Landmark transaction in development investments: responsAbility-managed funds take over part of FMO’s subordinated debt portfolio and invests USD 67.4 m in 9 financial institutions operating across 14 developing countries
The Hague/Zurich, 30 August 2016 – The Dutch development bank FMO has sold a portion of its subordinated debt portfolio amounting to USD 67.4 million to three investment vehicles managed by Swiss-based asset manager responsAbility Investments AG. The portion of the portfolio comprises transactions with nine financial institutions active across 14 developing and emerging countries which predominantly serve small to mid-sized enterprises.
Through the participation agreement signed in July 2016 the three investment vehicles obtain rights to cash flow in nine existing subordinated debt deals with FMO. While FMO remains the Lender of Record to the institutions and continues to manage the portfolio, the three funds under responsAbility management take over the underlying risks for a fraction ranging from 35% to 60% of FMO’s outstanding debt to those institutions.
Faced with regulatory changes under Basel III which make it more expensive to keep sub-debt deals on the bank’s own books, FMO wanted to create a precedent for a significant secondary transaction.
As Ruhi Cosgun, Manager Financial Institutions FMO, underlined: “This transaction evidences FMO’s capacity to source good deals that FMO can syndicate out via a secondary sale to other institutions. In addition, it contributes significantly to our target of catalyzing investments from commercial parties in our focus markets.”
For the responsAbility-managed funds, this landmark transaction offers an opportunity to invest a substantial amount at once in attractive assets, some of them new to the asset manager’s already substantial portfolio of financial institutions, while at the same time increasing the funds’ sub-debt exposure.
According to Martin Heimes, Head Financial Institutions Debt Financing, “This deal shows the increasing capacity of private asset managers like responsAbility to take up large transactions. This secondary sale is a primary example for the increasing maturity of development investments in the financial sector.”
responsAbility currently manages a total of 12 investment vehicles in the development investment area, many of them focusing on financial institutions in developing countries. By providing debt and equity financing to banks and microfinance organisations, the investment vehicles support the creation of a functioning and diverse financial sector in the respective markets, a key prerequisite for any development.
FMO The Dutch Development Bank
Senior Communications Officer (PR)
T: +31 70 314 9928
M: +31 6 11589127
E: p.hartogsveld [at] fmo.nl
responsAbility Investments AG
T: +41 44 250 67 15
E: ulli.janett [at] responsAbility.com ( )
About responsAbility Investments AG
responsAbility Investments AG is one of the world’s leading asset managers in the field of development investments and offers professionally managed investment solutions to both private and institutional investors. The company supplies debt and equity financing to non-listed firms in emerging economies and developing countries. Through their activities, these firms help to meet the basic needs of broad sections of the population and to drive economic development – leading to greater prosperity in the long term.
responsAbility currently has USD 3.2 billion of assets under management invested in over 550 companies in 96 countries. Founded in 2003, the company is headquartered in Zurich and has local offices in Bangkok, Hong Kong, Lima, Luxembourg, Mumbai, Nairobi, Oslo and Paris. Its shareholders include a number of reputable institutions in the Swiss financial market and its own employees. responsAbility is regulated by the Swiss Financial Market Supervisory Authority FINMA.
FMO is the Dutch development bank. As a leading impact investor FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development, and has a 45-year proven track record of empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food & water. With a committed portfolio of EUR 9.3 billion spanning over 85 countries, FMO is one of the larger bilateral private sector developments banks globally.