Your SlideShare is downloading. ×
Holger Rothenbusch
Upcoming SlideShare
Loading in...5

Thanks for flagging this SlideShare!

Oops! An error has occurred.

Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Holger Rothenbusch


Published on

Published in: Career
  • Be the first to comment

  • Be the first to like this

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

No notes for slide
  • DFIs and SRI-/Philantropic Investors share several goals Common responsibility to achieve Millenium Development Goals Focus on sustainable business creation in terms of ESG-issues Top-5 countries for SRI in EM: Brazil, China, India, Mexico, South Africa DFIs and SRI-Investors have a similar investment universe. Some cooperations with private and philantropic investors and NGOs already in place Innovative finance together with SRI- and philantropic investors as a model for modern development cooperation DEG Competence in SRI-related sectors: Agriculture, Financial Sector, Infrastructure etc. Country specific knowledge: Investment climate, transparency, lender in times of crisis Additionality Active management and reporting of projects creates added value Own Corporate-Policy Project Rating Tool GPR: comprises financial, environmental, social and governance criteria as well as development indicators KfW Entwicklungsbank Experience with high volume management Competence in SRI-related sectors: Infrastructure, Health, Financial Sector etc. Country specific knowledge and political contacts Impact on general framework
  • DEG´s competence: Business relationships and contacts with a significant number of private banks in developing countries - DEG´s strong knowhow and long experience in working with banks as a major asset
  • DEG´s competence: Large SME network in developing countries ensures acces to target group and region Signalling effects due to DEG´s parallel investment DEG´s strong sector knowhow allows for focussing on climate protection, health care, eduction, agriculture
  • Transcript

    • 1. Nobody Likes to Hug a Tractor TBLI Conference Europe 2010 12 November 2010 Holger Rothenbusch Senior Vice President DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH
    • 2. DEG at a glance
      • Mandate and working method
      • German development finance institution for the private sector
      • Specialist for entrepreneurial development in all sectors
      • Long-term investment capital for private enterprises
      • Financing of investments with a positive developmental impact
      • Market-oriented conditions
      • Ecological and social standards according to international guidelines
      • Contributions to sustainable economic growth and poverty reduction
    • 3. What´s the challenge? FX effects Africa Climate change Globalization/ outscorcing Environment Tax effects Social effects / CSR Infra- structure small and medium enterprise Market effects Equity Financial Return / RAROC Training Support of European Investors HIV/ Aids Health & Safety gender ILO-Stand./ child labor Employment & Poverty Reduction / MDG Motivated by the mission challenges, DEG has developed a rating approach to cover financial and non-financial issues that are of concern to our stakeholders
    • 4.  
    • 5. DEG´s rating approach - What do we measure? 2. Development effects/ sustainability
      • eg. tax revenue, jobs, training, ES-standards, CSR
      3. Role of DEG
      • eg. long-term debt/ equity financier (additionality ), promotor of Corporate Governance
      1. Long-term profitability/ default probability
      • eg. Rating of sponsors, market, financial ratios, country risk
      Rating Tool
      • r isik-adjusted return
      4. DEG´s return on equity
    • 6. Development effects - What do we measure?
    • 7. Socially Responsible Investments Assets under Management World & regional 38% 2.500 bn EUR 6% 400 bn EUR 4% 230 bn EUR 52% 3.400 bn EUR USA Developed Asia /Oceania EM Western Europe SRI GLOBAL : 6.530 bn EUR*
      • About 230 billion Euro are already invested in accordance with ESG-criteria. Growth up to 40 % p.a.
      • Assets under Management (AuM), own estimation based on Eurosif, Booz & Company, IFC/Mercer. Data and definitions are heterogeneous.
    • 8. SRI Products Products: 50% is invested in equity, growing role of investment funds; mostly negative/positive selection investment approaches. Need for actively managed portfolios instead of pure negative-screening! Themes: Sustainability in general, „Climate Change“/ Renewables, Water, Health In Emerging Markets: Microfinance is Sexy! … but, no one likes to hug a tractor Equity (Public) 50% Bonds 39% Other 11%
    • 9. 100 SME Financing One of DEG´s core strategic priorities is to promote financing to the SME sector Quelle: Thierry Sanders and Carolien Wegener. 2006. “Meso-Finance: Filling the Financial Service Gap for Small Businesses in Developing Countries.” NCDO. Die Grafik wurde leicht angepasst.
    • 10. SME Financing Growth initiative for small and medium-sized enterprises
      • Aim:
      • Provide SMEs in developing countries with risk capital and long-term investment capital at matching maturities
      • Mobilise additional private capital from external sources in the finance sector (crowding in) for SME financing
      • Target commitment volume by 2011: EUR 1 billion
      • Development and implementation of innovative financial instruments for SME financing
      Development constraint: Shortage of long-term finance and risk capital for small and medium-sized enterprises (SMEs) in developing countries
      • Implementation:
      • Direct SME financing in manufacturing/services and infrastructure
      • Indirect SME financing via financial institutions or private equity funds, complementary allocation of funds for accompanying measures
    • 11. SME Financing Innovative Instrument: SME Credit Finance Facility
      • Financing bottleneck I: Lack of long-term finance via local banks
      • Reason:
      • The root of the „missing middle“ is the lack of profitability of SME lending.
      •  demand for refinancing SME loans
      • DEG´s solution:
      • - Separation of credit risks and bank risks
      • - Improve underwriting standards
      • - Transfer of credit risks from SME financing to a fund, which acts as „SME promotion institute“
      • - raise private capital from SRI related investors at lower cost of capital
      100 45 41 35 -21 Components of net profitability in SME lending* * Source: Central and Eastern European Banking Study 2009 published by zeb/; page 19
    • 12.
      • Financial bottleneck II: Lack of Risk Capital
      Indirect SME Financing Innovative Instruments: Equity Finance Facility
      • Reason:
      • Small investment size and less institutional setup of SME lead to relatively high costs.
      • Difficulty of obtaining sufficient and good quality data about SME in emerging markets makes investment decisions more uncertain.
      • Owner-managed businesses with information asymmetry and misalignment among shareholders increase potential conflicts of interest.
      • The risk-return-ratio in SME financing is relatively unsatisfying compared to other emerging markets investment opportunities.
      • DEG´s solution:
      • Founding of a structured fund of funds for SME equity funds
      • First-loss tranche by German government to compensate for increased risk and attract private SRI investors
      • DEG acts as a co-investor with the fund of funds and investment advisor
      • implementation of ESG standards according to international criteria.
    • 13. Get in touch!
      • Holger Rothenbusch
      • DEG – Deutsche Investitions- und
      • Entwicklungsgesellschaft mbH
      • Kämmergasse 22
      • 50676 Köln
      • Germany
      • Phone: ++49 (0) 2 21 / 49 86 - 1372 E-mail:
      • Telefax: ++49 (0) 2 21 / 49 86 - 1290 Internet: