The funds lend to local microfinance institutions who in turn lend small amounts of money to entrepreneurs. Thereby investors get an opportunity to contribute to socioeconomic development while earning a favorable return.
Investors money is locked up for five years, but loans usually mature after 2.5-3 years, enabling the funds to lend the same money twice.
SEB was the first Swedish bank to launch a microfinance fund and has just closed its eleventh one. Currently the active funds have loans outstanding to 20 million entrepreneurs. All funds target professional investors.
The funds have pioneered local currency lending, thereby avoiding pushing the foreign currency risk onto the microfinance institutions or their clients. They lend to small and medium sized enterprises in sectors such as renewable energy, sustainable agriculture, education, and healthcare.
All 11 funds have a strong social impact focus and high diversification in terms of countries, currencies, and end-clients, with a low correlation with other asset classes.
The funds, support the United Nations Sustainable Development Goals and comply with Article 9 of the SFDR regulation, meaning they have sustainability as their objective.
Symbiotics is a leading market access platform for impact investing, dedicated to private markets in developing economies and the advisor to the SEB funds.
“We are honoured to have such a long-standing and fruitful partnership with SEB, which has been instrumental in expanding our global reach and impact,” says Roland Dominicé, CEO of Symbiotics.
The two companies are exploring other opportunities for collaboration going forward.
“We are immensely proud of what we have achieved,” says Håkan Brodin from Institutional Asset Management, a unit in SEB’s Investment Management division.
The funds that have reached maturity have provided an annualised returns of 4-9 per cent during the life of the funds.