tion of our expertise, our technical assistance support, and sharing the risk with development finance institutions. These efforts are laying the founda-tion for the fund’s and Finance in Motion’s long-term involvement in markets building sustainable energy.”

Georgia lies far away from where Altunay first observed the importance of wind power. Following his personal convictions has benefited him greatly, and his comments about the wind farm likely echo the sentiments of others on hand: “I can hardly put the experience of attending the inauguration ceremony into words. I ran my hands over the turbines and even stood inside one of the towers. Creating impact does not get more tangible and visible than this.”

Projects

GEORGIA


FIMEFSE

SANADeco.business Fund




LEVEL OF IMPACT

GGF

MARKETS

Shortly after Finance in Motion was incorporated in 2009, a tender was run on fund management services for a regionally focused energy efficiency (EE) fund with a renewable energy (RE) component. We threw our heart into it, yet realizing that we lacked experience, in particular in RE, we partnered with MACS to eventually win the advisory mandate. The steep learning curves of the time, the challenges the team faced trying to focus the financial sector on EE finance, and scouting for sound small-scale RE projects have not been forgotten. Neither has the momentum the Green for Growth Fund received when it expanded to Eastern European Neighbourhood countries. Economies of scale and leverage became easier to achieve, but most importantly, the new region required us to improve and expand our product offerings for the fund’s partners to effectively engage in lowering energy use and CO2 emissions in industries and households. It was again a matter of our hearts to expand the GGF one more time: In this case, to the Middle East and North Africa (MENA), a region we know intimately from managing the SANAD fund, and a region so full of challenges and opportunities. It’s a region in need of patient capital and tailored, focused technical assistance, which we believe is our strength and the strength of our funds. During COP22 in Marrakesh we, Florian Meister and Elvira Lefting, realized how perfect the timing was for the fund to roll out operations in MENA to attract interest from donors and investors. Yet we also felt more so than ever the pressure to deliver results, to deliver practical solutions to mitigate climate change, and to broaden the approach from energy efficiency to resource efficiency in a region suffering from problems such as the depletion of water resources.We have since expanded our teams and efforts to focus on local solutions, on tangible interventions both at the level of the financial institutions to mainstream EE and at the end–user level to build awareness and competent products to induce and finance the desired changes in business practices wasting energy and resources.With the expansion and ongoing operations in Southeast Europe, the Caucasus, Ukraine, and Moldova, the fund now serves 19 markets. It provides loans to qualified financial institutions that on-lend financing to small and

mid-sized businesses and households seeking reductions in energy use and CO2 emissions. So far, more than 22,000 EE projects have been financed, ranging from simple home insulation to large-scale changes in machinery and production processes to save energy and cut emissions. The GGF also invests directly in sustainable energy projects, including the first wind park in Georgia. As awareness of and know-how in possible solutions is key to meeting our goals, we invest just as intensively in building capacity on the ground, measures ranging from advancing energy auditor networks to assessing households and businesses alike for their energy savings potential .Marrakesh offered a platform to show how we at Finance in Motion are fighting climate change. Amongst others, we had the opportunity to present the GGF and eco.business funds at the Luxembourg-EIB ClimateFinance Platform. At COP22, further funding commitments to the GGF were announced, enabling us to roll out and deepen the fund’s engagement in particular in MENA: The European Investment Bank, which initiated the GGF together with German development bank KfW, announced a EUR 25 million commitment to GGF on top of the EUR 50 million in funding it has provided over the past seven years. With total commitments of EUR 500 million from donors, whose contributions serve as first-loss capital, and from development banks and, increasingly, private investors, the fund has now reached the critical mass required to truly effect change.Measures that have been financed by GGF investments since the fund’s establishment in 2009 save an estimated 1.3 million MWh and 329,000 metric ton of CO2 each year. And after announcing the 2016 expansion to MENA, the fund had already invested nearly EUR 50 million in the new markets it serves.When discussing the current state of the environment at COP22, with its top-level representatives, its informal atmosphere, and the sense of utmost urgency, for us one thing has become crystal clear about the GGF’s mission of reducing power use and cutting emissions: “We need to deliver.”

Projects

EGYPT, JORDAN, LEBANON, MOROCCO, THE PALESTINIAN TERRITORIES, TUNISIA


FIMEFSEGGF

eco.business Fund




LEVEL OF IMPACT

SANAD

LEASING FOR THE ’MITTELSTAND’

When members of the SANAD Equity Sub-fund team at Finance in Motion boarded a Frankfurt-to-Cairo flight in 2014, they were carrying cabin luggage and a business proposal. After months of research, the fund had decided to create a leasing company in Egypt in support of its mission to serve micro, small, and medium enterprises (MSMEs) in the Middle East and North Africa. The team was en route to meet with their colleagues in Cairo and offer the CEO position at the leasing company they were creating to their top candi-date. He had other plans.

In 2014, time was perfect for entering Egypt’s leasing market. New leasing regulations and pent-up demand were about to spur growth in the region’s largest economy, and rumors suggested some 10 greenfield firms were being prepped in the sector. The fund needed an experienced manager to help found and run a leasing firm, and Hatem Samir had been structuring complex deals in the region’s leasing industry for decades. However, after 20 years of working for others, Samir longed for change. “I wanted to capitalize on my experience, take it to the next level, and create my own business plan.” In Cairo, the equity team met Samir, who declined an offer to helm a leasing company still on the drawing board. He was already in the process of cre-ating one of his own with former business partner Wadi Degla Holding for Financial Investments, one of the largest investment groups in Egypt. The company would serve corporate customers.

Undaunted, the SANAD team broached the subject of leasing for MSMEs, a hugely underserved sector in the country. The backbone of virtually every strong economy in the world, small and medium businesses, known as the Mittelstand in Germany, are critical to job creation and employment. Before long, Samir had agreed that 40% of his company’s portfolio would be dedicated to this target client segment, a much higher portion than that associated with standard leasing companies.

SANAD initiated due diligence on the project’s business plan, terms were

negotiated, contracts signed, and in mid-2015, Global Leasing Company–or GLC–was formed. Samir notes the market signaled its belief in the new firm from the very beginning with unsecured credit lines. “This is unheard of in Egypt for a greenfield leasing company.” After founding a microfinance institution in Tunisia, the investment in GLC marked SANAD’s second equity investment.

SANAD owns 30% of the joint venture, whose performance has been impres-sive. Samir says the company “far exceeded” targets for growth and profit laid out in the 2016 business plan. More importantly, in its first 20 months of operation, GLC has signed leasing deals with 45 SME clients, which currently account for 37% of leases in terms of contracts.

Each month, the Egyptian Financial Supervisory Authority ranks leasing companies based on “total originations” – read new contracts – for the year to date. In this growth metric, an indication of the financial inclusion of more businesses in Egypt, GLC has placed second or third for eight straight months. “We were even number one in June 2016,” Samir says.

Projects

EGYPT


FIMEFSEGGF

eco.business Fund




LEVEL OF IMPACTTHE FIRST FIVE IN CAIRO

August 2016, a time for celebration at the SANAD Fund for MSME. Tasked with fostering small business and job creation in nine countries in the Middle East and North Africa, the impact investing fund and its debt and equity operations had just turned five years old. In only half a decade, SANAD had invested over USD 215 million in qualified local lenders, who in turn had ap-proved nearly 70,000 loans to micro, small and medium enterprises (MSMEs). Some 100 guests and dignitaries from across the region–and the world–as-sembled in Cairo to honor SANAD’s brief but bright history. From the outset, the leading impact asset manager Finance in Motion was on the ground conducting initial country assessments to guide the fund’s strategy for facili-tating financial access in the region.

Ironically, the research team was in Cairo during some of the largest protests. With such risk and uncertainty in the air, the fund probably would have never come to be without the foresight and perseverance of the German Develop-ment Bank KfW, the fund’s founder. It even came up with the name: “Sanad” aptly means support, and a shoulder to lean on in Arabic. Bold decisions and a commitment to finance the region when it needed it most are behind the fund’s success. Finance in Motion’s role was also key. Staff member Ahmed Khalil, in Cairo for the 2016 celebration, has been with the fund since its inception in 2011, and he grinned at how much things had changed: “When I was interviewing for the job, they were still furnishing the Cairo office.”

Born in Cairo, Khalil had returned home from Dubai to work for SANAD. The fluid situation on the ground pressured the Cairo team. “The operating envi-ronment was challenging,” Khalil says.

Outside Egypt, SANAD started its first partnership with a bank in Lebanon. Others followed with microfinance institutions in Jordan and the Palestinian Territories in 2012. Each partnership is strengthened through the fund’s Technical Assistance Facility. It supports financial institutions in local coun-

tries and has sponsored training seminars, sector workshops, and capacity building in Egypt, Iraq, Jordan, Lebanon, Morocco, the Palestinian Territories, Tunisia and Yemen.

In 2013, debt sub-fund activity spiked in Tunisia, where the equity team secured its first investment. In Egypt, a few politically and economically turbulent years and a challenging environment for microfinance legisla-tion required a more patient approach from the fund and its advisor. Their dedication and perseverance led to a year of negotiations and a 2014 loan to AlexBank, one of the few private banks catering specifically to small business. SANAD had successfully entered the Egyptian market, and AlexBank has become an esteemed partner of the fund.

The Cairo office has relocated, expanded, and now boasts five staffers. SAN-AD has more furniture, and many more partners in the region, and beyond. Dragan Spirovski, a Finance in Motion investment manager responsible for the Maghreb countries, outlined the next step: “We are currently planning to add an office in Morocco.”

SANAD recently received a EUR 15 million commitment from OeEB, the Austrian development bank, which is facilitating growth. More funding also arrived from the first-ever private investment in SANAD..So, just like it created a job for Kahlil, SANAD continues to create jobs and support MSMEs in his homeland, and beyond.

SANAD

Projects

EGYPT


FIMEFSEGGF

eco.business Fund




LEVEL OF IMPACTFOUR LOANS IN LEBANON

In an era where bankers are being blamed for the world’s ills, Fatima Kamel Metayrik likes lenders, or at least her lender. Why wouldn’t she? Fatima’s partnership with Lebanese microfinance institution Al Majmoua has sup-ported her education, it funded her ambition to create a start-up, and she’s hoping the cooperation may even allow her to walk away from her current job so she can work full-time at the company she founded.

Fatima credits her financial partner with the required support at important moments in her life: “Al Majmoua was always there when I needed them. The three loans they have provided so far are responsible for the successes in my personal life, and in the business world.” Her partner is also a partner of the SANAD Fund for MSME. It supports entrepreneurs just like her in the Middle East and North Africa. SANAD invests in qualified local financial institutions, who on-lend the money to micro, small and medium enterprises (MSMEs). SANAD, a partner of impact-driven microfinance institutions such as Al Ma-jmoua for many years, is advised by Finance in Motion, a leading impact asset manager, for which Fatima is a great example the types of entrepreneurs it supports. Fatima has plenty of experience when it comes to financing her personal journey. Al Majmoua has been by her side since her university stud-ies. Its two loans helped Fatima, who grew up in a low-income environment, pay for both her undergraduate courses and graduate school, where she earned a master’s degree.

After her studies, Fatima joined the workforce and now has a full-time job as a graphic designer at a reputable company. Working women are not a given in Lebanon: According to International Labor Organization estimates, female unemployment in Lebanon remained above 10% from 1991-2014, the last year for which it provides data. Even though Fatima had escaped the ranks of the jobless with steady work, she decided to reach for something more. Having already paid back her pair of educational loans, she qualified for more financing. This time, she applied for and received a business loan from Al Majmoua, money to help her and a partner establish a company that designs

and produces decorative glass. She used the loan to purchase a laptop and specialized printing equipment. Al Majmoua has not only shown its belief in Fatima by continuing to provide her with financing, it also nominated her for the Citi Microentrepreneurship Awards program.

Developing the glass design business, her business, so it can become her main source of income drives Fatima. Again, Al Majmoua was there to help with the next round of funding, making theirs a four-loan partnership. Fatima has even bigger plans: She wants to open a shop for her handcrafted products. Chances are she’ll stay true to a partner that has been there for her since she left secondary school.

Along with investments to support small business, in 2016 SANAD and Al Majmoua cooperated on improving access to finance for refugees in Lebanon. The civil war in neighboring Syria had driven more than one million people across the border to a country with a population of only 4.4 million. SANAD has been helping Al Majmoua develop services catering to the specific needs of refugees, allowing its partner to serve a particularly vulnerable target group in a lasting way.

SANAD

Projects

LEBANON


FIMEFSEGGF

eco.business Fund




LEVEL OF IMPACTA PARTNERSHIP AGAINST FEAR

In January 2016, the debt sub-fund of the SANAD Fund for MSME, which supports micro, small and medium businesses in the Middle East and North Africa and is advised by Finance in Motion, received its first private invest-ment: GLS Bank, the first bank in Germany founded on social and ecological policy, bought EUR 13.3 million of notes from SANAD’s debt-sub fund. In less than a year, the lender doubled down on its investment with EUR 16.6 million for another note purchase in November.

Founded in 1974, GLS stands for “community bank for loans and gifts.” It currently finances some 23,000 sustainable projects and businesses, and the lender prides itself on stringently vetting and monitoring all its investments, according to Marcus Pfingsten, a senior wealth manager at GLS. “We are one of the strictest in the market.” Before Pfingsten greenlights investments, they need approval from a committee comprising bank officials and external rep-resentatives, all of whom examine the social, ecological and economic merits of bank expenditures.

GLS entered the securities market in 2008 around the same time Pfingsten became one of its employees. More than 10 years of advising investors for various top European banks in Germany had soured his view of the industry. “I made a conscious decision against the profit-driven attitude of the German banking environment.” He wanted to offer investors fair advice, long-term customer relationships, a long view on investments, and he was looking for a social component. GLS had it all and was based in his hometown of Bochum, too.

GLS and its clients demand more than one bottom line. With a focus on micro, small and medium enterprises in the Middle East and North Africa, the fund offers both social and economic returns. That’s why the bank and its cli-ents have both invested in SANAD. “It’s easy for us to explain the advantages of your funds,” Pfingsten says, pointing out the overlap. “Microfinance is part of our DNA.” The same is true for SANAD.

GLS had been examining the fund when a radical geopolitical shift fast-tracked the vetting. “The migrant issue moved to the forefront,” Pfingsten explains. Heartbreaking footage of broken families and tragic sea crossings inundated the media. “We had to create hope in the migrant home coun-tries,” Pfingsten says. SANAD fits that bill by serving small business in low- and middle-income countries, most of which border the Mediterranean. Pfingsten points out economic factors, too, noting how SANAD’s innovative fund structure, which helps protect private investors from losses, makes the fund attractive. “Currently, without this public-private partnership, many private investors would not be involved in these regions of the world.” He explains that low, zero and even sub-zero interest rates in the world’s leading economies have increased the focus on the region. “Returns are better than in many financial markets, and the investments help people in those coun-tries.”

Part of GLS’s policy is to avoid “ideas with no future.” On the subject, Pfing-sten cites a quote from GLS Founder Wilhelm Ernst Barkhoff: “Concerns over a future we fear can only be conquered by visions of a future we desire.” With SANAD, GLS has formed a partnership against this fear.

SANAD

Projects

GERMANY


FIMEFSEGGFSANAD




LEVEL OF IMPACT

eco.business Fund

GREENING THE BIG LEAGUE

La Liga Agrícola Industrial de la Caña de Azúcar, or LAICA, is big. Membership in the organization, known in English as the Costa Rican Sugar League, com-prises some 8,000 growers and 13 sugarcane mills. As part of the UN Global Compact for implementing universal sustainability principles, three league sugar mills are owned by Fair Trade-certified cooperatives that comprise thousands of smallholder farmers. For more than 75 years, LAICA has been bringing producers and buyers to the bargaining table to hammer out prices and other key decisions related to the country’s sugarcane industry, a sector responsible for more than nine percent of jobs in Costa Rican agriculture.

LAICA’s depth and breadth make it prime partner for the eco.business Fund. Advised by Finance in Motion, one of the world’s leading impact asset man-agers, the fund supports biodiversity conservation and the sustainable use of natural resources in Latin America. To meet this mandate, eco.business pro-vides financing to qualified local banks and financial institutions to on-lend to agricultural businesses committed to conservation and biodiversity goals.

In Costa Rica, the fund’s loans to local lenders Scotiabank and Banco Davivienda support the league and its wide-ranging efforts to increase the sustainability of the country’s sugar industry. LAICA members have lowered energy use with lighting upgrades, motion sensors, and by taking advantage of gravity when moving goods vertically. They have also sharply reduced sol-id waste output, their reliance on fossil fuels, and water consumption. LAICA and its members have been switching to mechanical harvesting systems to avoid pre-harvest burning, and are implementing biological pest controls and using biodegradable chemicals. Most recently, the league has been im-plementing a zero carbon policy, which members are attempting to achieve by reducing the amount of synthetic fertilizers used, replanting forests in the unproductive areas of the farms, saving water by eliminating the sugarcane washing process and changing to dry cleaning of organic residues thereby reducing significantly the amount of waste water.

“LAICA is a great vehicle for effecting change on a large scale,” according to Sandra Abella, who manages investment activities of the fund from Finance in Motion’s Bogota office. Due to the league’s large membership and various activities, eco.business – through its local partner institutions – reaches a broad swath of important businesses in a centralized manner. “We can support a wide range of initiatives in line with conservation and biodiversity goals in a diversified set of players through one single agency.”

A sterling example of how LAICA members are promoting biodiversity con-servation comes in the form of the Hacienda El Viejo national wildlife refuge. Covering more than 1,300 hectares, this private refuge belonging to league member and sugar producer Hacienda el Viejo has dedicated 80% of its area to the “tropical dry forest,” a classification only met by 2% of the world’s woodlands and thus a priority in terms of global conservation. The compa-ny’s refuge boasts nearly 190 species of flora and some 270 species of fauna. Additionally, 260 hectares of wetlands have been created to provide shelter, food, and habitats for dozens of species of aquatic resident and migratory birds, which has increased the number of species from four to 31. Even the endangered Jaribu Stork is calling the refuge home.

By funding LAICA, water and natural vegetation have been protected through the conservation of springs, the recovery of surrounding vegetation, and the restoration of areas alongside streams and riverbanks. Biodiversity has been conserved and even restored, and the use of pesticides and ferti-lizers has been reduced. Sugarcane burning has been eliminated at certified Fairtrade Cooperatives. All of this has had a direct impact in improving the lives of millions while developing a solid franchise and differentiation for LAI-CA. The investment has helped improve the health and safety of farmers and their families and has allowed farmers to engage and transition to certified sustainable agriculture benefiting current and future generations.

Projects

COSTA RICA

Facts Welcome Preface Projects Fimshare About us Portfolio Contact us


CSR

1. Human Resources

Due to continued strong growth, Finance in Motion further increased its staff numbers by more than 30% to more than 180 employees as of year-end 2016. In addition, we opened our 15th regional office in the fourth quarter; this office in El Salvador further helps to strengthen Finance in Motion’s posi-tion in Latin America. Furthermore, the offices in Luxembourg and Colombia grew significantly in 2016. Overall, the percentage of colleagues in regional offices remained stable at around 35% of company staff. Thus, more than a third work in the regions the company serves and contribute directly to Finance in Motion’s in-depth knowledge and understanding of local market conditions.

CSR REPORT

Finance in Motion offers various employment models, including working part-time. Additional flexibility allows parents to continue their successful career paths. To increase the human capital of the company, Finance in Motion invests continuously in training. In 2016, 4% of total revenues were invested into training. In 2016, 130 of the more than 180 employees partici-pated in over 60 training programs. For senior staff, the company introduced a leadership development program. For international colleagues moving to Frankfurt, the company further improved its service by contracting an external relocation company. All staff – including colleagues working in the regional offices – gather each year for a corporate retreat, which not only includes strategic updates on the company, but also features workshop and teambuilding elements. For example, in 2016 one of the topics focused on change. Other activities supported by Finance in Motion include corporate sports events such as the participation in a corporate soccer tournament. In addition, families and friends of staffers all meet at the yearly “FiMily” event in Frankfurt.

2. Environmental Responsibility

CO2 emissions from staff travel were cut from 3.48 metric tons per capita in 2015 to 3.13 metric tons per capita in 2016. In order to mitigate this effect, Finance in motion invests in the Green for Growth Fund, which saves roughly 1 kg CO2 /year per euro invested. Further initiatives are reducing environ-mental impact of Finance in Motion to the lowest levels possible. This in-cludes the promotion of environmentally friendly travel both to the company and on business trips. Staff members are encouraged to take the train for short to mid-distance travel, and to use the company’s video conferencing system whenever feasible to avoid unnecessary business travel. Surveys amongst staff members have shown that – in comparison to the German average – more Finance in Motion employees travel to work either by public transport or by bicycle than in other companies. Commuting by bicycle is encouraged by providing safe bike storage rooms and shower facilities. Other activities to reduce our impact include hiring local service providers such as printers to reduce emissions from transportation, buying certified organic products – FSC certified recycling paper or organic coffee – wherever reasonable, and promoting recycling activities.

In our regional offices we encourage our staff to lead by example through measures like promoting recycling or purchasing locally produced equip-ment. This behavior usually requires significantly higher effort than in coun-tries such as Germany, the home of the head office, as many other countries are often just starting to develop a sense for the necessity of ecological sustainability.

NUMBER OF EMPLOYEES

Frankfurt Office

Regional Offices

2015 2016201420132012201120102009

24

18

42

62

83

103113 117

138

183

41

21

82

31

77

40

57

25

71

32

89

49

119

64

EMPLOYEES BY GENDER

male

48 % 52 %

female

Facts Welcome Preface Projects Fimshare About us Portfolio Contact us


3. Social Responsibility

Providing social impact through the funds we advise is a vital part of Finance in Motion’s business model. The company itself also bolsters these activities through its own activities. A centerpiece of Finance in Motion’s contribution to social impact remains the company charity fimshare. Operated by Finance in Motion employees, and supported by the company through matching donations at a rate of 1-to-2, fimshare funded 11 projects with a total of EUR 108,000 in 2016. Projects focused on support for children and disadvantaged populations in countries such as Serbia, Bulgaria, Colombia, Guatemala, Leb-anon and India. Company employees promote and coordinate each project. Other social initiatives supported by Finance in Motion in 2016 included con-tinuous support of the Kenyan initiative iHub, a co-working space in Nairobi where young developers can meet donors and investors, swap ideas, and build expertise in the field of IT entrepreneurship.

Cooperation with universities and business schools for the promotion of impact investing serves as another example of the company’s social engage-ment.

In addition, the company continued to provide office space in Germany for language courses for female refugees with children. Moreover, many of our colleagues are active in a range of refugee-support initiatives, includ-ing coaching refugees coming to Germany and organizing events such as kitchen parties to ease their integration into local communities. To foster the multicultural spirit in Frankfurt, Finance in Motion remains a proud sponsor of the Frankfurt English Theatre, which produces works for the stage for a cosmopolitan, English-speaking community.

CSR

Facts Welcome Preface Projects CSR About us Portfolio Contact us


Fimshare

FIMSHARE

COLOMBIABeneficiary: AmArteProject volume: EUR 5,000

AmArte is a registered non-profit created in 2014 seeking to integrate children with cognitive dis-abilities into society through music and other per-forming arts activities by working with a network of trainers. Concretely, AmArte is planning to stage a musical in which handicapped members can perform, but for this they need instruments. In addition, because workers supporting the project work on a fully voluntary basis, part of the donation is earmarked for paying a small amount to some of these social workers because they will spend significantly more time on the project.

COLOMBIABeneficiary: Fundación Geriátrica GuadalupeProject volume: EUR 9,900

The “Fundación Geriátrica Guadalupe” (FGG) is a non-profit institution in Manizales, Colombia that provides comprehensive care to the elderly through social and economic projects. Today, FGG supports 84 people and provides food, shelter and basic health services for residents, who rely on FGG’s washing machines, house-hold appliances not suitable for the heavy-duty laundry services required. The results are regular breakdowns, high maintenance costs for the insti-tution, and the need to often replace machines as their lifecycles are reduced to around six months by intensive use. With the fimshare donation, the institution will replace multiple old washing machines with new industrial ones that increase reliability and efficiency, reduce water and energy use, and thus save cost for FGG and improve the quality of life for the residents of the institution.

GHANABeneficiary: Presbyterian Senior High School,TamaleProject volume: EUR 5,000

The Presbyterian Senior High School in Tamale is open to pupils of all confessions – despite being backed by a religious organization – and, in an area where school infrastructure is very poor, is considered a leading institution, to which admis-sion is in high demand. fimshare’s contribution will support the construction of a dormitory for 160 girls from out of town, allowing them to stay at the school as opposed to local homes, where they regularly leave school before graduation due to expensive rent and poor quality of life, which includes sleeping on the ground and sub-stand-ard living conditions.

BULGARIABeneficiary: The Cedar FoundationProject volume: EUR 5,400

The Cedar Foundation is a leading Bulgarian char-ity established in 2005. It currently takes 24-hour care of 67 abandoned children and youth, most with disabilities, in the towns of Kazanlak and Kyustendil. The Cedar Foundation also manages a social rehabilitation and integration centre, which provides modern methods of care to more than 30 young people with disabilities and their families. Throughout 2017, fimshare will cover the annual fees of a physiotherapist and a speech therapist treating 20 of the children and young adults.

GUATEMALABeneficiary: Asociación Bendición de DiosProject volume: EUR 20,000

At present, a school run by the Asociación Bendición de Dios supports around 500 children and their families in the community of San Juan Alotenango, providing regular education, health care, and practical training sessions. The school has been growing permanently during the last year, and has outgrown its current building, which a Dutch charity allows it to use. fimshare is supporting the association construction of its own school building. The donation will fund con-struction material, builders, and the first phase of construction, including the installation of an electrical system, plumbing, doors and windows, and plastering. This will facilitate the Asociación’s (charity’s) good works for children and families in the local area over the long term.

INDIABeneficiary: Salaam Baalak TrustProject volume: EUR 10,600

Following the successful completion of a first pro-ject with Salaam Baalak Trust (“SBT”) in 2014, fim-share is now sponsoring an additional two-year project supporting four street girls living in SBT’s Arushi Residential Centre. fimshare’s donation will allow the girls access to educational facilities, pre-pare them for the job market, and provide them with room and board for the life of the project. Without these services, the girls would be forced to accept a future of living on the street without access to shelter or schooling.

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SERBIABeneficiary: Public Middle School “23rd May,” PancevoProject volume: EUR 20,000

Pancevo is a town an hour up the Danube river from Belgrade. The fourth largest city in the Vojvodina province by population, its school serves many children from surrounding villages and rural areas. Many of the students belong to socio-economically disadvantaged families in which parents either are unemployed or only one works for minimum wage (less than 100 EUR/month). Many children from such families cannot afford to continue going to school and drop out. To ensure they stay in school, fimshare is provid-ing much-needed support to 44 students living at or below the poverty line by covering bus tickets to travel from surrounding villages to the school, lunch packages, and t-shirts and sneakers so the kids can attend physical education courses.

NEPALBeneficiary: Sambhav Nepal e.V.Project volume: EUR 5,000

The Nepal earthquake in early 2015 either partially or completely destroyed the homes of a significant portion of the country’s population. Sambhav identifies those in greatest need and supports their rebuilding efforts. fimshare is funding the reconstruction of a house for a family forced to live in a temporary shelter after the quake.

Fimshare

LEBANONBeneficiary: KarmaProject volume: EUR 12,000

Karma supports refugees from Syria, Iraq, and Palestine – in particular children and adolescents – who suffer from severe diseases and whose fam-ilies cannot afford appropriate medical treatment. In collaboration with a network of NGOs and foundations, Karma strives to ensure financial and psychological support for patients and their fam-ilies on the way to recovery. Karma’s cases often need long, costly medical treatment. By adopting two of Karma’s cases for one year through paying for their chemotherapy medication, fimshare will contribute to making sure the patients complete their medical treatment.

SERBIABeneficiary: Usce HospitalProject volume: EUR 6,750

Usce (Ušće) is a village in the Kraljevo municipal-ity in Serbia. The village’s small hospital serves over 4,000 patients from the surrounding region, many of whom have limited access to health care, as the next hospital is one to three hours away due to the region’s poor infrastructure. The hospital is an important provider of emergen-cy care for the region, but it lacks basic medical equipment and furniture as it operates without financial support from the government. fimshare’s donation will enable the hospital to purchase an EKG machine, an inhalation machine, and three medical beds. In addition, upgrades are sched-uled for two toilets and the hospital’s facade.

SERBIABeneficiary: Primary School Rastko Nemanjic, DezevaProject volume: EUR 6,800

Dezeva is a small village located in southwest Serbia whose school also serves a number of the surrounding remote hamlets. The school lack ba-sic teaching tools, in particular IT equipment--in-cluding computers--white boards, projectors, screens, etc. Despite these challenges, students successfully participate in different school con-tests for reading and other activites. The fimshare donation will purchase IT equipment to serve the village school and its outlying branches.

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About us

ABOUT US

LocalHands-onProactiveReliable

WHO WE ARE

Impact investing continues to expand as the world identifies and seeks to remedy economic, social, and environmental problems. While we recognize the wide-ranging growth of the sector, we have selected two main areas that guide our investment decisions:

Micro, small and medium enterprises (MSMEs) Vital for creating jobs and socioeconomic development, these businesses often lack access to long-term funding, especially in low- and middle-income countries.

Green financeProtecting the planet’s climate and natural resources remains arguably the greatest challenge facing humanity. We believe green finance will have significant positive ramifications.

DedicatedOUR

VALUES

WHAT SETS US APART

As a leading impact asset manager, Finance in Motion’s unique combina-tion of operational assets, broad partnerships, extensive experience, and geographic spread has given us the ability to tailor our solutions to the requirements on the ground.

Technical assistanceFinance in Motion’s investment staff is paired with in-house teams of tech-nical assistance professionals to combine extensive technical expertise with time on the ground in the target regions.

Local officesWe have 15 offices in the regions we serve to ensure on-site knowledge and oversight.

Multiple shareholders We draw on experience in diverse investment environments through our cooperation with a wide range of public and private investors.

Public-private partnership (PPP)We leverage public funding by structuring impact investment funds so pub-lic monies serve as a risk cushion for private investors.

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Portfolio

KEY FIGURES OF ADVISED FUNDS

PURPOSEMSE finance via financial intermediaries

TARGET REGIONS Southeast Europe, Eastern Europe, Caucasus

FUNDING

Committed capital from investors 1.0 EUR billion

PORTFOLIO INVESTED

Investment portfolio outstanding 924.3 EUR million

Active partner institutions 72

Investment volume since inception in Dec. 2005 2.3 EUR billion

DEVELOPMENT PERFORMANCE

Portfolio outstanding on-lent to end-borrowers 1.0 EUR billion

Number of active end-borrowers 161,390

Average size of loans on-lent to end-borrowers 6,225 EUR

Number of loans to MSEs and households since inception in Dec. 2005 860,246

Volume of loans to MSEs and households since inception in Dec. 2005 5.9 EUR billion

Number of target countries 16

Initiated by KfW in December 2005

Initiated by KfW in December 2014

PURPOSEConservation and climate finance via financial intermediaries and direct investments

TARGET REGIONSLatin America, Carribean

FUNDING

Committed capital from investors 104.7 USD million

PORTFOLIO INVESTED

Investment portfolio outstanding 60.0 USD million


Investment volume since inception in Dec. 2014 75.0 USD million


Portfolio outstanding on-lent to end-borrowers 52.7 USD million

Number of active end-borrowers 285



The European Fund for Southeast Europe (EFSE) aims to foster economic development and prosperity in the Southeast Europe region and in the European Eastern Neighbourhood region through the sustainable provision of additional development finance, notably to micro and small enterprises (MSEs) and to private households, via qualified financial institutions.

The eco.business Fund aims to promote business and consumption practices that contribute to biodiversity conservation and the sustainable use of natural resources in Latin America and the Caribbean. The eco.business Fund solely invests in countries and territories eligible to receive official devel-opment assistance (ODA) and which are listed at the time of the respective investment in the OECD DAC list of ODA recipients. The eco.business Fund will pursue this mission by providing financing to both qualified financial institutions and non-Financial Institutions. In pursuing its development goal, the eco.business Fund will adhere to principles of sustainability and addition-ality, combining development and market orientations.

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PURPOSEEnergy finance via financial institutions and via direct investments in renewable energy project companies

TARGET REGIONS Southeast Europe, Eastern Europe, Caucasus, Middle East, North Africa

FUNDING

Committed capital from investors 413.8 EUR million

PORTFOLIO INVESTED

Investment portfolio outstanding 363.2 EUR million


Investment volume since inception in Dec. 2009 528.8 EUR million


CO2 savings 392,192 tCO2/yr

Energy savings 1,551,194 MWh/yr


Initiated by KfW and EIB in December 2009

Initiated by KfW in August 2011

PURPOSEMSME finance via financial intermediaries, including equity investments, to enable institutional green-fielding

TARGET REGIONSMiddle East, North Africa

FUNDING

Committed capital from investors 241.0 USD million

PORTFOLIO INVESTED

Debt investment portfolio outstanding 162.6 USD million

Equity portfolio (including approved investments) 6.0 USD million


Investment volume since inception in Aug. 2011 239.0 USD million


Portfolio outstanding on-lent to end-borrowers 130.4 USD million

Number of active end-borrowers 39,847

Average size of loans on-lent to end-borrowers 3,273 USD

Number of loans to MSMEs since inception in Aug. 2011 99,785

Volume of loans to MSMEs since inception in Aug. 2011 304.7 USD million



The mission of the Green for Growth Fund (GGF) is to contribute, in the form of a public private partnership with a layered risk/return structure, to enhancing energy efficiency and fostering renewable energies in the Southeast Europe Region including for the avoidance of doubt Turkey and in the European Neighbourhood Region, predominantly through the provision of dedicated financing to businesses and households via partnering with financial institutions and direct financing.

The SANAD Fund for MSME (SANAD) aims to foster employment creation, especially among the youth, and economic development in the Middle East and North Africa (MENA) region through the sustainable provision of finance to micro, small and medium-sized enterprises (MSME) and to support sections of society with limited access to finance for housing and shelter, via qualified and eligible financial intermediaries. The SANAD recognises the challenges in the countries it serves and is dedicated to assist the develop-ment of inclusive financial systems through the provision of finance and capacity building measures to the target group.

Portfolio

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FINANCE IN MOTION’S REGIONAL OPERATIONS

EUROPEALBANIA

Yerevan | ARMENIA

AZERBAIJAN

BELARUS

Sarajevo | BOSNIA AND HERZEGOVINA

BULGARIA

CROATIA

Tbilisi | GEORGIA

Frankfurt am Main (main office) | GERMANY

Prishtina | KOSOVO

Luxembourg | LUXEMBOURG

Skopje | MACEDONIA

Chișinău |MOLDOVA

Podgorica | MONTENEGRO

ROMANIA

Belgrade | SERBIA

Istanbul | TURKEY

Kyiv | UKRAINE

CENTRAL / SOUTH AMERICA

Bogotá | COLOMBIA

COSTA RICA

ECUADOR

San Salvador | EL SALVADOR

GUATEMALA

HONDURAS

NICARAGUA

PANAMA

PERU

Countries with Finance in Motion offices

MEMBER OF

AFRICAALGERIA

Cairo | EGYPT

Nairobi | KENYA

MOROCCO

TUNISIA

MIDDLE EASTIRAQ

JORDAN

LEBANON

PALESTINIAN TERRITORIES

YEMEN

SIGNATORY OF

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Armenia T +374 (0) 11 97 900 [email protected]

Bosnia and Herzegovina T +387 (0) 33 56 11 90 [email protected]

Colombia T +571 322 8190 [email protected]

Egypt T +20 (2) 27 37 13 44 [email protected]

El Salvador T +503 2567 [email protected]

Georgia T +995 322 611 158 [email protected]

Germany Carl-von-Noorden-Platz 5D-60596 Frankfurt am MainT +49 (0) 69 27 10 35-0 [email protected]

Kenya T +254 706 909 296 [email protected]

Kosovo T +381 (0)38 749 050 [email protected]

Luxembourg T +352 (0) 28 99 59 59 [email protected]

Macedonia T +389 (0)2 31 32 628 [email protected]

Moldova T +373 (0)22 54 46 26 [email protected]

Montenegro T +382 (0) 20 22 83 41 [email protected]

Serbia T +381 (0) 11 22 89 058 [email protected]

Turkey T +90 212 286 01 23 [email protected]

Ukraine T +38 (0) 44 290 70 88 [email protected]

CONTACT INFORMATION

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DISCLAIMER

© Finance in Motion 2017. All rights reserved.

Translation, reprinting, transmission, distribution, presentation, use of illustrations and tables, or reproduction or use in any other way is subject to permission by the copyright owner with acknowledgement of the source. Neither Finance in Motion nor any of its shareholders, directors, officers, employees, advisors or agents makes any representation or warranty or gives any undertaking of any kind, express or implied, or, to the extent permitted by applicable law, assumes any liability of any kind whatsoever, as to the timeliness, adequacy, correctness, completeness or suitability for any investor of any opinions, forecasts, projections, assumptions and any other information contained in, or otherwise in relation to, this document, or assumes any undertaking to supple ment any such information as further information be-comes available or in light of changing circumstances. The content of this information is subject to change without prior notice. This document does not necessarily deal with every important topic or cover every aspect of the topics with which it deals. The information in this document does not constitute investment, legal, tax or any other advice. It has been prepared without regard to the individual financial and other circumstances of persons who receive it.

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Please find the full Impact Investment Report 2016 onwww.finance-in-motion.com/IIR2016

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