February 4, 2020

2020 Outlook | 2019 Reflections

Impact Investing: A Rapidly Evolving Market

The impact market continues to evolve at a rapid pace as investor interest has grown and we expect this trend to continue. Greater enthusiasm for impact has also created stronger demand for data that substantiates an investment’s contribution to the common good to avoid “green washing”. In spite of this rapidly changing dynamic, MicroVest remains focused on our disciplined approach to allocating private capital to promote financial inclusion and improve economic opportunity in emerging and frontier markets.  We share notable highlights from 2019 below. 

72

Institutions Financed

34

Countries Invested

10.8m

End Borrowers Served

48%

Female End Borrowers Served

37%

Rural Borrowers Served

80%

Productive Loans

In addition to generating social impact as summarized above, MicroVest funds delivered performance in line with their target net return ranges over the last year- and for one private credit strategy, 2019 is likely to be the best in the trailing 5 years. As part of our disciplined approach and focus on risk management, the investment team conducted field due diligence and monitoring on 39 portfolio companies in 15 countries while completing disbursements of $146 million which is the largest annual dollar volume of private debt capital allocated in MicroVest’s history. Disbursements were made to 31 different Responsible Financial Institutions or “RFIs” in 19 emerging and frontier markets to foster economic opportunity in some of the world’s most vulnerable populations. In addition, MicroVest maintains a strong pipeline of approximately $600 million in future investments that have been vetted through our rigorous due diligence efforts.  

Gearing Up for the Next Phase of Growth

In December, Ron Cordes, a long time board member, co-founder of our shareholder the Cordes Foundation and 30-year veteran of the investment industry, was appointed Chairman of the Board.  Ron succeeds Bo Cutter, who co-founded MicroVest in 2003 and who has served as Chair since the firm’s founding. Mr. Cutter was named Chairman Emeritus. 

Mr. Cutter originally conceived of the idea for MicroVest as a second-tier lender to RFIs following a visit to a microfinance operation in Peru as a CARE USA Board member. Under Mr. Cutter’s leadership as Chairman, MicroVest was able to build and scale a world class investment platform and provide the opportunity for investors to align their money with their values. MicroVest is grateful and appreciative of Mr. Cutter’s leadership and commitment to the firm since its founding. 

We expect MicroVest’s next phase of growth will be driven by increasing institutional investor interest in impact. Mr. Cordes, who co-founded AssetMark, a leading US wealth management services firm with more than $50 billion in AUM and served as its CEO and Executive Co-Chairman from 1996 to 2016, is well positioned to lead us through this next phase of growth. Mr. Cordes is also a veteran in impact investing, having founded the Cordes Foundation with his wife Marty in 2006 and serves on the Boards of ImpactAssets (which he co-founded), Align Impact, and the Lynn University Social Impact Lab.  Phyllis Caldwell, recently named Vice Chair, now brings to MicroVest over 25 years of experience in housing and community development finance in the corporate, government and nonprofit sectors.  She served at the U.S. Department of Treasury under President Obama where her team was responsible for implementing the Home Affordable Modification Program (HAMP) and other foreclosure prevention initiatives established through the Troubled Asset Relief Program (TARP). Previously, Phyllis was president and CEO of Washington Area Women’s Foundation. She retired from Bank of America in 2007 where she held various executive roles including President of Community Development Banking and led a national team in tax credit investing, community development lending, investments in Community Development Financial Institutions and small business venture funds. She serves on numerous Boards and we are excited to be working with her in her new senior leadership role at MicroVest.

Codifying our Commitment to Pursue a Public Benefit

MicroVest General Partner Holding, LLC converted to a Delaware Statutory Public Benefit LLC (PBLLC), codifying what has been our mission since formation: to create scalable investment opportunities that support enterprising ventures and projects in underserved or underfinanced sectors and communities worldwide. MicroVest is committed to social impact through our investment and risk management approach, as well as, through the culture that we foster as an organization.

Aligning Existing and Future Investments with Market-standard Principles

In the Spring of 2019, MicroVest joined 59 other asset managers, capital owners, and key market participants as one of the first signatories of the IFC’s Operating Principles for Impact Management. We take great pride in our ability to offer investors a unique opportunity to achieve market rate returns by investing in emerging markets and the RFIs that spur financial inclusion across the rising middle-class and under-banked communities. Our Annual Disclosure to the Principles (published in December) outlines how MicroVest’s investment thesis, strategy, objectives, and processes contribute to our achievement of impact. 

Our accomplishments in 2019 would not have been possible without the dedicated individuals who collaborate daily in alignment with our mission, and the confidence of our investors, many of which have been invested with MicroVest since our inception. We look forward to building on this collective success in 2020. 

*At-a-Glance: Institutions Financed and Countries Invested are as of 9/30/2019. Metrics for Active, Female, and Rural Borrowers, as well as Productive Loans are as of 6/30/2019. The metrics included here span all of MicroVest’s funds. 

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