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NORSAD FINANCE LIMITED

PRI reporting framework 2020

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Basic information

OO 01. Signatory category and services

01.1. Select the services and funds you offer

Select the services and funds you offer
% of asset under management (AUM) in ranges
Fund management
Fund of funds, manager of managers, sub-advised products
Other

Please specify 

          Regional private credit firm and impact investor offering medium to long-term risk capital to mid-market growth companies across Southern Africa. (Balance Sheet Funding)
Total 100%

Further options (may be selected in addition to the above)

01.2. Additional information. [Optional]

Norsad has been investing for impact in the Southern African region (SADC) for 30 years. Norsad Finance is a permanent capital vehicle that does on-balance sheet lending seeking appropriate risk-adjusted returns and desirable impact. Norsad seeks growth to achieve more impact and maintains some retained earnings towards balance sheet growth, however, the company also pays dividends to shareholders from profits.

Norsad's Mission: "To be the premier provider of customised longer-term risk capital to Southern African companies and financial services providers that are financially, socially and environmentally sustainable.”

Norsad’s Vision: ''To be acknowledged as a preferred impact investor providing flexible and customised financing solutions to commercially viable businesses with the intention of driving economic growth, social advancement and environmental sustainability.”

One of our key strategic goals is ''Emphasising Norsad's Impact objectives and maintaining high Social and Environmental Standards'', this goal encompasses;

- Maximising the long-term development impact of Norsad's portfolio investments and overall capital.

- Improving corporate governance of investee companies and ensuring their compliance with the best social and environmental standard.

At Norsad, we recognise that growth needs to be sustainable by impacting jobs (reducing poverty and unemployment), enabling diversification (reducing dependence on resources and commodities) and promoting economic and socio infrastructural effects.

We provide direct debt financing of USD5 million to USD10 million to financial institutions and mid-market companies for growth and development. We offer customised financing solutions across the debt spectrum to each individual client depending on the business needs and capital structure. Our instruments include senior debt, stretched senior, unitranche, second lien and mezzanine debt finance. We are a long-term funding partner with a typical investment holding period of 5 years. We have a unique proposition in our markets with regard to customization and flexibility of our financing instruments.

OO 02. Headquarters and operational countries

02.1. Select the location of your organisation’s headquarters.

Botswana

02.2. Indicate the number of countries in which you have offices (including your headquarters).

02.3. Indicate the approximate number of staff in your organisation in full-time equivalents (FTE).

22 FTE

02.4. Additional information. [Optional]

Our head office is located in Gaborone, Botswana and we also have a new office in Johannesburg, South Africa. While Norsad is located in Botswana, our activities are across 16 countries in Southern Africa. Our current portfolio has investments in 12 of these countries.

Norsad employs 22 FTE staff members, and 5 interns. The Norsad team is diverse and is represented by nationals from Botswana, South Africa, Zimbabwe, Zambia and Britain. We have a gender balanced team and we are proactive in developing regional talent through our employee proposition offering. This is in line with our strategic goal of 'Maximising Value of the Norsad Team'. In 2019, we initiated an internship program where we onboarded a cumulative total of 7 newly graduated interns. The intention of this program was to provide the interns with working experience and capacitate them with the professional skills to enable them to compete in the limited Botswana job market. At the end of the program, 85% of the interns secured full time roles with a Regulator, Audit firm, Environmental Consulting firm and Regional Financial Service Providers. This we consider to be not only an investment in building a pool of Norsad alumni, it is also our contribution towards the country's human capital development and the stewardship Norsad continues to build in Africa.

OO 03. Subsidiaries that are separate PRI signatories

03.1. Indicate whether you have subsidiaries within your organisation that are also PRI signatories in their own right.

03.3. Additional information. [Optional]

Norsad Finance Limited is the trading entity and holding company for Norsad Botswana and Norsad South Africa. Norsad Botswana and Norsad South Africa are registered to ensure compliance with the country specific regulators and have limited operations. Norsad Finance Limited is the only signatory to PRI as the main trading entity.

OO 04. Reporting year and AUM

04.1. Indicate the year end date for your reporting year.

31/12/2019

04.2. Indicate your total AUM at the end of your reporting year.

Include the AUM of subsidiaries, but exclude advisory/execution only assets, and exclude the assets of your PRI signatory subsidiaries that you have chosen not to report on in OO 03.2
Total AUM
trillions billions millions thousands hundreds
Currency
Assets in USD
trillions billions millions thousands hundreds

04.4. Indicate the assets which are subject to an execution and/or advisory approach. Provide this figure based on the end of your reporting year

04.5. Additional information. [Optional]

Our AUM composition reflects our intention to provide appropriate financing instruments that are aligned to our risk appetite and impact mandate. Norsad is on a growth trajectory and some of our ESG key performance indicators are:

- ESG risk management strategies through compliance to best practice environmental, social and governance standards.

- Developmental Impact [sustained jobs, currency effects, contribution to Government revenues and contribution to National Income].

OO 06. How would you like to disclose your asset class mix

06.1. Select how you would like to disclose your asset class mix.

Internally managed (%)
Externally managed (%)

 

Listed equity 0 0 0 0
Fixed income >50% 100 0 0
Private equity 0 0 0 0
Property 0 0 0 0
Infrastructure 0 0 0 0
Commodities 0 0 0 0
Hedge funds 0 0 0 0
Fund of hedge funds 0 0 0 0
Forestry 0 0 0 0
Farmland 0 0 0 0
Inclusive finance 0 0 0 0
Cash 0 0 0 0
Money market instruments 0 0 0 0
Other (1), specify 0 0 0 0
Other (2), specify 0 0 0 0

06.2. Publish asset class mix as per attached image [Optional].


06.3. Indicate whether your organisation has any off-balance sheet assets [Optional].

06.5. Indicate whether your organisation uses fiduciary managers.

06.6. Provide contextual information on your AUM asset class split. [Optional]

Our assets [99%+ Fixed Income] are in the form of self liquidating bespoke debt facilities to clients/investees. All these assets have been deployed to investee companies who meet the impact criteria for Norsad and have committed to a Social and Environmental Action Plan (SEAP). The social and environmental impact of these assets is duly monitored through out the lifecycle of the asset. Norsad assets are deployed and committed across 12 countries and diverse sectors with a bias towards our impact focus of financial inclusion, food security, renewable energy and hospitality. This is reflected in our top 4 portfolio composition as aligned to our impact focus below:

  • Financial Inclusion: +50%
  • Food security: +20%
  • Hospitality: +7%
  • Renewable energy: +6%

Investment instruments offered by Norsad shall be flexible and innovative and structured based on the financing needs and cash flow projections of the investee company. Our portfolio instruments are as below: 

  • Senior Debt 24%
  • Stretch Debt 40%
  • Unitranche  11%
  • Mezzanine  17%
  • Tier II  7%
  • Equity 1%

OO 07. Fixed income AUM breakdown (Private)

OO 08. Segregated mandates or pooled funds (Not Applicable)

OO 09. Breakdown of AUM by market

09.1. Indicate the breakdown of your organisation’s AUM by market.

0 Developed Markets
3.3 Emerging Markets
8 Frontier Markets
88.7 Other Markets
Total 100% 100%

09.2. Additional information. [Optional]

Emerging Markets: South Africa 3.3%

Frontier Markets: Mauritius 8.0%

Other Markets: All other Southern African - SADC Countries 88.7% (Zimbabwe, Zambia, Angola, Botswana, Namibia, Mozambique, Malawi, eSwatini)

Our principal market is the 16-member Southern African Development Community (SADC) region. We can also provide financing beyond our principal markets to SADC domiciled companies expanding outside the region within Sub-Saharan Africa. Our markets have low GDP/Capital measures and have a combined GDP of USD700 billion and population of 350 million people. These markets are classified generally as developing markets which typically have low Human Development Indices (HDIs) and high Gini coefficients. Most of the member countries are agrarian based economies which are heavily dependent on rain fed agriculture. This makes these markets appear unattractive to the financial investor seeking risk adjusted returns. However, Norsad has played an active role in these countries for 30 years and has managed to partner and build sustainable companies having invested close to USD 400 million in over 140 companies.

While the region has elevated risk, SADC is Norsad’s principal market and impact focus region. We are aligned with the regional development needs and as such do not shy away from making investments which address the needs of the region and provide strong demonstration effects. To demonstrate this, in 2019 Norsad financed the construction of a solar project in Zimbabwe which feeds into the national grid. This was Norsad's third renewable energy investment in Zimbabwe to showcase the feasibility and encourage more investments in the space (Norsad financed the first renewable energy project in Zimbabwe connected to the national grid a few years before).  Zimbabwe and the entire Southern African region have experienced extreme drought due to climate change, this in turn has incapacitated the hydroelectric installed capacity. Norsad played a notable role in capacitating an economy by investing and facilitating the use of renewable energy in the form of solar (which is abundant in the region). The project has been granted the national project status by the Government of Zimbabwe and is estimated to substitute an estimated USD4M per annum in energy imports and comes and at a time when the country is reeling from power shortages.

 
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