news - Landmark transaction in development investments

FMO, the Dutch development bank, has sold a portion of its sub-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 sub-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.

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’s investment vehicles supply debt and equity financing to predominantly 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 that is invested in around 552 companies in 96 countries. Founded in 2003, the company is headquartered in Zurich and has local offices in Bangkok, Geneva, Hong Kong, Lima, Luxembourg, Mumbai, Nairobi, Oslo and Paris. Its shareholders include a number of reputable institutions in the Swiss financial market as well as its own employees. responsAbility is registered with the Swiss Financial Market Supervisory Authority FINMA.For more information please visit www.responsAbility.com.

About FMO

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. For more information please visit www.fmo.nl.

Press contacts:

Disclaimer: This information material was produced by responsAbility Investments AG and/or its affiliates with the greatest of care and to the best of its knowledge and belief. However, responsAbility Investments AG provides no guarantee with regard to its content and completeness and does not accept any liability for losses which might arise from making use of this information. The opinions expressed in this information material are those of responsAbility Investments AG at the time of writing and are subject to change at any time without notice. If nothing is indicated to the contrary, all figures are unaudited. This information material is provided for information purposes only and is for the exclusive use of the recipient. It does not constitute an offer or a recommendation to buy or sell financial instruments or services and does not release the recipient from exercising his/her own judgment. The recipient is in particular recommended to check that the information provided is in line with his/her own circumstances with regard to any legal, regulatory, tax or other consequences, if necessary with the help of a professional advisor. This information material may not be reproduced either in part or in full without the written permission of responsibility. It is expressly not intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law. Neither this information material nor any copy thereof may be sent, taken into or distributed in the United States or to any U. S. person. Every investment involves risk, especially with regard to fluctuations in value and return. Investments in foreign currencies involve the additional risk that the foreign currency might lose value against the investor's reference currency. It should be noted that historical returns and financial market scenarios are no guarantee of future performance.

Copyright © 2016 responsAbility Investments AG. All rights reserved.