World Vision subsidiary VisionFund International and FIIG launch first impact bond in Australia

From

Jim Stening

VisionFund International (VisionFund), the mission-focused microfinance subsidiary of children’s charity World Vision, has announced the launch of its first bond with the intention of raising up to AUD20 million.

In alignment with the UN’s Sustainable Development Goals of promoting sustained, inclusive and sustainable economic growth (SDG 8) and gender equality (SDG 5), the proceeds of the bond will be used for providing financial services, mainly microfinance loans, to families living below the poverty line in developing countries. The bond is being arranged by FIIG Securities Limited (FIIG), Australia’s largest fixed income specialist, and represents FIIG’s first foray into impact investment.

Offered in Australia to eligible professional and sophisticated investors, the bond is known as a ‘Kangaroo bond’ as it will be issued in Australia in Australian dollars by a non-Australian entity.  The five-year bond is unsecured and unsubordinated and offers a fixed rate of five per cent per annum, paid semi-annually.

Since inception in 2004, VisionFund has provided 16 million loans totalling around USD9 billion, introduced savings and microinsurance products to promote client resilience and provided financial literacy training and business education.Through its network of microfinance institutions located in 28 developing countries around the world, VisionFund serves over a million clients, the vast majority of whom are women and often the main income generator and caregiver for their families.

The funds raised from the bond issue will be used by VisionFund to on-lend to and grow its microfinance institutions which complement World Vision’s economic development work. These microfinance institutions require debt funding to expand their reach and impact, and serve vulnerable people and communities that would otherwise find it difficult to access loans, savings and insurance products. These financial inclusion services enable families to grow their businesses, increase incomes, manage their finances and strengthen their livelihoods to provide brighter futures for their children.

Globally, 1.7 billion adults are without a bank account at a financial institution or with a mobile money provider and 56% of these are women. The vast majority of the unbanked live in developing countries; a quarter of them are among the poorest 20% of their economies making their families particularly vulnerable to the effects of financial emergencies such as sudden job loss or bad harvest.

Michael Mithika, President & CEO of VisionFund International said: “This is the first bond issued by a microfinance organisation to Australian investors and we are grateful for this opportunity to raise funds within Australia and to FIIG and all of our other partners who have dedicated their services in support of our work.”

Jim Stening, Managing Director, FIIG said: “VisionFund International’s bond is an important milestone for FIIG and the Australian bond market in a number of ways. It is the first time we have brought an impact investment product to market, with the VisionFund bond meeting the growing appetite amongst Australian investors for purpose-driven investment without sacrificing returns. We are honoured to be able to partner with VisionFund to arrange the fundraising, enabling Australian investors to directly support tens of thousands of vulnerable individuals around the world so that they can take care of their families and create better futures. From our team’s perspective, arranging this fundraising on a pro bono basis is a high impact form of “exponential donation” and we are all very proud to be supporting the world-leading work of VisionFund.”

In addition to FIIG who is arranging the bond and has waived all of their fees to both VisionFund and their clients, Perpetual Trustees have also provided 100% pro-bono services. Other partners who have contributed pro-bono services in part include King & Wood Mallesons and MinterEllison, both providing legal services, and the Australian Securities Exchange through their subsidiary Austraclear.

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