Various Financing Options Through Major European Banks - Part One

A major leading European bank with branch offices in England, Germany, Holland, Belgium and Spain.  They provide funds for companies, institutions and projects that add cultural value and benefit people and the environment, with the support of depositors and investors who want to encourage the development of socially responsible and innovative business.

The bank’s mission is to:

  • To enable both, individuals and institutions, to use money more consciously in ways that benefit people and the environment, and promote sustainable development.

  • To help create a society that promotes people’s quality of life and that has human dignity at its core.

  • To offer their customers sustainable financial products and high quality service.

The bank only finances enterprises which add social, environmental and cultural value, in fields such as renewable energy, social housing, complementary health care, fair trade, organic food and farming and social business. They also provide financing to fair trade and microcredit organizations in developing countries.

The corporate values the bank has adopted guide their all their business dealings. Their corporate values are:

  • Excellence

  • Transparency

  • Entrepreneurship

  • Sustainability

Why this bank is different?

The bank has pioneered sustainable banking since it was founded in 1980. The bank exists because it believes that people have the freedom to develop themselves, that they have equal rights and that they are responsible for the consequences of their economic actions on society and the planet. The bank has pioneered a ground break approach to business to practically contribute to a sustainable society that respects these principles. It has developed a strategy to finance projects that both benefit people and the environment, and that are financially sustainable.

The lending parameters:

The bank select projects to invest in that can create lasting, positive change. The bank’s lending parameters are:

  • Selects projects which will bring real and meaningful benefits for the wider community; for which creating cultural, social and environmental added value is as important as meeting commercial and financial targets.

  • Identifies sustainable sectors where the bank can help projects to innovate and businesses to emerge and develop.

  • Ensures each selected project meets absolute criteria which measure the potential negative impact of an organization’s activity on people and the environment.

  • Closely considers the motivations of the people involved in a loan application.

  • Finances clearly defined assets, activities or projects within each organization.

Areas of interest:

The bank has a dynamic approach to where it works, considering any loan application that meets its overall objectives. As long as the projects continue to clearly benefit the wider community, where and with whom, will never be a question to the bank.

The bank is active in several sectors where the selected projects can combine added cultural, social or environmental value with financial credibility.

Sectors of Interest

Culture & Society:

Financing can be available for businesses and initiatives that can help people to develop and act as free and responsible citizens. Organizations which put financial and commercial objectives before people will not be considered. Financing can be provided for:

  • Childcare projects such as day care centers and kindergartens.

  • Healthcare projects such as medical centers, therapeutic farms, care for elderly people, hospices.

  • Education projects such as schools, training and conference centers.

  • Community projects social services, community buildings, and migrant integration.

  • Art & Culture projects such as performing arts, visual arts, cultural centers, film and media.

  • Philosophy of Life projects such as meditation centers, religious and spiritual groups.

Nature and the Environment:

As previously mentioned the bank finances sustainable environmental businesses and initiatives. To be more specific, the bank explores opportunities to finance organizations that help safeguard the environment and avoid “end of pipe” technologies whenever sustainable alternatives are available. The bank refers to certification from respected bodies such as SKAL, Soil Association and Biogarantie to guide their decisions about organic food and farming loan applications. Areas considered for financing include:

  • Organic Food projects such as shops, food processing, restaurants and butcheries.

  • Organic Farming projects such dairy, meat, poultry, forestry, arable and horticulture.

  • Renewable Energy projects such as wind, hydro, solar and biomass.

  • Environmental technologies such as transport and recycling.

  • Eco-development projects such as shared workplaces, nature development and property development.

Social Business:

Businesses, whose key objectives are to add value to society and/or the environment, are at the heart of the bank’s lending decisions. These objectives are clearly reflected in the products, services or working processes of successful loan applications. Sectors considered for financing include:

  • Manufacturing such as printers and publishing.

  • Retail non-food such as cloths, books and toys.

  • Housing such as residential housing and housing associations.

  • Fair Trade wholesale trading and fair trade shops.

  • Professional Services such as consultancy, building contractors and research.

  • Recreation such as eco-tourism, camping sites and parks.

  • Development cooperation such as certified FLO products, certified organic products and microfinance.

To ensure that the bank meets with its mission and lending parameters, the bank don’t provide financing to all organizations, businesses and activities that produce or distribute nuclear energy, weapons and environmentally hazardous substances as described below:

Non-sustainable working processes:

  • Corruption; all organizations, businesses that have been condemned by a court for frequent and serious corruption, bribery and money laundering and enterprises that have violated structural codes of conduct or treaties in the last three years.

  • Breach of legislation, codes of conduct or conventions; all organizations, businesses and activities that have frequently and seriously violated legislation, codes of conduct or conventions, unless there is proof that they have changed their behavior. The following criteria are considered:

  1. Breach of environmental legislation

  2. Breach of labor and other legislation

  3. Breach of international codes and conventions

  4. Breach of fundamental labor rights

  • Animal experiment; all organizations, businesses and activities that use animal experiments for non-medical purposes or sell non-medical products that have been tested on animals.

  • Genetic engineering; all organizations, businesses and activities that generate products that have been created by means of genetic engineering. All organizations, businesses and activities that sell genetically engineered products are excluded when these products do not have a clear label.

  • Intensive agricultural production; all organizations, businesses and activities that handle and, or process animals for consumption in an intensive, environmentally damaging way and which do not take due account of animal welfare. Businesses that sell animal products from intensive agricultural production are excluded when they do not offer the consumer a certified organic alternative.

  • Dictatorial regimes; all organizations and businesses and activities that directly and significantly contribute to, or profit from, human rights violations by a government or other actors.

Non-sustainable products and services:

  • Weapons industry; all organizations, businesses and activities that produce and sell weapons and weapons-related services. This includes both conventional weapons, such as pistols and rockets, and non-conventional weapons, such as nuclear, chemical and biological weapons and integral weapons systems.

  • Tobacco; all organizations, businesses and activities that produce or sell smoking materials.

  • Fur industry; all organizations, businesses and activities that hunt or keep animals for their skin or fur, supply services to this industry or sell fur products.

  • Environmentally hazardous substances; all organizations, businesses and activities that produce or sell substances that threaten humans and the environment.

  • Gambling; all organizations, businesses and activities that design, produce or sell games of chance, supply financial services related to games of chance that qualify as offering short odds.

  • Pornography; all organizations, businesses and activities that sell pornographic products and, or that operate related shops and meeting places.

Financing Options

Microfinance

The bank has been a leading investor in microfinance since making its first investment in the industry in 1994. The bank’s aim is to build long-term relationships, based on transparency and a shared commitment to relieving poverty and caring for the planet. The bank has invested in over 100 microfinance institutions in more than 40 countries in Asia, Africa, Latin America and Eastern Europe.

Funds can be provided for all stages with different risk profiles and funding structures from start-ups on wards.

Financing Criteria:

Funds can be made available to established and upcoming microfinance institutions around the world with the following parameters:

  • Sustainable approach toward providing financial services to underserved client groups

  • Solid business operations and transparent reporting

  • Work with/signatory to the Client Protection Principles

  • Sound governance structure, management and business planning

  • Financially/commercially sustainable or plan to be within 2 years

  • Portfolio at risk (PAR)>30 days of max. 5%

  • Gross loan portfolio outstanding of EUR 1 million minimum

  • Externally audited

Financing can be made in either equity or debt as follows:

Debt:

Financing can be made in Euros, US Dollars and local currencies, usually ranging from EUR 500,000 to EUR 5,000,000 or equivalent in other currencies for up to a maximum of 5 years and 10 years for subordinated debt. Funds disbursement and repayment schedules can be structured in different ways according to the project needs.

Equity:

The bank participate in the share capital of financial institutions, including microfinance banks or microfinance NGOs wanting to convert into regulated MFIs, and in need of additional capital.

If you believe you meet with the above investment criteria, you need to supply the following information and documents:

  • Provide short description of the organization including vision and mission

  • Business plan with 3-5 years projections

  • Biographies of senior management

  • Organizational chart

  • Audited accounts for the last 3 years

  • Recent monthly financials

  • Ageing portfolio review (PAR)

Sustainable Trade

The sustainable trade fund offers innovative trade finance that assist organic and fair trade producers in accessing the markets of Europe and the United States.

Exporters in developing countries and Eastern Europe generally lack access to adequate finance. This is a major problem, particularly in harvest time.

The trade finance offered is simple and straightforward. Based on an export contract with a reputable buyer in Europe or the United States, the bank can pre-finance up to 60% of the contract value.

Trade finance for organic and fair trade exporters in developing countries can be made according to the following parameters:

  • Tailored to the needs of agricultural exports in Africa, Asia and Latin America

  • No restriction on product type, from coffee to cotton, to fruit and nuts

  • Fast application handling, fair and transparent conditions

Financing Criteria

Financing available to agricultural exporters in Africa, Asia or Latin America and who are dedicated to organic production and/or fair trade principles based on the following parameters:

  • To be financially and commercially sustainable

  • Have access to export markets for commodities or related products

  • Have a minimum annual turnover of EUR 400,000 or the equivalent in US Dollars

Financing Terms

The purpose of this trade facility is to assist agricultural exporters to pre-finance their export contracts with foreign buyers, providing them with the cash they need to bridge the pre-harvest and shipment season. Export contacts form the basis of each finance facility provided.

Each finance facility can range between EUR 200,000 and EUR 1,250,000 or the equivalent in US Dollars and up to 60% of the value of the export contract. The financing period normally starts with the date of the harvesting season and may continue until the last shipment of the exported products. Generally speaking, the usual loan period is between 6 and 12 months. No collateral will be required beyond the receivables related to the export contracts.

The repayment process will be arranged through an agreement between the exporter, the buyer and the bank based on the following parameters:

  • All buyers payments for the contract pre-financed , are to be made to the bank

  • The bank will hold 60% of each payment and pay through the balance to the exporter bank account

  • The exporter’s monthly monitored reports enable the bank to follow up on the transaction and the repayment of the loan

If you believe you qualify to this type of financing, you can proceed and submit your request with the following information:

  • Provide short description of organization

  • Provide an executive summary of the deal

  • Recent financial statements of your company

Energy & Climate

Renewable energy is at the very heart of the bank’s main activities. The bank can provide the support and expertise of a team of more than 40 energy and climate specialists dedicated to providing clients with a fast and efficient service. They have built up unmatched experience right across the ever-expanding renewable sector; currently financing around 280 renewable energy generating a total of more 1000 M W of sustainable power.

The energy and climate financing scheme provide risk capital for new and existing sustainable energy ventures of all kinds, including wind, solar photovoltaic, biomass, hydro and geothermal projects.

The bank’s mission is to help create a society that promotes people’s quality of life where “human dignity” is at its heart. Energy and climate is one of the themes that contribute to this missions, since the world’s current unsustainable patterns of energy production and consumption are having an increasingly impact on people’s lives in many parts of the world.

Financing can be provided for projects that have the following parameters:

  • Reduction of demand for, and more efficient use of energy

  • Cleaner use of the remaining fossil fuels

  • Increased use of renewable energy sources like solar, wind, biomass, geothermal, etc.

Funding and know-how can be provided from a bank that knows the sector better:

  • Fast, efficient service from a dedicated team that understands and shares your goals

  •  Tailor made and one-stop financial services

  • Extensive experience and in-depth know-how in renewable since 1980

  • All types of funding, for new and existing projects

  • A proven track record, currently supporting almost 300 sustainable energy projects throughout Europe

  • Equity investments from EUR 1 million to EUR 50 million and ability to co-invest

Projects are funded either by the bank or by the investment funds managed by the bank, a wholly owned subsidiary of the bank as follows:

First Fund:

The fund makes equity or provides subordinated loans of between EUR 1 million and EUR 6 million, across Western Europe. The fund focuses on proven technologies such as on-shore wind, solar PV, small scale hydro power and clean biomass.

Second Fund:

This fund specializes in providing equity to larger wind solar and biomass projects throughout Western Europe, investing between EUR 10 million and EUR 50 million. Can participate in share capital of projects from 20% up to 100%.

Third Fund:

The third fund invests in renewable energy projects mainly in the UK, but can act as a co-financer with the first fund for projects in other countries.

Fourth Fund:

This fund provides financing just for Dutch projects looking for capital of between EUR 1 million and EUR 50 million. Ecological projects recognized by the government benefit from lower interest rates.

Private Equity

Private equity investment gives companies the capital they need to grow, and as an equity partner, the investors play an active part in the business, usually adding value to the Board of Directors.

The bank has been providing this valuable service to sustainable businesses since the mid of 1990s. In total, they have managed investment portfolios and exits of around EUR 100 million. They invest exclusively in businesses that make a positive social and environmental impact, in sectors such as clean energy, social enterprise and organic food.

Private equity, the capital your business needs:

  • 20 years track record of successful private equity investment including development and growth capital

  • Appropriate hands-on approach with portfolio companies

  • Backed by investors who share the bank’s value and understand its goals

  • Exclusive focus on sustainable sectors giving in-depth market knowledge

  • Focus on long-term returns, combining financial gains with positive social impact

Various Financing Options Through Major European Banks - Part Two

A major European investment bank that manages funds provided by a European government; with the aim to empower entrepreneurship in emerging economies in order to further development. Their vision is that a thriving private sector will help create long-term, sustainable development impact.

Through the support of this European government, they are able to fund higher risk projects with greater development impact.

The current financial facilities available include:

  • Access to Energy

  • Infrastructure Development

  • Capacity Development

  • Emerging Markets

  • Other

They represent a good investment opportunity for commercial capital-market players looking to invest in emerging markets. By playing a niche role, they specialize in providing full range of financial services within 3 key sectors:

  • Housing

  • Finance

  • Energy

While they focus on these three target sectors, their strategy prioritizes certain areas that promote the highest development impact.

Sectors of Interest

Housing

Since housing is a basic human need, they focus on land acquisition, infrastructure and construction, mortgage finance, building-related sustainability and housing microfinance activities.

One of the largest obstacles for emerging economies is the widening gap between demand and supply of both housing units and housing-finance solutions. To counteract this, they use an integrated approach that links the demand and supply sides of the housing chain.

Finance can be provided to all levels in the housing chain, including land acquisition rights, infrastructure and construction, mortgage finance, and housing microfinance activities for the lowest-income groups.

               

Investment Procedures & Criteria:

Funds can be made available to qualified projects with the following parameters:

  • Commercial viability

  • Sound investment plan

  • Transparency according to the principles of corporate governance

  • Detailed business plan and complete analysis of the market

  • A respectable environmental policy

  • Execution by internationally acceptable social standards

  • The loan amount and term will be considered case by case.

Capacity Development

Capacity Development (CD) program provides both finance and assistance in finding a suitable CD consultant to a particular client, with the aim of improving their management skills and technical know-how; this often includes support in improving social, environmental and governance standards.

  • The Capacity Development program covers fields like:

  • Corporate governance

  • Business processes

  • Financial administration

  • Financial planning

In practice, CD furnishes part of the funding, while local clients need to co-finance the fund commitment to the project or program. As a guideline, CD can contribute up to50% of the total budget. A maximum contribution of EUR1 million is available to any one client across a 7 year period.

Energy

Since energy from environmentally sustainable sources is essential to improving living standards, they focus on every link in energy chain, from developing energy-efficient technologies to distributing renewable energy.

Finance can be provided for various types of energy-improvement projects such as:

  • Development of energy-efficient technologies

  • Generation and distribution of energy to rural

  • Off-grid areas

  •  Refurbishment of existing coal-fired plants to increase eco-efficiency

  • Provision of solar-panel systems for homes in rural villages

  • Investment in wind

  • Hydro & other sustainable power supplies

Finance

Finance can be provided to micro, small and medium sized business, specifically in low-income countries. The financial sector is core of our business believing that a healthy financial sector stimulates a country’s economy and provides access to finance for both companies and individuals.

Financing can be provided for a broad range of financial institutions such as:

  • Banks

  • Microfinance institutions

  • Private equity funds

A full range of finance solutions are offered to clients. This covers everything from regular loans and guarantees to taking equity participations or building syndications. By making available both their services and expertise, they create access to finance for companies of all sizes, as well as for individual consumers. Local-currency loans can be provided where possible.

Infrastructure Development

Through the Infrastructure Development Fund scheme, the bank supports the development and improvement of social-economic infrastructure in development countries. The funding scheme aims to stimulate private investors to invest in private or public-private infrastructure projects in developing countries.

Through this funding scheme, the bank can provide various types of long-term financing for large infrastructure projects. Funding of up to EUR 15.5 million or equivalent in US Dollars or local currencies can be extended with a term up to 20 years. Also, equity investments can be made up to EUR 7.75 million on the basis of minority shares only.

Funding is available to infrastructure projects that contribute to the development and/or improvement of social-economic infrastructure such as:

  • Power

  • Telecom

  • Water

  • Transport

  • Environmental and social infrastructure

Access to Energy

The Energy funding scheme fund private sector projects that create sustainable access to energy services. By providing financing for projects involved in the generation, transmission or distribution of energy, the funding scheme hopes to ultimately connect 2.1 million people in developing countries by year 2015.

The Fund policy provides flexibility when evaluating energy projects. Project diversity can fall under a wide range of possibilities from new initiatives to established facilities requiring rehabilitation, from renewable energy to traditional sources, through direct project investments or even by catalyzing a broader project group through targeted energy investment funds. Financing requirements are also evaluated in ways to optimize the success of a project.

Financing can be made up to EUR 10 million per project or 75% of total transaction amount. Subordinated debt/senior loans can be made up to EUR 20 million or 75% of total transaction can amount. Longer grace periods and longer tenors can be offered if necessary to get projects off the ground.

Other

Small companies and micro-entrepreneurs usually deliver products and services to clients in their direct vicinity. They underpin the local economy by creating employment, training personnel, generating wealth and growth. Also, they face great challenges in accessing capital, savings and payment services. Here comes the role of the bank, by extending its financing services that makes it easier for them to do business.

The MASSIF financing scheme do contribute to the development of financial services for small businesses and micro-entrepreneurs by increasing financial resources available to them and by strengthening the financial intermediaries. Such borrowers do offer a wide array of financial services such as savings, cash flow, guarantees, credit, and mortgages, leasing and insurance.

MASSIF financing scheme offers local financial intermediaries, long-term debt and equity financing in local currency, while assuming the currency risk.

Financing through the MASSIF financing scheme can be suitable for:

  • Microfinance institutions seeking to widen services offered

  • Commercial banks seeking to expand their client base

  • Non-governmental organizations seeking to professionalize and gain official financial status

 

 

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