THE MINDANAO COMMUNITY IMPACT FUND
(Hypothetical CWF Term Sheet)
“The State shall encourage equity participation in public utilities
by the general public.” – Art. XII, Sec. 11, 1987 Ph Constitution
MCIF is a hypothetical, illustrative venture capital fund to be invested in enterprises in identified communities in the Mindanao region that have undergone a vetting system or an equivalent process of selection and de-risking that promotes bankability.
AMOUNT: USD100 Million
TYPE: Equity, privately owned without sovereign guarantees
FUND MANAGER: Professional fund manager carefully selected by…
RISK AND YIELD PROFILE:
Availments from BCIF are pre-qualified under presumptions of “good risk, high yield”, validated by a rigid assessment process by qualified, professional Fund Managers.
TENOR/EXIT MECHANISM:
10 years exit for First Fund Investors. Capital build-up programs for fund users and beneficiaries are prescribed, against which First Fund Investors can exit. Takeouts by Secondary Investors are exit options for First Investors. IPO after 3 to 5 years is another exit option.
USE OF FUNDS:
Primarily invested in capital assets by the Fund as a surrogate owner of depreciable assets with high economic, and utilitarian value in manufacturing, processing, storage, and logistics of community-produced raw materials for use by SMEs under lease or pay-as-you-use, or “Sukuk” arrangements. Such as:
- Common Asset and Service Facilities -- processing plants, machinery, storage equipment, warehouses, tractors, farm implement pools, common lab / R&D.
- Toll common post-harvest facilities and farm-to-market infra.
- Strategic Nucleus Estate Enterprise, and other strategic assets.
- Of highest priority are investments in strategic, high-impact assets such as Renewable Energy fed power plants.
FUND INVESTMENT PHILOSOPHY:
The fund investment philosophy is premised on the “scarcity of capital and financing in the Agriculture and the SME sector” where investments are needed most and will produce the highest impact in the development of economically viable communities. When impact communities become viable enterprises through innovative systems, Capital, freely abundant to the elite but scarce to the SMEs, can be democratized by providing them not with cash capital, which can be risk-vulnerable, but with access to capital assets under de-risked arrangements and more affordable lease, “Islamic Sukuk” or pay-per-use terms. Along with a well-structured and managed capital build-up program for beneficiaries and users, a convenient exit mechanism for Investors is created while transforming small but viable entrepreneurs into savers and eventually investors. -- ESG-oriented, enlightened Socio-Capitalism through Impact Investments.
THE COMMUNITY IMPACT
A Community Impact Fund, a CWF properly managed, addresses unemployment and underemployment, rampant migration, scarcity of capital, corruption, and involuntary poverty. Impact Investments that create community linkages can cure these interconnected symptoms of poverty. Impact Investments create more enterprises, and more enterprising communities, stimulate their productivity and growth, create good jobs, and foster self-reliant communities and households that seekers of better lives will go to rather than leave behind. It enhances the Productivity of People (POP) in communities.
THE GAPP PERSPECTIVE
Generally Accepted Practices and Policies or GAPP for Sovereign Wealth Funds was developed by the International Working Group of Sovereign Wealth Funds (IWG) in 2008. The GAPP provides a set of voluntary principles and best practices for Sovereign Wealth Funds to promote transparency, accountability, and good governance covering various aspects of the fund's operations, including investment strategy and risk management, governance structure, and financial reporting.
The usefulness of the GAPP lies in its ability to promote good governance and responsible investing practices among Sovereign Wealth Funds. The GAPP helps to enhance its reputation and credibility among stakeholders. Moreover, the GAPP provides a benchmark for best practices that Sovereign Wealth Funds can use to evaluate and improve their operations continually. This can lead to greater efficiency and effectiveness in managing the fund's assets, which can ultimately benefit the fund's stakeholders, including the citizens of the fund's home country.