MICROFINANCE PAPER WRAP-UP: “Private Asset Impact Fund Report 2020;” by Basile Quartier, Brendan Mackinnon, Ramkumar Narayanan; Published by Symbiotics

This survey reports on private asset impact funds (PAIFs), which are defined as those that have most “of their non-cash asset [base] allocated both to private debt and/or private equity instruments and to emerging and frontier markets, with a development impact bias.” When referring to impact, Symbiotics focuses on the “intention of generating measurable social and environmental” improvement.

The dataset includes input from 157 PAIFs, which hold a total of USD 22 billion in assets, two thirds of the global PAIF market. The participating funds operate under 78 investment managers, which are headquartered in 26 countries. The report succeeds the series of surveys that Symbiotics has published yearly on: (1) microfinance investment vehicles since 2007; and (2) private debt impact funds since 2018.

The sampled PAIFs report growth in total assets of 9.5 percent during 2019 and forecast contracting 1.5 percent during 2020. Of these assets, 58 percent are deployed in microfinance, 21 percent in small and medium-sized enterprise (SME) development, and 7 percent in food and agriculture. From 2018 to 2019, the average loan size for this micro- and SME lending rose from USD 1,600 to USD 1,800.

The authors report on three categories of impact metrics: (1) sustainability, as measured through environmental, social and corporate governance (ESG) factors – based on which 133 funds screen investments and 118 report to investors; (2) impact investing, as measured using the UN Sustainable Development Goals (SDGs); and (3) inclusive finance, as measured through rate of outreach to people at the “base of the pyramid.”

The survey concludes with the status of PAIFs amid the COVID-19 pandemic. Monthly returns dipped from 0.30 percent in February to -0.70 percent in March. They recovered to 0.10 percent in May and have continued to increase since then, as of October. The expected change in returns for 2020 is negative for 70 funds, stable for 26 and positive for 25.

This is a summary of a paper by Basile Quartier, Brendan Mackinnon and Ramkumar Narayanan; published by Symbiotics; October 2020; 126 pages; available at https://symbioticsgroup.com/wp-content/uploads/2020/11/Symbiotics_PAIF-Report-2020-1.pdf

By Romil Pandey, Research Associate

Additional Resources

Symbiotics homepage
https://symbioticsgroup.com/

SDGs website
https://www.un.org/sustainabledevelopment/

Past MicroCapital articles on Symbiotics
https://www.microcapital.org/?s=symbiotics

Symbiotics Impact Report 2018
https://symbioticsgroup.com/wp-content/uploads/2020/02/Symbiotics_LFG_Impact_Report_2018.pdf

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