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Emerging Markets

The inclusive finance and sustainable trade funds’ goal is to contribute to the development of inclusive financial sectors in developing countries. Inclusive financial systems improve lives by providing financial services in a transparent and responsible way, encouraging trade in certified fair trade and organic products and stimulating sustainable agriculture. Triodos Investment Management believes that access to financial services plays a crucial role in reaching global sustainable development goals.

The Emerging Markets’ activities consist of the management of internationally operating funds that invest in emerging markets in Latin America, Africa, Asia and Eastern Europe.

The emerging market funds collectively grew by EUR 94 million in 2013, an increase of 19.7% to EUR 563 million compared to 2012.

The activities of the Triodos Fair Share Fund, Triodos SICAV II – Triodos Microfinance Fund, Triodos Sustainable Finance Foundation, Stichting Hivos-Triodos Fonds, Triodos Sustainable Trade Fund, and Triodos Renewable Energy for Development fund, are all managed from the Triodos Investment Management offices in The Netherlands.

Developments in 2013

In 2013 Triodos Bank and the DOEN Foundation concluded that their joint initiative, the Triodos-Doen Foundation, can continue without the active involvement and catalytic role of the DOEN Foundation, after a successful and constructive partnership of almost 20 years. Instead the initiative’s goals can continue with the direction of Triodos Investment Management only. Since December 2013 Triodos-Doen has continued to operate as the Triodos Sustainable Finance Foundation.

Inclusive finance

Since 1994, our assets under management in the microfinance sector have increased to EUR 533 million, making us one of the leading investors in the industry. (impact statistic)
 

Combined total assets under management in inclusive finance were EUR 533 million, up by 20.4% compared to 2012.

The four Triodos inclusive finance funds; Triodos Fair Share Fund, Triodos SICAV II – Triodos Microfinance Fund, Stichting Triodos Sustainable Finance Foundation and Stichting Hivos-Triodos Fonds financed 110 microfinance institutions and banks, operated in 44 countries in 2013. These institutions reach 8.4 million low-income clients with loans (2012: 6.9 million). 66% of these are women. 7.9 million people were served with savings products (2012: 6.4 million).  46% of these clients live in rural areas. 

The four Triodos inclusive finance funds hold equity stakes in 22 leading and innovative microfinance institutions and vehicles worldwide (2012: 17). Senior Triodos Bank co-workers sit on the microfinance institutions’ board of directors, sharing valuable knowledge and expertise in sustainable banking.

Portfolio Triodos Microfinance Funds

31 December 2013

Sustainable Trade Finance

Triodos Sustainable Trade Fund provides trade finance to cooperative and private agricultural exporters in developing countries, producing certified organic and/or fair trade products.

By the end of the year, the fund’s volume of trade finance transactions had increased by 23.6% to EUR 25.5 million. In total, Triodos Sustainable Trade Fund disbursed 33 loans to cooperatives and private processors and exporters, producing 13 different agricultural products in 22 countries, including coffee, cotton, cocoa, olive oil, cashew nuts and honey.

Triodos Sustainable Trade Fund receives most of its funding from a credit facility provided by Triodos Bank, which is partly secured by guarantees from Dutch and international governmental and non-governmental organisations.

In 2013 Triodos Investment Management began a process to restructure Triodos Sustainable Trade Fund into an open-end fund making it possible for new investors to invest in this fund in 2014.

Case Study

Triodos Investment Management, together with other investors, has sold the majority of its 13.5% equity stake in TenGer Financial Group, the holding company of Mongolia’s XacBank, to new strategic investors including ORIX Corporation, IFC and MAK.  Triodos-Doen and Triodos Fair Share Fund, have been shareholders with an active role at board level since 2004.

The primary rationale behind the sale is that XacBank has achieved a level of maturity as a fully-fledged bank in terms of its outreach, governance, risk management and performance and is entering a new phase in its development where it can benefit from new strategic partners. Triodos Fair Share Fund will remain a shareholder in this institution, but on a smaller scale.

Prospects

Continuing growth of the inclusive finance funds is foreseen in line with current trends.

The transformation of Triodos Sustainable Trade Fund, which will allow investors to participate in the financing of sustainable agriculture and trade, is scheduled to be completed in 2014.