IMPACTASSETS 50™

An Annual Showcase of Impact Investment Fund Managers

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An Annual Showcase of Impact Investment Fund Managers

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ImpactAssets 50: A Global Landscape of Impact Investment Fund Managers
The ImpactAssets 50 (IA 50) is the first open-source, publicly published database of experienced private debt and equity impact investment fund managers.
https://www.impactassets.org/impactassets-50

ImpactAssets 50

An Annual Showcase of Impact Investment Fund Managers

IA 50 2013 PROFILE

MicroCredit Enterprises

Total Assets Under Management: $25 – 49M
Asset Class: Private Debt - Absolute Return / Notes
Financial and Economic Inclusion
Microfinance and Low-income Financial Services

Firm Overview

Category: (None)
MicroCredit Enterprises (MCE) leverages the balance sheets of its guarantors to provide capital for small loans to poor women in developing countries via microfinance institutions (MFIs), which act as financial and social intermediaries. Each MicroCredit Enterprises Guarantor provides a minimum $1 million full recourse guarantee to MCE. MCE conservatively borrows 50% of the total value of its guarantees from commercial banks and foundations, using that capital to on-lend to MFIs throughout the developing world. In the event of a loan default, each Guarantor bears the tax-deductible loss on a pro rata basis with all other Guarantors.  MCE launched its guarantee-based lending model in 2005. Its first loan to a microfinance institution was issued in January 2006. Through June 2013, MCE has issued over $63 million in loans, to 57 MFIs in 25 countries. As of June 2013, MCE's pool of guarantees to support its loan portfolio totals $80 million.
Firm Headquarters: United States
Years of Operation: 5 – 9 years
Total Assets Under Management:
$25 – 49M
Total Number of Investors: More than 25
% of Capital from Top 3 Investors: Less than 25%
Investment Thesis:
MicroCredit Enterprises implements an innovative model for leveraging guarantees from individuals, foundations, and corporations to raise private capital for the provision of loans to poor micro-entrepreneurs in developing countries.  MCE creates a pool of guarantees and uses these guarantees to borrow from banks, foundations, and individuals. MCE on-lends the proceeds from these loans to MFIs that have passed MCE's in-house due diligence and have been approved by MCE's Loan Committee. These MFIs then use the capital to issue microloans to the poor micro-entrepreneurs that they serve.  MCE exclusively issues senior term loans to MFIs.  MCE targets MFIs that do not have adequate access to local capital. MCE maintains an emphasis on lending to financially sustainable MFIs that have a strong social mission, including a focus on serving women and individuals living in rural areas, and those that offer non-financial services to their clients, such as health education or business training.
Investment Overview:
(None)

Investment Example

The typical loan from MicroCredit Enterprises has a term of 36 months. Interest payments are scheduled quarterly and principal is typically amortized each 6 months over the last half of the loan. Target loan sizes range from $100,000 to $1,500,000 with an average disbursement of about $500,000. The interest rates for a three year US dollar loan typically range between 7% and 10% depending on the country and credit risk of the MFI. Loans in local currency are priced to give a net yield equal to the previously mentioned dollar equivalent return after paying for the currency hedge. An origination fee of 50 to 100 bps is typically charged on each transaction.  MCE targets small to medium sized MFIs. Historically, MCE's MFI partners have had active borrowers or between 2,360 and 220,314 (median is approximately 15,000) and loan portfolios between $764,000 and $72,078,000 (median is approximately $6,000,000).

Leadership and Team

Cumulative Leadership Experience in Impact Investing:
20 – 29 years
Cumulative Impact Experience of Top Three Firm Leaders:
20 – 29 years
Jonathan Lewis – Founder and Board Chair More Info

Chair, Board of Directors, MicroCredit Enterprises. Founder/Host, Cafe Impact. Founder/President, Opportunity Collaboration. Co-Founder, Copia Global. General Partner, Dev Equity. Member, Board of Directors, Everyone Counts. Former President, Academy for International Health Studies. Recipient, Social Venture Network Innovation Award. Davis, California.
Gary Ford – CEO (Pro Bono) and Board Member More Info

Principal, Groom Law Group. Former ERISA Counsel, U.S. Senate Committee on Labor and Human Resources. Former General Counsel, Pension Benefit Guaranty Corporation. Charter Fellow, American College of Employee Benefits Counsel. Washington, DC.
Pierre Berard – Director Portfolio Management More Info

Former Investment Officer, Grassroots Business Fund / IFC World Bank, Tanzania. Former Lead Finance Consultant,   Hewlett-Packard's outsourcing division, US and Europe. Graduate, SAIS Johns Hopkins University in International Relations and International Economics. San Francisco, California.
Natasha Goldstein – Chief Financial Officer More Info

Former Finance Director, Hot Bread Kitchen.  Founder, LIFT Investments.  Former Management Consultant, ESV Strategies.  Former Financial Analyst, UBS Investment Bank.  Masters in Public Administration, Columbia University’s School of International and Public Affairs.  Bachelors of Commerce degree, Queens University, School of Business.  New York, New York.
Benjamin Stone – Director of Strategy & General Counsel More Info

Vice Chairman of Indego Africa and Term Member on Council on Foreign Relations. Former Director of Start Up and Small Business Development at American Express. Former CEO of Indego Africa. Former Managing Associate at Orrick, Herrington & Sutcliffe LLP. B.A. in English Literature from Washington University in St. Louis, J.D. from New York University School of Law, and certificate from Stanford Graduate School of Business Executive Program in Social Entrepreneurship. New York, New York.

Financial Performance

Target Financial Returns Relative to Benchmark:
Near-market Rates
Actual Performance of Impact Products/Funds Relative to Target Financial Returns in the Past Three Years:
In line with initial target returns
Financial Reporting Frequency to Investors or Donors
Quarterly

Impact Performance

Percentage of Total Assets Under
Management that are Impact Investments:
100%
Primary Impact Outcomes:
Alleviating poverty
Increasing access to financial services
Increasing access to healthcare services and improving health
Value-added Services Offered:
Business and legal training
Financial literacy training
Health services
Education services

Investments systematically target companies where social and/or environmental impact is integral to the product/service being created:
MicroCredit Enterprises lends to MFIs which reflect MCE's social mission. Namely, MCE seeks to invest with MFIs that:
  • Serve a high percentage of deeply-impoverished individuals and families
  • Serve a high percentage of women
  • Extend operations to isolated rural communities
  • Operate or provide linkages to comprehensive social service programs, such as women's empowerment, financial literacy, health education or services, and business training for micro-entrepreneurs
  • Demonstrate a track record of lowering interest rates to impoverished clients   

Investments systematically include social and environmental sustainability practices in the due diligence process:
MCE evaluates and tracks the following social impact data from its borrowers:
  • Percentage of women clients
  • Percentage of rural clients
  • Average loan balance per borrower and what percent that value is of GDP per capita for the respective country 
  • Percentage of clients below the poverty line when available
  • Delivery of social service programs

Impact Tracking and Monitoring

Impact is Tracked:
Yes
Impact Verified by an Independent Third-Party:
Social and/or Environmental Impact is Reported to Investors and Donors:
Yes - on regular basis (annual or quarterly)
Third Party Validations:
GIIRS-rated fund
B-Corp certified firm
Participant in Global Reporting Initiative
Signatory of the United Principles for Responsible Investing
Member of Impact Capital Managers
Impact Frontiers Cohort Participant
Implement recommendations from Task Force on Climate Related-Financial Disclosure
Net Zero Assets Managers Initiative
Utilizes standardized impact metrics (e.g. IRIS+, GIIRS, etc.)
Listed on ImpactBase
Participant on steering committees or leadership roles within impact industry associations
Publisher or contributor to industry white paper or other research in impact investing
Participant in the Impact Management Project
Signatory of the Operating Principles for Impact Management

Learn More

Key Contact Name: Kevin Carnahan
Phone: (415) 676-9233
Website: https://www.mcesocap.org/
Mailing Address:
5758 Geary Blvd #261
San Francisco, CA 94121

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