Transaction opens up global capital markets for high-impact sector in emerging markets as
responsAbility closes USD 175 million microfinance securitization
Zurich, 17 July 2019 — responsAbility Investments AG, the international impact asset manager, has today closed a USD 175 million securitization of loans to microfinance and SME-finance institutions in emerging markets. The proceeds will be used to fund financial intermediaries providing capital to 30,000 small businesses and 5.6 million microfinance borrowers. 81% of the borrowers are women.
The transaction pools the borrowing needs of 26 micro and SME finance organizations, thereby allowing them to achieve the scale necessary to access global capital markets. At the same time, the transaction enables investors to contribute to financial inclusion in developing countries, earn a commercial return, and diversify their exposure across multiple borrowers and geographies.
Denominated in USD and with an expected maturity of three years, the securitization provides investors a choice of three different risk return profiles (senior, mezzanine, and junior) in a listed, transferable bond format. The senior and mezzanine notes earn fixed interest rates and junior note returns will depend on performance of the underlying loan portfolio. Key investors in this transaction include the Overseas Private Investment Corporation (OPIC), the US government agency, providing the initial capital necessary to mobilize the private institutional investment in the deal, and Alecta, the fifth largest occupational pension provider in Europe, and investing in the essential risk capital. Impact investing firm Calvert Impact Capital also brings U.S. private capital into the deal.
“This securitization shows that the fast-growing microfinance and SME finance space in emerging markets has now reached a maturity that allows it to access financing from mainstream capital markets,” commented Thomas Müller, Co-Head Financial Institutions Debt at responsAbility.
“This is an area of increasing focus for fund managers globally and applying capital markets technology to traditional impact investing creates the potential to open this sector to a wider range of investors,” added Eric Wragge, Managing Director, Securitised Products Group at J.P. Morgan. “We are very pleased to have helped facilitate this flow of investment to emerging economies, where financial inclusion can make such a difference in the lives of small-scale entrepreneurs and their communities,” Eric said.
“OPIC is proud to partner with responsAbility to expand access to the financing of micro-entrepreneurs and small business owners – especially women – who need to grow their businesses, create jobs, and help their communities thrive,” said Tracey Webb, OPIC Vice President for Structured Finance and Insurance.
”Alecta actively manages approximately 100 billion USD, at an extremely low management cost. To meet our high sustainability standards and really make an impact with maintained low costs, these are the kind of partners and product we’re looking for. This type of security allows Alecta to invest capital extremely efficiently,” said Magnus Billing, CEO of Alecta.
Songbae Lee, Director of Investments for Calvert Impact Capital noted that “this deal has great potential to serve as a template for making microfinance – and other impact investing deals – more accessible to a range of investors in the future. We’re excited to help scale responsAbility’s microfinance platform and ultimately, get more capital flowing to the communities that need it most.”
“This transaction reopens the impact securitization market and paves the way for further issuance in pursuit of the 17 Sustainable Development Goals,” commented Desiree Fixler, Senior Consultant to responsAbility, Managing Director, ESG Investing at Zais Group.
“We are delighted to be part of a global pool of quality microfinance and SME finance players, participating in an innovative, global capital markets transaction managed by responsAbility, arranged by JP Morgan, and invested in by OPIC and other high quality investors in pursuit of the Sustainable Development Goals,” commented Gevorg Tarumyan, CFO, Deputy General Director of Ameriabank.
responsAbility Investments AG is the originator and servicer of the loan portfolio. JP Morgan acted as arranger and placement agent. Latham Watkins and Paul Hastings acted as legal advisors to JPMorgan and responsAbility Investments AG respectively.
responsAbility Investments AG
+41 44 403 0553
stephanie.bilo [at] responsability.com
+44 207 742 7994
rebecca.hooper [at] jpmorgan.com
+1 (202) 357-3976
Laura.Allen [at] opic.gov
About responsAbility Investments (www.responsability.com)
A leading asset manager for impact investments in emerging economies, responsAbility manages USD 3 billion of assets through a range of investment vehicles that provide private debt and private equity to some 540 companies with inclusive business models across 90 countries. Founded in 2003, the company is headquartered in Zurich, Switzerland, and has local offices in Bangkok, Geneva, Hong Kong, Lima, Luxembourg, Mumbai, Nairobi, Oslo and Paris.
About J.P. Morgan’s Corporate & Investment Bank (www.jpmorgan.com)
J.P. Morgan’s Corporate & Investment Bank is a global leader across banking, markets and investor services. The world’s most important corporations, governments and institutions entrust us with their business in more than 100 countries. With $24 trillion of assets under custody and $444 billion in deposits, the Corporate & Investment Bank provides strategic advice, raises capital, manages risk and extends liquidity in markets around the world. Further information about J.P. Morgan is available at www.jpmorgan.com.
About OPIC (www.opic.gov)
The Overseas Private Investment Corporation (OPIC) is a self-sustaining U.S. Government agency that helps American businesses invest in emerging markets. Established in 1971, OPIC provides businesses with the tools to manage the risks associated with foreign direct investment, fosters economic development in emerging market countries, and advances U.S. foreign policy and national security priorities. OPIC helps American businesses gain footholds in new markets, catalyzes new revenues and contributes to jobs and growth opportunities both at home and abroad. OPIC fulfills its mission by providing businesses with financing, political risk insurance, advocacy and by partnering with private equity fund managers.
OPIC services are available to new and expanding businesses planning to invest in more than 160 countries worldwide. Because OPIC charges market-based fees for its products, it operates on a self-sustaining basis at no net cost to taxpayers. All OPIC projects must adhere to best international practices and cannot cause job loss in the United States.
About Alecta (www.alecta.se)
Alecta manages occupational pension plans for 2.5 million white collar employees and 35,000 businesses in the private sector in Sweden. Alecta is a mutual company, with the mission from the clients and owners to ensure that the occupational pension grows, while working to ensure that more people can benefit from the security which an occupational pension provides.
About Calvert Impact Capital (www.calvertimpactcapital.org)
Calvert Impact Capital invests to create a more equitable and sustainable world. Through their products and services, they raise capital from individual and institutional investors to finance intermediaries and funds that are investing in communities left out of traditional capital markets. During their 24-year history, they have mobilized over $2.5 billion of investor capital. Learn more at www.calvertimpactcapital.org.
About ZAIS Group (www.zaisgroup.com)
ZAIS is an investment advisory and asset management firm focused on specialized credit strategies with over USD 6 billion of assets under management. Based in Holmdel New Jersey, with operations in London, Zais has over 20 years experience in the corporate and asset backed credit markets in addition to a dedicated ESG investment team. The firm is a signatory to the UN PRI.