In February 2015, the GABV-initiated fund Sustainability | Finance | Real Economies (SFRE), closed on commitments in excess of $40 million. This fund is an innovative source of permanent and patient capital for banks throughout the world that operate in compliance with the Principles of Sustainable Banking.
The Alliance provided not only the project costs to develop SFRE but its members also invested over $17 million on an individual basis. As a Luxembourg registered SICAV-SIF, SFRE has a fully independent Board of Directors elected by its investors. However, the Global Alliance is the owner of a mission share that ensures ongoing focus of Sustainability-focused Financial Institutions (SFIs) for SFRE relative to its investments, primarily using the GABV Scorecard in the investment process.
SFRE began to invest in 2015 through acquiring preferred shares in Vision Banco, (a GABV member based in Paraguay) and subordinated debt in Desyfin (a Costa Rican based non-GABV member). In 2016, SFRE also invested through subordinated debt in PRASAC (a Cambodian non-GABV member) and kept on building the pipeline to grow with additional deals in the coming years in both members and non-members, as well as on a geographically diverse basis. Learn more.
SFRE continues to seek new investors to expand its impact. At the end of 2016 commitments were still slightly below $50 million since SFRE focused most of 2016 on restructuring its operations, and replacing the initial portfolio manager with the intention of better aligning the investment strategy with the mission of SFRE and with the values of the mission shareholder. A new portfolio manager is expected to be announced early in 2017 and a new phase of the life of SFRE will begin.
SFRE is an example of the innovation in finance arising from the work of the GABV. Meeting the growth capital needs of SFIs was identified as a critical step at the GABV Annual Meeting in 2010 in Dhaka. Developing an investment product that provided long-term growth capital, reasonable financial returns, and social and environmental impact required new thinking as well as outreach to investors sharing these goals.
With SFRE operational, the eco-system for SFIs with leadership from the Global Alliance is further strengthened. New sources of innovation and impact will result from SFRE investments. The transformation of the financial system by focusing on delivering social value will be enhanced and accelerated through SFRE.