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Oxfam launches its first investment fund

Finance | Vibeka Mair | 24 Jan 2012

Oxfam has launched an investment fund, with social and financial returns, which will target small and medium companies in developing countries by investing in local financial intermediaries which focus on small enterprise development.

The fund, called the Small Enterprise Impact Investment Fund (SEIIF) is a joint initiative between Oxfam and asset management group Symbiotics, which already manages $200m in 24 microfinance funds.  It will target small and medium enterprises in developing countries, and give investors both measurable social impacts and financial returns. Investors are being sought for the fund.

An Oxfam spokeswoman said: “There are huge numbers of small businesses in Africa and Asia stifled by underfunding and limited access to credit, despite being recognised as a critical engine of growth in many economies.

“This sector is not being met by the existing microfinance asset class, so the SEIIF will target this financing gap by investing in a variety of local financial intermediaries which focus on small enterprise development.”

Oxfam will take an ‘impact adviser’ role for the Fund, and use its local knowledge and development experience to offer independent intelligence on the impact of investee activities. Its primary focus will be activities which build women’s empowerment, job creation and food security in low-income economies. The fund aims to directly create 100,000 good quality jobs in its first five years.

The target size of SEIIF is $100m after three years, which will be invested in a portfolio of debt and equity instruments, targeting those with low-risk, high-impact profiles.

Roland Domincé, chief executive of Symbiotics, said the SEIFF will seek low risks through high diversification and clear exits.

The fund will have targeted returns of 5 per cent with capital preservation. Initially, investors will be locked in for five years, and get quarterly redemptions thereafter. The management fee will be 1.5 per cent, and will be split between Symbiotics and Oxfam.

Barbara Stocking, chief executive of Oxfam, added: “Impact investing is still a relatively new concept for both financial markets and the development community. Oxfam has long talked about the role the investment industry could play in poverty eradication, but now we’ve decided to prove it.

"As well as providing capital to an under-served market, the SEIFF’s biggest job will be demonstrating success and leading the way for a new wave of impact investment centred on SMEs in developing economies – helping them become an asset class in their own right.”

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Directory: Oxfam