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James K.

Addo

July 2012

Definition
Impact Investment represents an emerging and fast evolving sector that that blends traditional development and risk capital investment. SNV has practiced impact investment advisory work for over 4 years mainly in Africa but across Asia and Latin America as well. More recently we ramped up the strategy to incorporate a newly articulated integrated value proposition. IIAS targets both the buy side, where we originate and present opportunities to asset holders of blended-mission risk capital, and on the sell side of the investment matrix, where we engage in make-ready capability development of eligible small holders and entrepreneurs. Our primary focus is and has been to delivery of capability and relevant patient investment capital to our core constituency small holders, SME and entrepreneurs along the whole value chain.

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Our Objectives
1. Promote resilient livelihoods and shared prosperity for BoP through capability development and job creation 2. Prepare (graduate) SMEs to make them investment-ready

3.

Execute investment facilitation through


partnerships

4.

Capture best practice to maintain knowledge leadership

Our History

4-year history

Three phases starting 2008

I.

Preliminary Exploration 2-year Duration (ESA


Pilot)

I.

Assessment/Re-strategizing 1-year Duration


Integrated Strategy In progress

II.

What We Offer

SNV Advisory work focuses on:

Pre-investment services:
Supply-side sourcing, Due diligence and Coordination

Capability Development
Management, Operational and Group Cohesion

Post-investment services:
Demand-side advisory & Technical Assistance Support

Who We Work With: Partnerships


Investment Advisory Practice: Investment Facilitation

Target eligible funds

Develop Relationships with fund managers

Negotiate & Sign MOUs for to provide TA services & facilitation*

Map out potential eligible enterprises

Provide preinvestment make-ready services to enterprises

Execute Investment Facilitation Service

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Who We Work With: - Clients


Investment Advisory Practice Graduation & Capability Development
Identify and analyze via region and market, specific opportunities, based on investing partner risk profile and social impact requirements.

Opportunity Mapping Needs Assessment Capability Development

Conduct SME client needs assessment based to determine potential impact on client and members as well as investing partners return criteria

Analyze, propose mitigation and hedging of identified potential risks via provision core technical assistance to SME Clients

Impact Investing

Deal Structuring Quality Assurance Impact Measurement

Advice on the optimal investment approach and structure to optimize financial and social returns for client and partner

Support enterprises to maximize growth and accelerate social impact while minimizing risks and improving quality

Develop objective, evidence-based social and financial impact assessments of projects and entire program
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What is our Record


Total Partnership $: US$910MM

Partnerships and Capital Raise Mandates to date


Africa Latin America US$460 US$450

Sustainability
Optimized upfront fee structure Long term value-driven compensation (typically 3-5 years) Leverage of multiple services across SNV offerings

What Have we Learnt


Utilization of local capability trainers and consultants:
Highly trained, local professionals are not always present Availability of regional expertise essential

Standardization of investment criteria challenge


Matching SMEs to investor preferences: e.g. size of (agriculture )

businesses suitable for funding are often smaller than the threshold
of most fund managers and investors

Facilitation of investment alone is not enough


Need for concurrent provision of capability development services

Scaling-up
In fragmented sub-sectors such as honey, innovation is needed to achieve scale

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Collaboration options: Support for SMEs in Strategic Sectors

1. RENEWABLE ENERGY:
Waste-to-Energy Mini Hydro Projects Bio Gas Retrofitting & Carbon Capture

2. AGRICULTURE
Agro processing Livestock Processing Viticulture/Horticulture

CASE STUDIES

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Case Study: Graduation of Honey Company


Mozambique Honey Company
Processing, packing and marketing of honey

The company

Created from a partnership between V&M Grain (agroprocessing) and Eco-MICAIA (social enterprise)

Supports capacity building of small holder beekeepers


(technical training, technology, access to markets) Beekeepers organized to shareholders

Sustainability:
environmental impact through modernization (end of burning of grass)

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Case Study: Graduation of Honey

SNV Support

TA & Business Support by SNV in 2009


SNV member of steering committee Intervention in the middle of the value chain:
Business plan development (won 2010 national Bid Network Nature challenge)

Finance brokering
Value chain analysis Producer group strengthening Support to PR and marketing Trust building between partners Facilitating a fair model for producer relations Engaging LCBs to train Bee Promoters Building capacity of associations and supporting their legalization
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Case Study: Graduation of Honey

Investment

US$ 250,000 through Beira Agriculture Development Corridor Equity Aim: modernize equipment Challenges:
High cost of procuring to assure quality control: hard to scale To maintain quality producers need training: requires grant funding

Expected Impact:
Expected outreach from 3,000 to 10,000 small holders in 3 years
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More Information
See SNV ESA Handbook
https://intranet.snvworld.org/Library/Knowledge%20Library/IIAS%

20guidebook%20Toolkit%20B5.pdf

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Thank you

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