World Vision - Small and Growing Business (SGB) Fund

World Vision Canada ○

Offering Description

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Investing in the Missing Middle:

World Vision and our microfinance arm, Vision Fund International (VFI), have been providing microloans (up to $5,000) to families and small business in the developing world since 2003. We have a strong track record of success with over 1.4 million loans issued and a 97.4% repayment rate. Small businesses have limited access to capital beyond what's available from micro financing organizations making it incredibly difficult to grow.

Small and Growing Businesses (SGBs) in developing countries are key drivers of equitable economic growth and social development. They are growth-oriented businesses that employ between 5 and 250 people. They create stable, formal sector employment in local communities and catalyze local value chains. They give women and youth the chance to earn fair wages and seize new opportunities. What’s more is that SGBs deliver vital goods and services to their communities. When SGBs thrive, they help emerging economies achieve their long-term development goals, reduce poverty and inequality, and play a major role in transforming lives. However, although they are vital to the health and strength of emerging economies, there is a critical lack of financing and credit available to them. In fact, the total unmet capital need of SGBs in these countries is estimated at $2 trillion USD.

The World Vision Small and Growing Business Fund gives investors the opportunity to support entrepreneurs with powerful tools for growth, to empower economic equality and strengthen economies in developing countries. It’s an opportunity to make a unique social impact while earning a return on your investment.

Investment Highlights

Investment:
A blended finance fund that is raising a total of $16 million in private debt with an additional $4 million to be funded by World Vision’s philanthropic capital over the next three years. Their initial target is $1.5 million dollars by Sept, 2019 with a 3 year term and a 3% interest rate. Vision Fund International (VFI) is committed to making all interest payments and principle payments regardless of the performance of the portfolio. 

Use of Proceeds:
World Vision Canada will be using the SGB Fund to support entrepreneurs in developing countries in the scaling of their business, providing both loan capital and expert business management support. The aim is to disburse loans of $5,000 to $25,000 to entrepreneurs in an effort to support them with tools for growth, empower economic equality and to strengthen economies of developing countries. The SGB Fund is currently operational in Sri Lanka, Ghana, Mexico, and Myanmar, with future expansion planned to Honduras, Tanzania, Uganda, Zambia, Rwanda, Philippines and Guatemala.

Investment Structure:
World Vision's offering is structured as an unsecured debt offering.

Investment Opportunity:
The World Vision SGB fund is a 3 year security with an annual 3% interest rate paid annually. Although it isn't secured, Vision Fund Internation is fully backing this investment to reduce the risk to investors. 

 

Please note that this is not a complete investment summary. Investors should read all associated documentation including the investor package and associated securities agreements before considering or making any investment. Please contact us via email at info@svx.ca or fill in the Ask a Question box for more information.

Use of Funds

Investing in the the 'Missing Middle'
Many emerging market economies are primarily comprised of two distinct segments: a large number of very small firms, and small number of very large firms. What is missing is the vibrant segment of small and medium enterprises that spur local growth and development. This is what is referred to as the ‘Missing Middle’.

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Key Factor: Lack of Capital
SGBs are generally perceived as high-risk by banks and commercial lenders due to their lack of formalization and recordkeeping, poor credit reporting infrastructure, and the high costs of due diligence relative to loan size. At the same time, their credit needs are generally too large to be met by microfinance loans. As a result, without targeted interventions, these small firms are destined to remain small and not achieve their full potential for growth.

Funding and Business Support Provided
Alongside loans of $5,000-$25,000 World Vision SGB will also be providing One-on-One coaching as well Technical Assistance*. 

One-on-One Coaching
Personalized coaching is comprised of tailored business development and financing modules, designed to provide SGB clients with a better understanding of their customers, their value proposition, costs, pricing, revenue and more. One-on-one coaching takes place during monthly meetings between the entrepreneur and the client relationship manager.

Technical Assistance
Based on their specific needs, clients will be connected to other sources of training that are unique to their particular value chain. For example, if a client needs to learn more about drying fish or building boats, or requires a new technology that adds value to their business, specialized training will be provided.

*Funding for the business support will be raised through World Vision philanthropic sources. 

Results to Date

Disbursements of the SGB Fund began in Sri Lanka in the first quarter of 2016, in Ghana and Mexico in the last quarter of 2016, and in Myanmar in the first quarter of 2018.

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Impact Narrative

Investment in SGBs has a far-reaching, meaningful financial and social impact. With stronger, more profitable businesses, more sustainable opportunities can then be nurtured, resulting in more equitable income-earning jobs, and additional opportunities for suppliers. More people are moved across the poverty line as economic prosperities increase, goods can reach more remote areas and communities can flourish.

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Risks

All private securities listed through online investment platforms and Exempt Market Dealers (EMDs) like SVX are likely to carry more risk than those available on the public markets. Our goal is to make you aware of those risks before making an investment. For further details on the risks in the private markets, refer to the SVX Risks section. Some of the offering specific risks are identified below:

Liquidity Risk: The SGB Fund is an illiquid investment, with investors receiving investment payout after the 3 year term set out.

Default Risk: Due to the majority of SGB Fund operating in developing countries, higher default risks may be prevalent in the underlying assets. Default risk for the investor into the SGB is low based on the track record and backing of VFI.

Foreign Market Risk: Nationalization, expropriation, confiscatory taxation or political changes within the market that SGB Fund operates in could adversely affect this investment. 

Inflation Risk: Inflation in the portfolio companies is high, and can change quickly based on social/political/environmental challenges.

Underlying Asset Risk: The success of the SGB Fund is directly related to the success of the underlying investments. VFI currently has a repayment rate of 97.4% demonstrating a strong track record in the countries SGB will operate. 

Political Risk: The SGB Fund tends to operate in markets with greater political volatility. Swings in political climate can affect the economic status of the country of operations, as well as loan repayment frequency.

Currency Exchange Risk: Loan repayment amount may depend on the currency exchange rate between local currency and CAD. Loss of capital can occur due to consistent funds exchanged

Management Team

Josh  Folkema

Josh Folkema

Investment Solutions Manager

Josh Folkema is Investment Solutions Manager and has been with World Vision Canada since 2008. He holds a degree in geological engineering, a masters in environmental studies, and an executive certificate in investment appraisal and risk analysis. He has more than 13 years, experience working in over forty emerging-market contexts, building cross-sector market-based solutions in agriculture, carbon finance, and small-business development.

Chris  Rowlands

Chris Rowlands

Social Entrepreneurship & Economic Development Unit Manager

Chris leads VisionFund International's Small and Growing Business(SGB) program. He has over 15 years of combined banking, business and international development experience. Chris spent almost 10 years at World Vision Australia, most recently leading the Social Entrepreneurship and Economic Development (SEED) Unit; a team of specialist consultants in the fields of agribusiness, micro and small enterprise, small holder agriculture value chains, and youth employment.

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Raised Of $1,500,000.00 Goal*

Days Remaining 286
Hours 10
Mins 05
$0.00
 
Debentures Offer. Structure
3% Valuation
3 Years Term
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*Capital raised figures include amounts raised both on and off platform. Amounts raised off platform or committed have not been independently verified by SVX.