Microfinance and social investment 2012
2 Microfinance and social investment 2012 Our microfinance and social investment group At Allen & Overy, we believe that we influence the wider communities in which we live and work and must ensure that our influence is a positive one. Our microfinance and social investment practice encompasses more than 300 lawyers located in over 30 offices across the Americas, Europe, Asia Pacific, Middle East and Africa, and includes many of the leading practitioners in our key practice groups including banking, capital markets, corporate and dispute resolution. The team has advised on a number of microfinance-related transactions and prides itself on being able to provide real and much-needed solutions helping to transform businesses in developing economies. Our clients include microfinance institutions (MFIs), banks, private investors and institutional investors. Whether on a pro bono or fee-paying basis, we aim to handle every case in exactly the same way - with professionalism and care. The team has also supported and advised a number of social enterprises in several jurisdictions. On the social investment side, we have been involved in advising Social Finance Limited on its Social Impact Bonds (SIB), a unique investment product, structured as a fund, that directs private-sector money to fund public-sector projects. In this case, the investment provides funding for a prisoner rehabilitation programme at Peterborough Prison in Cambridgeshire, creating a potential financial return to the investors that is dependent on levels of recidivism in the prisoner group. Legal fees for negotiating and setting up the Social Finance prisoner programme could have run into hundreds of thousands of pounds, a particularly significant amount when measured against a fundraising target of GBP5m. To make the project a reality, Allen & Overy stepped in to donate over 1,500 hours of legal advice on a pro bono basis, to help Social Finance craft and negotiate the SIB. The investment product has been enthusiastically accepted by investors, the Ministry of Justice and HM Treasury and has the potential to be used in many jurisdictions around the world as an example of groundbreaking social finance funding. Members of the group are also currently involved in several financial inclusion initiatives, providing services to a number of disadvantaged individuals and communities in. 300 Number of lawyers making a difference GBP3.5m Value of our pro bono legal advice on microfinance matters over the past three years GBP14.12m Pro bono advice in FY2011 Allen & Overy LLP 2012
3 Microfinance A multi-disciplinary microfinance team The depth and breadth of our global team means we are uniquely placed to advise on any aspect of microfinance deals. In particular, we are capable of providing innovative solutions in the following areas: Capital Markets & Structured Finance We have led the way in opening the capital markets to MFIs. By enabling the microfinance sector to tap into the international capital markets on a brand new scale, and by advancing a new asset class for investors, these deals offer a way out of the poverty trap for thousands of people by helping them to help themselves. Derivatives We have a world leading derivatives practice uniquely placed to develop innovative solutions to bridge the gap between currencies in which funding is raised and local currencies of MFIs. Banking Our banking practice has applied its cross-border finance expertise to assist a range of clients including MFIs, governmental agencies, charities and nongovernmental organisations in local regulatory matters and fundraising transactions for the purpose of on-lending to micro-entrepreneurs around the globe. Corporate Corporate needs of MFIs and NGOs are multidimensional. We have extensive experience assisting these organisations on all aspects of corporate matters, from risk management to structuring equity investments. Tax Our global tax practice has advised on tax structuring for microfinance funds in order to allow for an efficient flow of funds (for example regarding the mitigation of withholding taxes) and has also been involved in industry discussions regarding the tax status of microfinance activities in some jurisdictions. Employment & Incentives We have provided employment advice to MFIs in relation to hiring policies in various jurisdictions and have represented MFIs in employment-related matters. We have also advised on incentive arrangements for employees, for example, in relation to the structure of employee stock ownership plans for the employees of a joint stock company.
4 Microfinance and social investment 2012 Microfinance Our global reach CHF International OXUS Development Network We advised on the review of proposed memorandum of association and articles of association of a new holding company. CHF International is a US-based non-governmental organisation that owns 100% of the shares of the Middle East Microcredit Company, LLC, (MEMCC) a non-profit company registered in Jordan. MEMCC makes loans to low and moderate income families in Jordan. (Jordan) We advised on the Luxembourg aspects of the restructuring of the OXUS group and its Luxembourg holding company, OXUS Holding SA. As a result of the restructuring, three microfinance institutions (based in Tajikistan, Kyrgystan and Afghanistan) will be held directly by OXUS Holding SA. (Tajikistan, Kyrgystan and Afghanistan) FMO Microloan Foundation We advised on two projects (i) the entry into a shareholders deed to regulate the affairs of its Zambian entity, Microcredit Loan Foundation; and (ii) advice relating to the constitution of its Malawi trust entity, Microloan Foundation Trust and the incorporation of a separate Microloan Foundation-controlled Malawi shareholding company. (Zambia and Malawi) We advised the Dutch development agency, on a USD5.7m equivalent local currency facility to FIE Gran Poder S.A., an Argentine microlending institution and an affiliate of Centro de Fomento a Iniciativas Económicas of Bolivia. (Argentina) GLOBAL PRESENCE AFRICA EUROPE Casablanca Amsterdam Antwerp Athens** Belfast Bratislava Brussels Bucharest* Budapest Düsseldorf Frankfurt Hamburg Istanbul Luxembourg Madrid Mannheim Milan AMERICAS New York São Paulo Washington, D.C. ASIA PACIFIC Bangkok Beijing Hong Kong Jakarta* Perth Shanghai Singapore Sydney Tokyo Allen & Overy LLP 2012 Moscow Munich Paris Prague Rome Warsaw MIDDLE EAST Abu Dhabi Doha Dubai Riyadh* * Associated offices ** Representative office MFX Solutions We advised MFX, an industry-conceived initiative providing specialist currency hedging solutions and training for MFIs worldwide, with the negotiation of its trading documentation governing foreign exchange transactions. BOLD (2006-1 and 2007-1) These securitisations provided finance to MFIs in the following countries: Albania, Azerbaijan, Bolivia, Bosnia and Herzegovina, Cambodia, Colombia, Ecuador, Georgia, Kenya, Mexico, Mongolia, Montenegro, Nicaragua, Peru, Russia and Serbia. BOLD 2007-1 was the first rated securitisation of loans to microfinance institutions and received numerous awards.
5 Homeless International We assisted with the development of its infrastructure for its latest facility, the Homeless International Africa Bond a finance facility for housing and related infrastructure loans to Africa. Allen & Overy is preparing the loan documents for the pilot project between Homeless International and a local partner in Africa. (South Africa, Tanzania and Malawi) Musoni We advised on the preparation of a template loan agreement to use between Musoni and the private lenders who have agreed to lend it funds and also providing tax advice on intercompany payments. (Kenya) BRAC We assisted in conducting a survey of 16 jurisdictions in Canada, the Middle East, Europe and Japan, to assist BRAC with their fundraising strategy in these jurisdictions. (Canada, Europe, Japan and the UAE) ACCION We advised the ACCION Gateway Fund on the incorporation of its MFI, ACCION Microcredit Company in Inner Mongolia, China, as a Wholly Foreign-Owned Enterprise. (China) Mercy CorpS We advised on its form of investment in a microfinance institution in Bosnia and Herzegovina and the transformation of the microfinance institution from a foundation into a joint stock company. (Bosnia and Herzegovina) Mercy CorpS We assisted in establishing a regional bank holding company in Central Asia. (Central Asia) chf international We assisted with the review of organisational documents for a microfinance company in Bosnia and Herzegovina in which CHF would be a minority investor with the Lider Microcredit Foundation, a MFI founded by CHF. We prepared the legal review to ensure CHF s position as a minority investor is adequately protected. (Bosnia and Herzegovina)
6 Microfinance and social investment 2012 Social investment Our recent experience Charity Bank Limited Charity Bank Limited on the structuring and execution of a debt funded finance vehicle which is intended to provide finance to UK based Community Development Financial Institutions (CDFIs). The proceeds of the repayment of these loans will be used to service the debt funding raised by the finance vehicle. Tower Hamlets Education and Business ship Our staff, in collaboration with Deutsche Bank staff and the Tower Hamlets Education and Business ship, volunteer as part of a financial educational programme at Christ Church Primary School. We are also involved in setting up a School Bank initiative in collaboration with the Community Credit Union at Christchurch primary and Bethnal Green Technology College which allows students to open bank accounts and provides guidance on managing finances. We will be piloting a scheme with parents in Christ Church Primary School. Toynbee Hall We work in collaboration with Toynbee Hall which is a leading financial inclusion charity. Toynbee Hall works both in the local community and nationwide. We also work in collaboration with most of the major banks on their financial inclusion initiatives. Toynbee Hall delivers free debt advice to the local community and our staff have been trained and have volunteered as debt advisers. We are assisting Toynbee Hall in developing a money mentors training scheme, which aims to create local experts in finance in the local community. Community Credit Union We work in collaboration with a local Credit Union assisting it in raising awareness and Credit Union membership. We have also helped the Credit Union with its work in providing financial education in local schools. Excellence in Community Investment Award The Law Society 2010 Allen & Overy LLP 2012
7 Social impact bonds Our recent experience Social Finance Limited The SIB investment product channels private-sector funding for prisoner rehabilitation programmes, which involved us providing over 1,500 hours of legal advice on a pro bono basis. We assisted Social Finance with the creation and negotiation of the SIB, which have been enthusiastically accepted by investors, the Ministry of Justice and HM Treasury. Children in Care We are providing pro bono corporate assistance to Social Finance in relation to an SIB aimed at reducing the number of days in care for vulnerable young people. Law Centres We are assisting a network of free legal advice centres with an explanation of the type of Social Investment products that could help law centres deal with ongoing legal aid cuts. Wider pro bono client requests A number of the pro bono clients we work with including the Young Foundation, Toynbee Hall, Law Centre networks and some charitable trusts, are interested in the idea of developing SIBs in a variety of areas. We offer them our experience and help them to generate ideas in this respect. We advise them on how to establish a SIB, how they work and who else has done them.
8 Microfinance and social investment 2012 Key contacts Microfinance and social investment Greg Brown Melissa Manzo Senior Associate Dylan Matthews Senior Associate Patrick Mischo Luxembourg Tel +44 20 3088 4760 greg.brown@allenovery.com Tel +44 20 3088 4773 melissa.manzo@allenovery.com Tel +44 203 088 5656 dylan.matthews@allenovery.com Tel +352 44 44 5 5429 patrick.mischo@allenovery.com David Slade Cathleen McLaughlin Ellen Cramer-de Jong Washington, D.C. New York Amsterdam Tel +1 202 683 3855 david.slade@allenovery.com Tel +1 212 610 6320 cathleen.mclaughlin@allenovery.com Tel +31 20 674 1468 ellen.cramerdejong@allenovery.com Social impact bonds Pavel Shevtsov Louise Wolfson Rob Schwartz Senior Associate Jennifer White Senior Associate Tel +44 20 3088 4729 pavel.shevtsov@allenovery.com Tel +44 20 3088 2046 louise.wolfson@allenovery.com Tel +44 20 3088 4313 rob.schwartz@allenovery.com Tel +44 20 3088 2832 jennifer.white@allenovery.com Allen & Overy LLP 2012
9 Business in the community big tick award in the Coffey International Awards category for the past three years. 2011/2010/2009
For more information, please contact: Allen & Overy LLP One Bishops Square E1 6AD United Kingdom Tel +44 (0)20 3088 0000 Fax +44 (0)20 3088 0088 Office Contact Greg Brown, Tel +44 20 3088 4760 greg.brown@allenovery.com GLOBAL PRESENCE Allen & Overy is an international legal practice with approximately 5,000 people, including some 512 partners, working in 40 offices worldwide. Allen & Overy LLP or an affiliated undertaking has an office in each of: Abu Dhabi Amsterdam Antwerp Athens (representative office) Bangkok Beijing Belfast Bratislava Brussels Bucharest (associated office) Budapest Casablanca Doha Dubai Düsseldorf Frankfurt Hamburg Hong Kong Istanbul Jakarta (associated office) Luxembourg Madrid Mannheim Milan Moscow Munich New York Paris Perth Prague Riyadh (associated office) Rome São Paulo Shanghai Singapore Sydney Tokyo Warsaw Washington, D.C. Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP s affiliated undertakings. Allen & Overy LLP 2012 I CS1109_CDD-62_ADD-5757 (Email)