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Luxembourg Microfinance and Development Fund

PRI reporting framework 2020

Basic information [OO 01 - 09] Asset class implementation gateway indicators [OO 10 - 12]

Investment policy [SG 01 - 04] Objectives and strategies [SG 05 - 06] Governance and human resources [SG 07 - 08] Promoting responsible investment [SG 09 - 11] Outsourcing to fiduciary managers and investment consultants [SG 12] ESG issues in asset allocation [SG 13 - 15] Asset class implementation not reported in other modules [SG 16 - 17] Innovation [SG 18]

Direct - Inclusive Finance

Context [IFD 01 - 06] PIIF Principle 1: Range of services [IFD 07 - 10] PIIF Principle 2: Client protection [IFD 11 - 13] PIIF Principle 4: Responsible investment [IFD 18 - 24] PIIF Principle 5: Transparency [IFD 25 - 27] PIIF Principle 6: Balanced returns [IFD 28 - 31] PIIF Principle 7: Standards [IFD 32 - 34]

Confidence building measures

Confidence building measures [CM1 01 - 07]

Export Public Responses

You are in Direct - Inclusive Finance » PIIF Principle 3: Fair treatment

PIIF Principle 3: Fair treatment

IFD 14. Investment in local currency

Possible action:

Provide financing in an appropriate currency and tenor.

14.1. In relation to your direct portfolio in debt, indicate if you provide investment in local currency.

Yes

14.3. Additional information. [Optional]

As indicated in the semi-annual report 09/2019, 81% of the portfolio is in local currency. Where possible such a strategy is being favoured by LMDF as it facilicates currency management at the investee level.

IFD 15. Average maturity of debt investments

Possible action:

Provide financing in an appropriate currency and tenor.

Actively support the building of a diversified funding base.

15.1. In relation to your direct portfolio in debt, indicate what percentage have a maturity (from the point of investment) of the specified duration:

12 months or fewer

13 to 24 months

25 to 60 months

Over 60 months

15.2. Indicate if you have a set limit regarding the maximum fixed income investment exposure of the investees in which you invest. [Optional]

Yes

15.3. Additional information. [Optional]

IFD 16. Average holding period of equity investments (Not Applicable)

IFD 17. Terms and conditions

Possible action:

Negotiate terms and conditions that are transparent, fair and reasonable, including fair break-up clauses.

17.1. Indicate if you adopt the following practices:

For fixed income investments: Use the Lenders’ Guidelines for Setting Covenants in Support of Responsible Microfinance as an example or reference document.

Indicate if these practices are formalised in written policies and procedures.

Yes

Ensure that the investee understands the terms, covenants and their implications prior to signing loan / shareholder documentation.

Describe your process.

          Initial discussion with MFIs through a detailed term sheet and timely submission of the full contract for review of MFIs.

Indicate if these practices are formalised in written policies and procedures.

Yes

Foster trust and proactive dialogue with investees through straightforward discussions on issues such as a covenant breach.

Describe your process.

          Key is a dialogue between MFI and the opportunity to justify any breach and propose an action plan to address the situation.

Indicate if these practices are formalised in written policies and procedures.

Yes

In the case of material covenant breach, create/participate in a voluntary workout group where applicable, with the goal to help the investee remain a going concern whenever possible.

Indicate if these practices are formalised in written policies and procedures.

Yes

For fixed income investments: Train your staff on effective monitoring and covenant waiver negotiations to manage deteriorating conditions, and transition a non-performing loan from loan origination staff to specialised workout staff.

Indicate if these practices are formalised in written policies and procedures.

Yes

Encourage investee skills-building on financial projections, scenario planning and stress-testing for management, and on financial expertise and governance for Directors.

Indicate if these practices are formalised in written policies and procedures.

Yes

Other (explain)

None of the above

17.2. Additional information. [Optional]

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Luxembourg Microfinance and Development Fund

PRI reporting framework 2020

PIIF Principle 3: Fair treatment

IFD 14. Investment in local currency

14.1. In relation to your direct portfolio in debt, indicate if you provide investment in local currency.

14.2. Indicate what percentage of your direct portfolio in debt is invested in the investee’s local currency.

14.3. Additional information. [Optional]

IFD 15. Average maturity of debt investments

15.1. In relation to your direct portfolio in debt, indicate what percentage have a maturity (from the point of investment) of the specified duration:

Indicate percentage

15.2. Indicate if you have a set limit regarding the maximum fixed income investment exposure of the investees in which you invest. [Optional]

15.3. Additional information. [Optional]

IFD 16. Average holding period of equity investments (Not Applicable)

IFD 17. Terms and conditions

17.1. Indicate if you adopt the following practices:

Indicate if these practices are formalised in written policies and procedures.

Describe your process.

Indicate if these practices are formalised in written policies and procedures.

Describe your process.

Indicate if these practices are formalised in written policies and procedures.

Indicate if these practices are formalised in written policies and procedures.

Indicate if these practices are formalised in written policies and procedures.

Indicate if these practices are formalised in written policies and procedures.

17.2. Additional information. [Optional]