serch

Sustainability | Finance | Real Economies (SFRE) Fund

Enclude-structured, open-ended investment vehicle with first close of over $40 Million


YEARS

First Close, February 2015

CLIENT DESCRIPTION

The Global Alliance for Banking on Values (GABV), founded in 2009, is a growing independent network of financial institutions with a shared mission to use finance to deliver sustainable economic, social and environmental development, including 25 financial institutions in 30 countries and serving 20 million customers with USD 100 billion of combined assets under management.

CLIENT'S OBJECTIVE

Design, structure and raise long-term capital to support a vibrant and growing segment of the financial institutions system. This segment is comprised of sustainable financial institutions committed to funding real economy enterprises and individuals that generate positive social, environmental, and economic outcomes in the communities they serve, while delivering steady financial returns to investors.

Results

BUSINESS RESULTS

Launch of a fully operational Luxembourg domiciled SICAV-SIF umbrella investment company with a perpetual life investing Tier 1 and Tier 2 capital of sustainable financial institutions globally.  A first close was achieved on 12 February 2015, with 21 investors and total commitments of more than $40m. The fund was launched without public funding support.

Successful execution of the transaction resulted in a follow-on contract for Enclude as exclusive placement agent for the next 5 years.

SOCIAL & ENVIRONMENTAL OUTCOMES:

SFRE (pronounced “Sapphire”) will enable sustainability-focused financial institutions (“SFIs”) around the globe to expand in number and grow in scale as key players in building more inclusive and sustainable local economies. These SFIs finance real economy enterprises and entrepreneurs who, in turn, create jobs, produce goods and services, ensure clean water, and promote solar energy and sustainable waste management. SFRE’s portfolio management process will be managed by its CEO and MicroVest Capital Management, LLC, using a proprietary scorecard developed by the GABV to measure and assess the alignment of any bank’s activities with the GABV’s Principles of Sustainable Banking. A triple bottom line approach is at the heart of SFIs’ business models (economic resiliency, environmental regeneration, and social empowerment – prosperity, planet and people).

Activities

Development of the fund’s objectives and initial design of the overall structure

Finalisation of the legal structure and development of the governance structure for the vehicle (in conjunction with legal counsel)

Leading and execution of the search for a CEO for SFRE, as well as for non-executive directors and Investment Committee members

Management of selection process of all third-party service providers (portfolio manager, AIFM, depositary, etc.) through the preparation of complete proposal request procedures and the creation of a framework of criteria to facilitate decision making

Drafting all investor marketing materials as well as fund policies and procedures

Formulation of initial investment strategy and eligibility criteria for financing by the vehicle, including criteria as to adherence to sustainable banking principles

Identification of profile pipeline of potential investees for the development of the financial model

Raising capital, including identifying and approaching investors, managing due diligence, Q&A and documentation processes

Management of successful first closing with continued marketing efforts appropriate for an open-ended investment vehicle

LEARNINGS

Grounding a robust investment strategy in performance data and market opportunity is key for success

Structuring of the capital needs to reflect the purpose of deploying the capital – “what are we solving for”? In this case, SFRE was established as an open-ended global vehicle for growth capital as this is at once the need and the opportunity of a growing segment of banks serving the real economy

Navigating the regulatory environment is important, especially in the context of the newly implemented European Directive for Alternative Investment Managers (“AIFMD”)

Reaching different types of investors is a high-touch process that requires persistence and informed market understanding