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Hartzler

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Hartzler

  1. 1. Impact Investment Portfolio Analysis55% RE and RE Backed (21% impact) 45% Securities (16% impact) Target = 25% impact by 2012 50%+ impact by 2020 First Impact Investment - 2004
  2. 2. International Microfinance• Microfinance – Global Diversified Fund – MicroVest Fund 1, LP - www.microvestfund.com • Debt/Equity Fund (80/20) – Founding Investor • 10% annual IRR since 2004 – 10 year closed end fund • Additional CD investment, pays 3-4% – MicroVest II LP • Equity Fund, 2009, target 10+% – MicroVest Short Duration Fund • Target 2% – Investment Committee / Board Seat• Microfinance – Direct Investment in MFI – Micredito – Nicaragua – www.meda.org • Direct Loan to MEDA sponsored MFI • 6% annual pay since 2005 • Short term bridge loan, 9% (repaid) • Board Observer – AMSA – Argentina • Preferred Stock • Under/non performing
  3. 3. International Private Equity• Emerging Market Private Equity Fund of Funds – Sarona Frontier Market Fund, LP – www.saronafund.com • Founding Investor • Target Return 12-15% • Diversified, Global, Target companies that focus on demand of the rising lower/middle class • Sector and/or Geographic focus • Agriculture, Water, Health Care, Renewable Energy, Low Income Housing • Board Chair – Assist in Due Diligence Process• Emerging Market Private Equity Fund – Sarona Risk Capital Fund – www.meda.org • Global, Opportunistic Fund • Provides seed capital for start-up of Impact Investment initiatives • Latin America, Eastern Europe • 8% return since 2007• Individual Investments – Via Mennonite Economic Development Associates, managed by Sarona Asset Management • Paraguay – Starch Processing Company; loan (6%) • Paraguay – Sugar Cane Ethanol Plant ; equity
  4. 4. Domestic (US) Community Development• Community Real Estate Investment Fund – WCI Partners, LP www.wcipartners.com – www.olduptownhbg.com – Total return since 2005 (-5%) – slight underperformance vs similar RE nationally in time period – Partnerships with PHFA, Commonwealth of PA – Built 18 new market rate townhomes ($210k) on vacant ‘brownfield like’ land – Renovated 100+ townhomes ($110-$210k) – Transformed 4 square block area (320 tax parcels) from known drug area to leading neighborhood – Added $15M value to city tax rolls – Established neighborhood association – Substitute city services in area of strained city budgets (street cleaning, security, sidewalks, street trees, banners, lawn care) – Recognized as “best” city neighborhood, Historic Preservation Awards – Jobs created 3 permanent, 15 ongoing construction since 2005, additional 10+ part time (doesn’t include mine – no pay) – Managing partner• Real Estate Backed Loans – Loan Portfolio backed by mortgages on homes in “target” area – Yields: various, blended 5.5% – Essential support for early stages of project due to lack of appraisal values, first time home buyers, etc – 0 loss rate since 2005
  5. 5. Impact Investment Principals and Observations• Match Investment with Values• Provide/Demand Risk Adjusted Market Rate Returns• Achieve/Seek Discreet, Measurable Goals• Impact has met/outperformed traditional since 2004 (for this portfolio)US Investments• more difficult due to transaction costs, competition, other market capital• Risk of free rider problem (reduced return by 10-15% - “cost” over $1M)International Market – strong opportunities for return and impact• Seek diversity, strong, local, engaged management• Consider “Fund of Funds” or Sector Focused Funds• Individual (one-off) investments very risky – unlikely to scale profitably• Ensure local interests/managers aligned with global investors• Consider opportunity for Board involvement, travelThree Principals of Impact Investing: Success/Vision/Humility1. Success: come with real investment (not charity) $$2. Vision: come with the ability to see beyond your traditional financial advisor3. Humility: perhaps most importantly, unless your name is Gates – don’t expect to do it all yourself or break new ground, join with others already doing good things and help to make them better – be like Buffet, for example

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