Today’s article is by Brightlight Group. We have a particular interest in moving capital in Australia to South and SouthEast Asia under the Frontier Brokers initiative. We have an ambitious goal to move $100M in the second half of 2020 through an innovative notes issuance, targeting gender lens investments across the region. Our efforts are focused on four layers of innovation:
We are balancing carefully the credit profile of investees who have strong gender lens credentials with the need for investors to satisfy a low risk/regular yield investment proposition. This requires our notes issuance to have forms of credit enhancement, given the gap between the profile of the portfolio as it currently stands, and the criteria of our investors. Should we get this balance right, we will be able to shift large ticket size investments out of Australia into emerging market impact investments for the first time.
The notes issuance will require a level of innovation around structuring. Note subscribers will range from private investors, foundations, development finance institutions and institutional investors. To issue the notes, Brightlight needs to establish a warehousing facility that acts as issuer. We also need to establish Security Trustee and Lead Arranger, FX hedging arrangements, Portfolio Insurer/Loan Guarantor, Collateral Pool and Portfolio Manager(s). We are well advanced on a number of these fronts but all elements are interconnected and complex. We continue to navigate the elements carefully and methodically — making mid-course corrections in design as we go along.
We want to provide flexible debt finance to a wide ranges of investees, beyond your typical microfinance institutions. So on the one hand, we are exploring how we can offer cashflow-based debt, milestone based debt, and the like. On the other hand, we are exploring a range of investees from microfinance, SME finance, agricultural enterprises, and fintech companies. We are especially interested in financing supply chain gender lens investment (GLI) opportunities where there is a multiplier of positive impact to women, such as in agriculture.
We are exploring the possibility of piloting a new beneficiary outcome methodology that we have been developing together with the University of Melbourne. The output of this project will be modeled on the UNDP Sustainable Development Goals Impact Practice Standards and we will be coordinating with their team to ensure alignment as the standards are built out. Each standard of good practice will be followed with actionable guidance on what good beneficiary outcome measurement and management practices look like throughout the investment life cycle; and followed by a series of tests designed to assess whether its core elements are met, partially met, or unmet. It is also tool-agnostic, and can be used at every level of the investment to interrogate and improve existing beneficiary outcome measurement and management practice, thus increasing transparency and de-risking investment.