Agenda item

Presentation relating to your investment in the Small Enterprise Impact Investment Fund (SEIIF) – to follow.

Vincent Dufresne (Head of Asset Management, Symbiotics), Fabio Sofia (Head of Investor Relations, Symbiotics) and Nicholas Colloff (Director of Innovation, Oxfam) were welcomed to the meeting.  The Chairman then invited them to provide the Board with an overview of the Small Enterprise Impact Investment Fund (SEIIF), which emerged from work led by Oxfam, with support from the City of London Corporation, to strengthen economic development in low income countries by focussing on the provision of affordable credit to small and medium sized enterprises to generate positive social returns as well as financial returns for investors.   

Vincent Dufresne and Fabio Sofia commented on Symbiotics’ current microfinance funding activities, the status of the investment portfolio in 2012/13, fund management and investor arrangements for the Small Enterprise Impact Investment Fund (SEIIF); and anticipated funding targets by July 2014.  In respect of future investment opportunities, it was noted that further investments in South America and Sub-Saharan Africa were being considered.

Members were advised that all SEIIF investees were required to gather impact information to ensure that Symbiotics could assess overall benefit for end clients and provide investors with collated data on the impact of the fund portfolio.  Clarification was provided in respect of monitoring methods used, including data point collation, semi-annual reporting and Portfolio Analysis (static/dynamic).  Members were advised that, in some instances, it was difficult to generate information as certain investees did not have suitable systems or processes in place.  Consequently, Symbiotics was working closely with Oxfam who provide investees with technical assistance, to improve impact reporting arrangements.  Whilst this was a challenging issue, it was felt that over time, there would be much improved assessments of impact for all end-clients. 

In respect of future activities, Members were advised about the opening of a Symbiotics office in London in August 2013 and further business development with Oxfam around the provision of technical support and assistance in respect of impact measurement and data collation systems, which was cutting-edge.

At the conclusion of the presentation the Board was invited to ask questions. 

The Chairman sought clarification regarding investment exit routes and the agreed policy of recovery in the event that a loan could not be repaid.  He was advised that investors were, through fixed investments, tied for 36 months but thereafter they could have their finances returned or reinvested.  In respect of equity investments, the commitment was far greater (in excess of 7 years) due to the complexity of the investments.  In respect of the policy on recovery, Vincent Dufresne advised that due diligence was undertaken by personnel at Symbiotics through visits and comprehensive reviews of financial data.  On the basis of those investigations and credit risk assessments, the Investment Committee would then take a view on the institution’s potential to repay a loan after 36 months.  Close monitoring would also be undertaken throughout the lifetime of the loan, however it was noted that there remained a risk of default.

In respect of the investment pipeline and a query about the possibility of making investment commitments before the necessary funding had been raised, Members were advised that the capital held in other Symbiotic funds could not be used to invest in SEIIF opportunities so consequently these could only be progressed once funding had been raised.

In response to a query regarding an anticipated FSA ban on certain specialised funds and the possibility of having to convert the SEIIF to a regulated fund (i.e. for retail clients), Fabio Sofia explained that the fund required better liquidity and it remained suitable for qualified investors only so the fund would not be moved to retail in the future.

The Chief Grants Officer, Clare Thomas sought further clarification regarding the current impact measurements that were used, in particular the 22 data points per end-client and the range of metrics.  Nicholas Colloff explained that two sets of metrics were used – (i) core and (ii) wider (for those SME’s that were expected to grow).  In respect of the core metric, this included an assessment of whether the business was developing, who owns the business and who benefits in terms of employment creation; and payment levels.  The Board acknowledged that excessive metrics created resistance and that the current approach not only encouraged institutions to use data to create effective business plans but also ensured that impact remained integral to making business decisions.     

Following a query regarding whether Symbiotics would create financial intermediaries if they were not already in place, Members were advised that institutions should already exist to effectively manage initiatives on the ground and that this was not the purpose of the fund.  They were further advised that it was very important to utilise local expertise and capacity through established local intermediaries who were best positioned to work with clients.

The Board welcomed the opening of the London office and asked for further information to be provided to ensure that the City Corporation could assist practically, if possible, but also to maximise Symbiotics’ profile. 

The Board thanked the representatives from Symbiotics and Oxfam for attending the meeting.