ICCO Investments is active for already 4 years now. Pinky Pradhan (PP) interviewed Mark Joenje (MJ), CEO of ICCO Investments, on successes and future expectations. Some insights from the world of investments.
PP: How many companies does ICCO Investment currently invest in?
MJ: “The Capital 4 Development Fund (C4D) has invested in 17 companies until now. C4D has the main focus on the agribusiness sector and besides on Energy, Health and Water & Sanitation. Apart from Water & Sanitation, we have managed to invest in companies in all sectors of the Fund. The current portfolio composition already reflects quite well what we intended to do. The majority of the investments are loans, but we have built as well a respectable equity portfolio. We have also managed to make investments in all regions where C4D is active.”
PP: What are the challenges faced while advancing impact funding?
MJ: “It is a challenge to find companies that have a relevant and scaleable impact. Though basically all companies have a positive impact in some way as they provide jobs and perspectives for their employees, C4D specifically looks for companies that also impact the lives of their suppliers and consumers. This is also very much part of the due diligence process before an investment is considered and made. In 2015 we have developed an impact measurement and monitoring framework that is now implemented. We track and report on impact achievements on an annual basis with all investee companies.”
PP: What kind of companies are successful?
MJ: "This is difficult to answer as every company is very different from the other. Successful in one context can be moderate in another. Of course we would like to say that all our investees are super performers, but that is not realistic. We have had our challenges and situations where we had to step in and support the management to overcome problems and bring the business in an upgoing spiral again. This is also the added value we have for investees apart from the capital we provide. Our investment managers are real sparring partners. One of the companies that is really making good progress and develops rapidly is Lighting Energy Solutions in Cambodia. LES provides off grid households with a solar powered electrification package. The sales of the company are above expectations at the moment. This we obviously like to see. More sales is more impact and better ability of the company to pay back our loan."
PP: And what does ICCO Investment see for future developments?
MJ: "The company is now coming into a phase that many lessons are learned, the local networks are firmly established, the procedures are clear and functioning. We are more and more approached by companies for funding and this means that we are processing more and more deals. Exactly as planned, but we have to work on attracting additional funding for the Fund in order to be able to serve the clients as well in the future. This is the main focus in 2016. Once we have closed deals with additional investors in the Fund we will also carefully look to further diversify our geographical scope on a limited basis. We have also increased our working relation with the Rabobank. Recently is was decided to integrate the Inclusive Business Fund that we have set up with Rabobank into the Rabo Rural Fund (RRF). This will be realized in Q1/Q2 2016. This provides opportunities to deliver also investment opportunities to the RRF that can provide companies with short term trade financing funding as well as long term loans for investments to increase production capacity for example."
PP: What are the targets for 2016?
MJ: "The main challenge in 2016 is fundraising. Over the years we have developed some interesting connections with investors and it is now time to approach those investors with an attractive proposition to join our fund. We are ready for it! The original business plan that was implemented was geared towards first building up a professional Fund Management Organization (ICCO Investments) and built up a portfolio of investments in the C4D Fund. Our efforts in the last years now gives us a relevant track record to show to potential investors. We really have something to tell, our companies can be showcased to investors and we can transparently show to investors how we manage our investments. This should give us the credibility to convince investors to join our fund and grow C4D in the next phase from 15M€ to 30M€."
PP: What kind of investees is ICCO Investments looking for?
MJ: "We are always looking for companies that combine relevant impact potential in one of our focus sectors (Agribusiness, Energy, Health, Water & Sanitation) with a healthy return on investment that can cover a decent interest and risk premium. We typically invest in a single company between 100K€ and 1M€, but it is important to note that 100K€ is very small and 1M€ is very large compared to the size of our Fund. The average investment size so far is about 380K€. As the Fund will grow in size, we can consider to do somewhat larger deals as well."
(This interview has also appeared in the April edition of ICCO Cooperations newsletter. Mark can be contacted at Mark.Joenje@icco-investments.org)