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O F F -‐ G R I D S O L A R & F I N A N C I A L A C C E S S S E N I O R D E B T F U N D I

Photo: Simpa Networks

CONFIDENTIAL – NOT FOR DISTRIBUTION

A fixed income product with defined tenors up to 4 years

D I S C L A I M E R

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This document is intended for discussion purposes only and does not create any legally binding obligaHons on the part of Social Investment Managers and Advisors (“SIMA” or the “Firm”). Without limitaHon this document does not consHtute an offer, an invitaHon to offer or a recommendaHon to enter into any transacHon. When making an investment decision, you should rely solely on the documentaHon relaHng to the transacHon and not the summary contained herein. SIMA is not acHng as your financial advisor or in any other fiduciary capacity with respect to this transacHon. The transacHon(s) or product(s) menHoned herein may not be appropriate for all investors and before entering into any transacHon you should take steps to ensure that you fully understand the transacHon and have made an independent assessment of the appropriateness of the transacHon in light of your own objecHves and circumstances, including the possible risks and benefits of entering into such transacHon. You must (i) have such knowledge and experience in business and financial maXers as will enable you to evaluate the merits and risks of a proposed investment in the securiHes referred to herein, and (ii) be able to bear the economic risk of this investment. You should also consider seeking advice from your own advisors in making this assessment. If you decide to enter into a transacHon with SIMA, you do so in reliance on your own judgment. The informaHon contained herein does not consHtute and shall not be construed to consHtute legal and/or tax advice by SIMA. Individuals should consult with their advisors regarding their parHcular situaHon. The informaHon contained in this document is based on material we believe to be reliable; however, we do not represent that it is accurate, current, complete, or error free. AssumpHons, esHmates and opinions contained in this document consHtute our judgment as of the date of the document and are subject to change without noHce. Any projecHons are based on a number of assumpHons as to market condiHons and there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results. SIMA may engage in transacHons in a manner inconsistent with the views discussed herein. SIMA trades or may trade as the principal in the instruments (or related derivaHves), and may have proprietary posiHons in the instruments (or related derivaHves) discussed herein. SIMA may make a market in the instruments (or related derivaHves) discussed herein. The distribuHon of this document and availability of these products and services in certain jurisdicHons may be restricted by law. You may no distribute this document, in whole or in part, without our express wriXen permission. SIMA specifically disclaims all liability for any direct, indirect, consequenHal or other losses or damages including loss of profits incurred by you or any third party that may arise from any reliance on this document or for the reliability, accuracy, completeness or Hmeliness thereof.

The informaHon contained in this preliminary transacHonal summary is confidenHal informaHon regarding securiHes that may in the future be offered by a to-‐be-‐formed, offshore special purpose vehicle (the “Issuer”). This preliminary transacHonal summary is being delivered to a limited number of sophisHcated prospecHve investors to assist them in determining whether they have an interest in the type of securiHes described herein and is solely for internal use. The Issuer has no operaHng history upon which prospecHve investors may evaluate their performance. There is no assurance that the Issuer will be profitable or achieve its investment objecHve. The result of an investment in the Fund may be adversely affected by a variety of factors.

The informaHon contained herein is not complete, is subject to material changes and, if any offering of securiHes is made, will be superseded by preliminary and final offering memoranda with respect to any notes as such offered. Such offering memoranda will describe in greater detail the Issuer of the securiHes described herein, the business and financial condiHon of such Issuer, a descripHon of the securiHes described herein and the risks related to invesHng in such securiHes. You will not be permiXed to make an investment decision with respect to the securiHes described in this preliminary transacHonal summary unHl you have received a printed copy of a preliminary offering memorandum with respect to such securiHes. Any decision to invest in the securiHes described herein should be made a]er reviewing the offering memoranda, conducHng such invesHgaHons as the investor deems necessary or appropriate and consulHng the investor’s own legal, accounHng, tax and other advisors in order to make an independent determinaHon of the suitability, merits and consequences of investment in the securiHes described herein. This preliminary transacHonal summary is not an offer to sell any of the securiHes described herein and it is not soliciHng an offer to buy these securiHes.

Neither the Issuer nor the securiHes referred to in this material may have been or will be registered under the securiHes laws of any jurisdicHon. No applicaHon has been made for the lisHng of the Issuer on any stock exchange.

An investment in the Issuer represents a speculaHve and highly illiquid investment and involves a high degree of risk. There is no secondary market for the securiHes referred to herein and no such market is expected to develop. These securiHes will be subject to restricHons on transferability and resale and may not be transferred or resold except as permiXed under the SecuriHes Act and any applicable state or other securiHes laws, pursuant to registraHon or an exempHon therefrom and, further, under the organizaHonal documents of the Issuer.

1.2 billion people in the world do not have electricity.

95% of these people live in Sub-‐Saharan Africa and Asia.

E N E R G Y P O V E R T Y

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An image of Earth’s city lights. The brightest areas of the Earth are the most developed.

R E A L I T Y B o P c o n s u m e r s a r e f o r c e d t o t u r n t o u n h e a l t h y , c o s t l y , a n d d a n g e r o u s c a r b o n -‐ b a s e d s o u r c e s

Health Kerosene lamps contribute to

household air polluHon which causes fatal respiratory problems

and is associated with 4.3 million deaths a year,

higher than the number of deaths resulHng from malaria, AIDS, or sanitaHon issues combined.

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Social

In darkness, social interacHons are limited and

safety is reduced, especially for women.

Economic BoP households—who only earn $2-‐$10/day—spend

10-‐15% of their monthly income on inefficient energy sources.

A]er the sun goes down, there is also

less economic acFvity.

Environmental

90 million tons of CO2 are emiXed annually from burning

fossil fuels for lighHng.

Demand For Solar Is Need-‐driven: 1.2 billion people in the world do not have electricity. 95% of these people live in Sub-‐Saharan Africa and Asia. In 2014, more than $23 billion was spent on non-‐renewable sources of energy including kerosene, baXeries, and candles.

O F F -‐ G R I D S O L A R THE MO S T CO S T -‐ E F F E C T I V E WA Y O F P ROV I D I NG E L E C T R I C I T Y

Proven Technologies Minimize Risk For Solar SoluFon Providers: GSM technology allows companies to monitor and automaFcally shut off products in the case of non-‐payment.

Technology & InnovaFve Business Models Make Solar Affordable: Not only is demand based on need, solar can be delivered affordably through smaller installments, o]en using digital payment technology.

Shrinking Solar Component Costs: Solar is cheapest form of energy in the world and solar components conHnue to drop. Since 2008, costs have dropped more than 80%.

Growing Investable Market: Bloomberg New Energy Finance esHmates the debt needs of off-‐grid solar providers to be $3.1 billion by 2020.

Many Developing Countries Are Solar-‐Rich: The majority of the countries that don’t have widespread power infrastructure are some of the richest with the sun’s irradiaFon.

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The confluence of these factors have made off-‐grid solar an a]racFve commercial opportunity and a reality for the poor.

TO T H E B A S E O F T H E P Y R AM I D

LighHng Africa

HEALTH •  Reduces home air polluFon avoiding the fatal respiratory illnesses

•  Reduces fire and ingesFon hazards associated with candles and fuels

SOCIAL

•  Increases study hours for children from 1.7 to 3.2 hours each night, on average

•  Increases community acFvity (night classes, meeHngs, etc.)

•  Improves safety and vulnerability for households, parHcularly for women

ENVIRONMENTAL

•  Prevents 90 million tons of CO2 emissions per year

•  Reduces 25 billion liters of kerosene consumed per year

•  Prevents 270,000 tons of black carbon per year

ECONOMIC

•  Saves $60/year from a one solar light; every $1 spent on solar a consumer saves $3 in the long run on kerosene & phone charging costs2

•  Creates $27 billion in purchasing power

•  SFmulates small business through increased evening hours

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Solar Aid

A L I F E C H A N G I N G I N V E S T M E N T

I N V E S T I NG I N C L E AN E N E RG Y A C C E S S

Y o u r i n v e s t m e n t i n S I M A ’ s F u n d w i l l b r i n g s o l a r e n e r g y t o 2 5 0 , 0 0 0 h om e s a n d w i l l i m p a c t t h e l i v e s o f m o r e t h a n 1 . 2 5 m i l l i o n p e o p l e . 1

1Based on an average solar home system price of US $300 and an average household size of 5. 2 Bloomberg New Energy Finance, 2016

2 0 2 0 E S T I M A T E D T O B E ~ $ 3 . 1 B N A N N U A L L Y B Y

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Source: Bloomberg New Energy Finance, 2016

>10W SHS Pico-‐PV

2015 2017 2020

0.5 0.2 1.2

0.3 2.7

0.4

$0.7 bn

$3.1 bn

$1.5 bn

G R O W I N G O F F -‐ G R I D E N E R G Y M A R K E T

NEED FOR DEBT Several prominent investors have invested in the off-‐grid solar sector, mostly in the form of equity. SIMA is filling the huge need for debt to expand off-‐grid solar company growth.

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P R O M I N E N T I N V E S T O R S I N T H E O F F -‐ G R I D S O L A R S E C T O R

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SO LAR HOME S Y S T EMS PORTAB L E SO LAR L I GHTS

$5 – 60 $100 – 1,000 made affordable through leasing or installment plans, o]en using digital payment technology

0.5 – 3 Wa] Solar Panel lithium-‐ion baXery

4 – 200 Wa] Solar System lithium-‐ion baXery, typically

Single LED lantern, mobile charging on some models

Plug-‐and-‐play system, 2–6 LED lights, radio, mobile charging Technician installed mulF-‐room energy system: 4–10 LED lights, mobile charging, fridge, fans, TV

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A R R A Y O F H I G H -‐ D E M A N D O F F -‐ G R I D S O L A R A P P L I A N C E S

QUA L I T Y A S SURANC E SIMA requires all portolio companies to sign a Code of Conduct that includes product quality assurance (including at least 2 year warrantees), good customer service, and transparency in pricing. SIMA also requires that products be verified by the IFC LighHng Global Quality Assurance program or similar standards.

DIGITAL PAY-‐AS-‐YOU-‐GO (PAYG) PLANS & REMOTE MONITORING TECHNOLOGY

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Mobile money enabled repayment in installments over 12 to 36 months

$Smart solar energy as a service with a

remotely monitored ba]ery

Server-‐based Customer Management; can be in the cloud

-‐  D i g i t a l p a ymen t s make p r odu c t s affo rdab l e t o c u s t ome r s t h r ough sma l l e r i n s t a l lmen t s .

-‐  Remo te mon i t o r i n g m i n im i z e s r i s k f o r s o l a r s o l uHon p r o v i d e r s .

Solar Company Maintenance Team

Customer Database

Solar System Health DiagnosFcs

Customer

One example of how an off-‐grid solar company can deploy technology within its business model:

MA N U F A C T U R E R S

•  Need capital for R&D to tailor products for BoP customers

•  Inventory financing to order units and parts from overseas suppliers

•  Product/Receivable financing if operaHng throughout the PAYG value chain

Design and engineering OperaFons Manufacturing NaFonal

distribuFon Retailing Consumer financing

D I S T R I B U T O R S & R E T A I L E R S

•  Distributors and retailers need to finance product acquisiFon

•  Financing required over 12 to 24 months to place products with clients (PAYG)

•  Important working capital needs because of long transport and distribuHon Hmes (12 to 20 weeks)

F I N A N C I A L A C C E S S C OM P A N I E S

•  Microfinance InsFtuFons (MFIs) can play a key role in developing the off-‐grid sector by providing much needed product acquisiFon financing

•  SIMA has a vast network in microfinance (where write-‐offs are ~1%) to make links to the off-‐grid solar sector

E N E R G Y V A L U E C H A I N

S I M A ’ S P O S I T I O N I N G

SIMA expects to operate throughout the enFre value chain and finances companies with a variety of needs:

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A spate of solar and financial access companies have sprung up in Africa and South/Central Asia to manufacture, distribute, and/or finance off-‐grid solar products:

M A N A G E M E N T R I S K

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Fenix InternaHonal

ASSET QUALITY RISK Asset quality in both sectors is very good: microfinance write-‐offs are below 1% and off-‐grid solar write-‐offs are below 5%.

Microfinance is an established, $70 billion industry with a 30 year track record and loan portolio CAGR of 15-‐30%; diversificaHon with these assets miHgates portolio risk.

Leading solar companies have ~ 5 years of operaFng history

SIMA requires portolio companies to have a Code of Conduct that assures quality of products, responsible pricing, and good a]er-‐sales service

MARKET RISK

Fund is structured to naturally match assets and liabiliFes

Assets and liabiliHes will be fixed rate instruments to avoid basis risk

Fund and its loans are of relaHvely short duraFon (4 years or less), which further limits the exposure to interest rate risk

SIMA has a team in Africa and S. Asia to perform local monitoring

CURRENCY RISK

Loans to be made in USD or employ FX swaps; excepHons approved by the investment commiXee on a case-‐by-‐case basis

Country and repatriaFon risk assessed on an ongoing basis during the screening and due diligence phases

SIMA’s Managing Partners are experienced fund managers with on ground experHse raising 13 funds totaling $630 million invesFng in 50+ countries with less than 2% losses.

Loan ApplicaFon and Review

Pipeline

Due Diligence and

Compliance

Credit Write-‐Up and Investment Commi]ee

Legal

Closing and Fund Disbursal

ReporFng and

Monitoring

S I M A ’ s I N V E S T M E N T

P R O C E S S

INCLUDES SOCIAL AND ENVIRONMENTAL FACTORS

Investment screens Skype calls Term sheets Sample Covenants

ApplicaHon Financial model Document review Preliminary commitment leXer

QuesHonnaire Site visit Social scorecard KYC/AML checklist Social and environmental diligence

Risk raHng Financial model QualitaHve informaHon IdenHfy and agree on social goals

Local legal opinion Loan agreement

Covenants

Signing of documents Wire money

Quarterly/monthly reporHng and covenant tracking of financial,

environmental, and social goals Interest payment

Re-‐raHng External audit

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T E R M S A N D C O N D I T I O N S

F U N D K E Y

Fixed income product with defined tenors up to 4 years

Management fee: 1.75%

Minimum investment: $250K (smaller amounts at the discreHon of the manager)

MulFple risk/return categories: Highest IRR of 20.18% and greatest credit protecHon of 63%

At investor’s discreHon, opHon to extend maturity by 3 years

14 Photo: Mobisol

Coupon paid to investor on quarterly basis

Credit ProtecFon (USD)

Credit ProtecFon (% of Total Fund

Size)

$47.5M 63.4%

$12.5M 16.7%

$7.5M 10.1 %

African Guarantee Fund is providing a first loss guarantee on the Junior tranches

USAID enabled SIMA to add an addiHonal $1.0M Junior-‐B tranche $3.0M 4.1%

$2.0M 2.7% CatalyFc Credit ProtecFon = $1.3M modeled losses (1.8%) + $0.7M excess spread (0.9%)

Super Senior Tranche USD $29.5 million Coupon: 3.35%

Senior Tranche Size: USD $35.0 million Coupon: 5.35%

Junior-‐A Tranche Size: USD $9 million Coupon: 7.35%

CatalyFc Tranche Size: USD $0.5 million IRR: 20.18%

LiabiliFes

50-‐70%

Off-‐Grid Solar Companies

30-‐50%

Microfinance InsHtuHons w/ solar asset

backed micro-‐financing programs

Assets

Junior-‐B Tranche Size: USD $1.0 million Coupon: 1.75%

F U N D S T R U C T U R E

A 4-‐year, US $75 million

Fixed Income Fund

NB: Figures provided for illustraHve purposes and are not a promise for a specified financial return.

F I R S T C L O S E C O M P L E T E $ 4 1 M I L L I O N

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Anchor Investors:

Board of Directors of Fund I

3 members from Advisory Board

Advisory Board (composed of significant

investors in the Fund -‐ 9 members)

General Manager Social Investment Managers & Advisors, LLC

Delaware, USA Noteholders

Fund I The Netherlands

Accountant Ernst & Young

Fund Servicer Vistra, B.V.

FX Hedging MFX SoluHons

Legal Counsel O’Melveny & Myers LLP

Service providers:

SFchFng Impact Investment FoundaFon

The Netherlands

Board of Directors of SFchFng Impact Investment FoundaFon

Members: Asad Mahmood, Michael Rauenhorst, Mark van Doesburgh and 1

other (TBD)

Investment Commi]ee Deepak Kamra (Chair), Partner, Canaan Partners Asad Mahmood, SIMA CEO Donn Tice, Founder, FronHer Energy Joe Fernandez, Founder/Director, TWB/Solageo Tor Gull, Former MD, SHchHng Oikocredit ISF

Role of the FoundaHon Board is to ensure the Fund performs on its social objecHves.

F U N D I B . V . O R G A N I Z A T I O N A L S T R U C T U R E

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T R A C K R E C O R D T E A M

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We are one of the longest serving fund managers in the impact invesFng space. We have managed 13 funds totaling $630mm, invesHng in 50+ countries with less than 1.75% losses. In addiHon to investors, we consider ourselves industry builders with a long track record. StarHng in 2011, SIMA managers were some of the first investors in off-‐grid solar companies including D.Light, Orb Energy, and Greenlight Planet. SIMA team members have managed an off-‐grid solar distribuFon business in Uganda. SIMA’s Managing Partners have raised two successful equity funds and have made several equity investments in Off-‐Grid Solar companies including BBOXX, One Degree Solar, and BrighterLite.

HENRY SHILLING DIRECTOR, USA

•  Launched sustainableinvest.com, an early stage website devoted to independent sustainable research and analysis intended to assist interested investors achieve posiHve societal outcomes while realizing market-‐based financial results

•  25-‐year career at Moody’s: iniHated, led and coordinated Moody’s worldwide efforts to bolster the raHng agency’s research acHviHes and marketplace engagement within the broad environmental, social and governance (ESG) sphere

•  Directed Moody’s program to implement a methodology for assessing green bonds world-‐wide

ASAD MAHMOOD CEO & MANAGING PARTNER

MICHAEL RAUENHORST MANAGING PARTNER

XAVIER PIERLUCA MANAGING PARTNER

•  One of the longest serving social investment fund managers. Managing Director at Deutsche Bank-‐ Created DB’s Social Asset Management business –cumulaHvely deployed more than $2 bn in social investments in 50+ countries.

•  Responsible for FINCA InternaHonal’s social enterprise sector engagement, focused on solar energy and innovaHve financing structures

•  GOGLA working commiXees. Founding Board member, Microfinance InformaHon Exchange (MIX). Advisory Council, Social Investments, World Economic Forum

•  Long-‐Hme social investor in financial access and energy access firms. Developed and launched Moody’s CorporaHon’s first social raHng product

•  Co-‐developed four microfinance funds at Deutsche Bank. Founded Jamaica’s first independent MFI. Managed 4 foundaHons, serves on the board of a family office.

•  Advisor to ACCION InternaHonal and Catholic Relief Services’ Impact Investment CommiXee. Member, Social Performance Task Force Indicators CommiXee.

•  Board member, several Deutsche Bank Funds

•  Investment professional with a over 12 years experience in the field of impact invesHng managing private equity and debt funds

•  CIO of Bamboo Finance. Designed and Launched the Bamboo Financial Inclusion Fund II, targeHng microfinance / SME banks and Fintech companies. At Deutsche Bank structured several funds for microfinance and care companies. Management Consultant, DeloiXe ConsulHng and Ernst and Young Corporate Finance

•  Board member CONFIE, Banco FIE, Apoyo Integral, Accion Investments, Asmitha

S I M A T E A M

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ERIN DAVIS VICE PRESIDENT, USA

BRIAN MCCONNELL VICE PRESIDENT, KENYA

FAIQ KAHN VICE PRESIDENT, PAKISTAN

•  Founding member of SIMA •  Former Investment Officer, FINCA

InternaHonal – focused on developing linkages between microfinance and delivery of Energy and SanitaHon products.

•  Fellow, South Pacific Business Development (SPBD) Tonga.

•  Senior Research Associate, Harvard University, Dana Farber Cancer InsHtute.

•  BA Spanish, Wheaton College (MA). MBA & MA InternaHonal Development, American University. Fluent in Spanish

•  Expert in evaluaHng financial insHtuHons and businesses serving low income clients. Former Regional Manager – Africa at Micro-‐Credit RaHngs InternaHonal Limited (M-‐CRIL). Conducted over 40 raHngs. Led development efforts across SSA. Former Senior Analyst at Planet RaHng. Published research at the World Bank on access to finance. Peace Corp Vol.

•  MBA (Finance), American University, Kogod School of Business, BA (Economics), Kenyon College. Conversant in French

•  Former Business Planning Manager at Habib Bank Limited (Islamic Banking), Karachi. Managed end-‐to-‐end launch of HBL-‐Car Leasing product and helped design long term strategic framework for HBL-‐IB. Credit Analyst at JCR-‐VIS Credit RaHng – designed credit scoring for different sectors.

•  B. Sc. in TexHle Engineering. MBA in Finance, InsHtute of Business AdministraHon, Karachi. NaHve Urdu speaker, proficiency in Chinese.

SAMMY MALAKI VICE PRESIDENT, KENYA

KANWAL RATHI INVESTMENT OFFICER, PAKISTAN

NELSON KANYU INVESTMENT OFFICER, KENYA

•  Former CFO Nuru Energy, oversaw financial acHviHes for the group’s six business units in five countries. •  Former controller at Access Afya Kenya Limited (A healthcare social enterprise). • Accountant at Retriever Limited where he set up the finance unit. • CPA, Kenya. MBA, University of Derby, City of Derby, East Midlands, United Kingdom. Speaks five languages

•  Former Assistant Manager Corporate Finance at TCS Private Limited(LogisHcs company) • Worked on the financial analysis of major CAPEX investments, managed debt funding for group companies and worked on the financial valuaHon for equity raise • CFA Level 3 Cleared; BBA, InsHtute of Business AdministraHon, Karachi. NaHve Urdu speaker

•  Worked at Commercial Bank of Africa, Kenya working with the bank’s Insurance Agency, Asset Finance and Business Banking departments

•  Roles include financial modeling for due diligence, internal audit and credit risk assessment

•  BBs in MathemaHcal Finance Strathmore University

•  NaHve English and Swahili speaker with limited professional proficiency in French

S I M A T E A M

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RAMSHA RIZVI INVESTMENT ANALYST, PAKISTAN

MAHAM SAQIB INVESTMENT ANALYST, PAKISTAN

•  Former Student Industry Analyst – USA at Fi]h Third Bank

•  Volunteer at Paper Airplanes – English Tutor for students who live in conflicted areas

•  BS AccounHng and Finance, InsHtute of Business AdministraHon, Karachi

•  NaHve Urdu speaker

•  Former intern at JS Private Equity Ltd. Focused on financial modeling and valuaHon analysis for a healthcare insHtuHon under consideraHon for expansion through equity

•  CFA Level 1 cleared •  BS AccounHng and Finance, IBA Karachi •  NaHve Urdu speaker

S I M A T E A M

Currently hiring two more people: -‐  Vice President based in Kenya -‐  Investment Officer based in Kenya or Pakistan

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C O M M I T T E E I N D E P E N D E N T , E X P E R T I N V E S T M E N T

Deepak Kamra (Chair), General Partner of Canaan Partners -‐  Deepak is a prominent venture capitalist and directs Canaan Partners’ impact investment strategy.

Personally, Deepak is a leading social investor and serves as the chairman for several of Deutsche Bank’s funds’ credit commiXees.

Asad Mahmood, SIMA CEO -‐  See bio on previous page. Joe Fernandez, Founder and Director of Trade Without Borders -‐  Joe is an expert on evaluaFng manufacturing processes and has served major clients including Tesco,

Home Depot and Carrefour. Trade Without Borders is a Social Enterprise whose mission is Sustainable Development Through Responsible and Inclusive Trade of Impact Products. Its primary focus is on clean energy soluFons for underserved markets through its Solageo online platorm.

Tor Gull, Former CEO of Oikocredit -‐  Tor headed Oikocredit, the worlds largest impact investor and has more than 600 relaFonships globally.

Tor has served on the investment commiXee for several of Deutsche Bank’s funds Donn Tice, Former CEO of d.light -‐  Developing world energy execuHve and investment professional who has built and scaled d.light, a global

off-‐grid energy business in 60 counHes, advised and developed off-‐grid energy investment funds, and advised African governments on energy policy to accelerate private sector market growth.

22 One Degree Solar

APPENDIX

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F I N A N C I A L A C C E S S

Number of customers: 10,000+

2012: AMK Cambodia without digital finance (113 offices) 2014: AMK Cambodia with digital finance (139 offices and 1,600 agents)

T Y P I C A L

Revenue: > $5mm

113 Offices Branch Office Sub-‐Branch Office

Number of employees: 150+ Customer service: code of conduct, signatory to SMART Campaign

Technology: innovaHon and technology is a key strategy component for greater outreach

139 Offices & 1,600 Agents Branch Office Sub-‐Branch Office

Agent

Business model: Microfinance using FinTech Microfinance with solar asset-‐backed financing

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C O M P A N Y

Example of an MFI using FinTech to increase outreach:

O F F -‐ G R I D S O L A R C O M P A N Y

G E N E R A L P R O F I L E :

Revenue:

$1 -‐ 10mm

Number of employees: 100 -‐ 500

Business model: _ Distributors _ Manufacturers _ Distributors and manufacturers

DistribuHon model: _Cash and carry _Lease to own _Pay-‐as-‐you-‐go (flexible payment based on usage) _Off-‐grid “uHlity”(customer never owns system)

Number of customers: 5,000 -‐ 50,000

Customer service: warrantees, code of conduct, a]er-‐sales service

Technology: many companies use digital monitoring and payment

How company interacts with customers and collects payments

Mobile money enable repayment

over 3 years

$

Smart solar energy as a service. Remotely monitored baXery.

Smart retail kiosks and technicians

25 Photo: GREALTEC

O F F -‐ G R I D S O L A R C O M P A N Y P R O F I L E E X A M P L E S

Investors:

Khosla Impact, Synergy Energy, Bamboo Finance, SHchHng Doen FoundaHon, AECF, SunFunder, Ceniarth

CompeFFve Advantages:

Proprietary hardware and cloud based-‐souware dashboard: monitors and collects customer usage and their repayment history and can remotely shut down the service due to severe delinquencies and redeploy the product

In-‐house customer financing: to assist customers with payment plans (12-‐36 months) and work with them to lower the risk of defaults

Products:

15 -‐ 50 waX solar panels, baXeries, and other accessories

Business OperaFons:

Small to medium-‐sized company selling solar systems to the low-‐income African mass market on a pay-‐to-‐own monthly payment plan. It leads and manages all aspects of its business operaHons through an engineering lab in London, manufacturing plant in China, and a franchise distribuHon network in 35 countries and 30 local shops in Kenya, Rwanda and Uganda.

Employees:

40 total (38 in the UK and 102 worldwide)

Est. 2010 Operates in Kenya, Rwanda

BBOXX

$9M of Capital Raised to Date

Revenue (2014): ~$4.4M

26 Photo: Simpa Networks


Investors:

Fidelity Growth Partners India, Bamboo Finance, Deutsche Bank, Prabhakant Sinha


Intelligent, durable, affordable products: run for 30 hours straight and offer a breakthrough five-‐ year lithium Ferro-‐phosphate baXery

Direct To Village (DTV) channel: penetrate hard to reach regions, offer its agents, ‘micro entrepreneurs’ both an income stream and a sense of personal worth

Global Partnerships: distribuHon efficiencies; One Acre Fund (Rwanda, Kenya, Tanzania, Burundi), Fullerton India, Total (HaiH, Cambodia, Nigeria, Tanzania, Zambia), SunnyMoney (Kenya, Malawi, Zambia, Tanzania), Wilkins Engineering (Ghana), ZamSolar (Zambia), Global Cycle SoluHons (Tanzania), Great Lakes Energy

Products:

Smallest: wide-‐angle beam for general illuminaHon and spotlight mode for tasks; sold 3 million lanterns since 2009 launch and serves over 8 million users. In a 5-‐year period, 1 million were sold in only the last 8 months Largest: smart solar-‐powered lamp system designed to provide light in more than one place at a Hme; three solar hanging lamps with individual switches to control the intensity of light with 2-‐year warrantee

Business OperaFons:

11 offices in 4 countries

Leverages 6,000 micro-‐entrepreneurs, earning a steady income by selling in their own communiHes

Experienced 100% growth in each of the past 3 years; aims to be in 16 million households by 2016

Employees:

630 Full-‐Fme employees across the US, Sub-‐Saharan Africa, India, and China. 6,000 Sun King micro-‐entrepreneurs

Est. 2007 Operates in India, Kenya, Uganda

GREENLIGHT PLANET

$14M of Capital Raised to Date

Revenue (2014): ~$5-‐7M



Investors:

Deutsche InvesHHons-‐ und Entwicklungsgesellscha] (DEG), European Union – European Development Fund, The Africa Enterprise Challenge Fund (AECF), Mobile for Development – GSMA, The Energy and Environment Partnership with Southern and Eastern Africa, myclimate


InnovaFve payment scheme: pay-‐as-‐you-‐go 36-‐month installment method circumvents iniHal investment hurdles for customers who could previously not afford a high quality solar home system Comprehensive auer-‐sales services: three-‐year warranty on the baXery and a twenty-‐year guarantee on the solar panel Remote monitoring: GSM modem included in the solar controller tracks and stores technical data from the panel and baXery in a web-‐based database; potenHal maintenance problems can be addressed swi]ly; tracks payment paXerns and enables the systems to be locked remotely in case of overdue accounts – thus decreasing the risk of payment default The Mobisol Akademie: training insHtuHon for local entrepreneurs, contractors and Mobisol staff

Products:

Systems come in five different sizes ranging from 30, 80, 100, 120 to 200 WaX-‐peak (Wp). Smallest: lights two rooms and charges four mobile phones per day Largest: powers mulHple lights, consumer appliances such as a laptop/TV or a refrigerator and can charge up to ten mobile phones simultaneously

Business OperaFons:

Combines solar energy with an affordable payment plan via mobile phone, comprehensive customer service and innovaHve remote monitoring technology. Offices in Tanzania and Rwanda (15,000 solar home systems installed so far)

Employees:

Berlin: ~60 employees, Tanzania: over 100 permanent employees and 150 freelance operators, Rwanda: 90 employees and 50 freelancers

Est. 2010 Operates in Kenya, Rwanda, Tanzania

MOBISOL

$20M in capital, $6.7M in grants of Capital Raised to Date

Revenue (2014): ~$10M



Investors:

AECF, Acumen, Novastar Ventures, Ashden, Arc Finance, Centenary Bank, Challenges, Invested Development, SunFunder, DOEN, NL Agency


End-‐user credit facility: adapted to the needs and spending habits of its target market

Franchise Model: Well-‐developed distribuHon network, quality equipment and customer service

Products:

Modular, expandable Solar Home System product range (40-‐500Wp)

Business OperaFons:

SolarNow sells high-‐quality modular solar home systems with 18 months credit through a network of 43 branches across Uganda. With 4,200 sales to date, the company is providing energy access to a significant number of rural communiFes. The company plans to expand to Tanzania and Kenya over the next 2 years.

Employees:

70 employees

Est. 2011 Operates in Uganda

SOLARNOW

Revenue (2014):

~$4M


2 I M P O R T A N T B U S I N E S S M O D E L S S I M A F I N A N C E S

PAYG

Products Market Management Capacity

•  Manufacturing (outsourcing, procurement, capacity, cycle, cost)

•  Product (client adequacy, subsHtutes, pricing, versions, R&D deployment cycle)

•  Sales and client demand drivers

•  Technical features (IP, proprietary technology, validaHon, adopHon of technological changes)

•  Environmental impact

•  Trends, size, historical actual and future projected growth rates, drivers

•  CompeFFon (key players, price pressures, trends, differenHaHon)

•  Profile of customers (income levels, economic incenHve, uHlizaHon)

•  Sales, distribuFon channels and post sale services

•  Working capital assumpHons

•  ExecuFon abiliFes of management

•  Track record (number of years of operaHon, growth comparisons, delays in execuHon)

•  IncenFves (Stake in company, Esop plan, terminaHon clauses)

•  Key management gaps

•  Shareholder and Board support (financial, operaHonal)

Direct Sales

Customer SelecFon &

Product Adequacy

Monitoring, Service & CollecFons

Cash Flow SegregaFon & Repossession

•  Market: segment, footprint, saturaHon

•  Sales: rep/agent, training, incenHve

•  Product: price, pay-‐ plan, adequacy

•  UnderwriFng: agent /call center role, credit scoring

•  Customer Contract: terms, repossession, etc

•  Customer Service: warrantee, call center protocol,

•  Remote on/off and top-‐up processes

•  Product Quality

•  Monitoring/ERP system (capacity, accuracy, etc)

•  Payments: Mobile interoperability, fail rate, manual recon

•  Customer CommunicaHons

•  Auer sales service •  Portolio quality

(PAR, write-‐offs, provisioning, repossession, etc.)

•  SegregaHon of operaFonal vs financial cash

•  Lien/collateral security and reserve

•  Technology analysis (tracking of deployed products, remote switch-‐off, tamper proof)

•  Repossession and redeployment process

P AYG & D IRECT SALES

30

31

FINANCIAL PERFORMANCE

Annual Revenue Growth Revenue/Unit COGS/Unit Gross Revenue/Unit OperaFng Expenses/Unit Financial Expenses /Unit Net Profit/Unit Overall Profitability Efficiency (%)

ASSET QUALITY

PAR>90>30 (%) Cash Received Vs. Expected (RVE) % Locked (or % Out of Credit [OOC]) % Write-‐off % Repossessed % Redeployed

QUALITY OF TECHNOLOGY Compliance to Technical Standards Average Maintenance Cost Churn Rate Fault Rate

LIQUIDITY Growth in Funds From OperaFons (FFO) and Funds Flow from Financing (FFF) (%)

Debt Servicing (x) 2 years month by month and projected cash flow analysis

CAPITALIZATION Financial Leverage (x)

IMPACT Environmental, Social and Governance

FINANCIAL RESULTS & OTHER INFO ReporFng Requirements

T W O I M P O R T A N T B U S I N E S S M O D E L S S I M A F I N A N C E S

S IMA DUE D I L IGENCE CR I TER IA

Pay As You Go (PAYG) and Direct Sales of Pico Solar products, are the two prevalent models in the off-‐grid solar sector relying on different factors of success. The elements and concepts listed, while not exhausDve, are key concepts to assess in the context of a due diligence on these two business models.

31

RISK MITIGATING FACTOR

Limited Performance History

The majority of companies in our portolio have a proven track record of ~5 years

Major solar companies have demonstrated at least 5 years of successful performance history, and the basic demand-‐supply dynamics suggest that they will experience significant growth in coming years.

Insufficient Access to Capital

Solar companies conHnue to gain momentum as a viable soluFon in the development industry.

Increasingly, well-‐known venture capitalist, private equity, and impact investment firms are making significant investment in solar companies.

The Power Africa and LighHng Africa iniHaHves have a]racted the strong presence of mulFlateral development banks and government mandates.

QuesFon of Commercial Viability

Solar soluFons make good basic business sense: affordability of products is good, demand conHnues to increase, and customer delinquency is minimal.

Solar products are priced such that they save the user money compared to tradiHonal lighHng methods of fuel or candles and offer added funcHonality such as phone charging.

Growing Market CompeFFon

Demand strongly outweighs supply as the solar market conHnues to grow.

In Africa alone, 85% of the populaHon does not have access to grid electricity or experiences frequent outages leading to demand for other soluHons.

Technology Becoming Obsolete

R&D is incorporated into the business models of our portolio companies.

Solar companies conFnue to develop new products based on customer needs and industry trends while incorporaHng new technology and ensuring for quality.

Li]le Product DiversificaFon Solar products conFnue to diversify.

Most companies in our portolio offer several products geared for different household and business needs ranging from single lanterns to complete home systems while also catering to different income brackets.

O F F -‐ G R I D S O L A R S E C T O R

R I S K S / M I T I G A N T S

32

RISK MITIGATING FACTOR BOTTOM LINE/EVIDENCE

Performance History

The Financial Access companies we target are well established with internal risk management systems but also are innovaFng by using financial technology to streamline their operaHons.

Major microfinance and financial access companies have demonstrated ability to manage risk with at least 5 years of successful performance history, and the added efficiencies of financial technology suggest that they will experience significant growth in coming years. In addiHon, we require these companies to agree to codes of conduct and the SMART Campaign customer protecHon principles

Access to Capital

Financial access companies are not banks but have solid capital structures.

Microfinance and financial access companies conHnue to a]ract investment capital.

QuesFon of Commercial Viability

Microfinance and financial access companies conHnue to diversify their products and make them more affordable, demand conHnues to increase, and customer delinquency is minimal.

Demonstrated less than 1% loan write-‐offs in porzolios

Microfinance and financial access companies conHnue to improve efficiencies with high levels of customer saFsfacFon.

Growing Market CompeFFon

Microfinance and financial access companies, parHcularly those with digital finance, conHnue to experience strong demand, even in regions where commercial banks compete.

Commercial banks ouen do not have the same customer orientaHon and reach as financial access companies.

Technology Becoming Obsolete

The Financial Access companies we target use financial technology to offer new products, become more efficient and improve customer level data.

Financial Access companies we target are developing efficient new products based on customer needs and ensuring for quality.

Li]le Product DiversificaFon

Financial Access companies we target use financial technology to offer new products.

Most companies are able to offer more differenHated products geared for different customer needs. These innovaHve new products are based upon a long history of working with the specific customer base.

F I N A N C I A L A C C E S S R I S K S / M I T I G A N T S

33

C R E D I T & S O C I A L I M P A C T S C O R I N G R E V I E W E D B Y

Business analysis: Country Overview Analysis of Strengths and Weaknesses Strategy and Business Planning Market Risk Reference Check Financial & Credit Analysis: Financial Analysis Loan Product Profile Credit Analysis Capital Structure OperaFonal: Internal Control Environment Credit Risk Management ProducHvity and Efficiency Management & Governance: Governance Human Resources Management InformaHon Systems (MIS) Social & Environmental: Social Performance Scorecard Environmental Performance Indicators

I N V E S T M E N T C O M M I T T E E

34


Adapted from Deutsche Bank Social Scorecard and Moody’s Social Performance Assessment

S O C I A L S C O R E C A R D C A T E G O R I E S

Defining Social Goals And Commitment To Mission #1

Customer OrientaHon #2 Monitoring And ReporHng Social Goals #3

Responsible Treatment Of Employees #4

Environmental Impact #5 35


C O N S U L T A N T S TROY BERENS GENERAL ELECTRIC SOLAR BUSINESS, TECHNICAL SOLAR CONSULTANT/ADVISOR

Engineering Manager with 18 years overall experience in R&D and manufacturing of semiconductor and solar products

4 patents , 7 patents pend ing , 10 contribuHons to literature

Worked for General Electric on $500+ million project to commercialize GE’s first thin film solar product

Worked for mulHple start-‐up companies from ground level to pilot demonstraHon to factory expansion

Expert at building and developing technical teams and resources, managing programs, managing projects, managing engineering operaHons, developing products and processes

Skilled in product reliability, product tesHng, r e g u l a t o r y c omp l i a n c e , s u p p l i e r development, reducing cost, manufacturing process control, increasing yield

Directed global cross-‐funcFonal teams located within the US, Germany, China, and Taiwan

JOE FERNANDEZ FOUNDER/DIRECTOR SOLAGEO, TECHNICAL SOLAR ADVISOR/CONSULTANT

~20 years of internaFonal business experience working with clients on China manufacturing projects; 5 years in the solar sector on a global level

Developed all Quality Assurance procedures and documentaFon, and served as Lead Auditor and Quality Control Specialist serving major clients overseas, including leading importers and retailers in North America and Europe such as Tesco, Home Depot and Carrefour, as well as major importers and retailers in the Asia-‐Pacific region such as the Dairy Farm Group and Bajaj Electricals in India

Strong technical competencies to quickly grasp design, engineering and product development issues and converHng this knowledge into technically complex documents that can be eas i l y understood

Expert advisor to a graduate Energy & Env i ronment team at Co lumbia University

36

JUL IE HARR IS IMPACT INVESTMENT CONSULTANT

InnovaHve, socially moHvated, senior execuHve with over 30 years experience working in finance; 10 years consulHng in impact invesHng

Deutsche Bank SecuriFes, Director, Structured Finance/Asset SecuriFzaFon: Originated, structured and managed a portolio of over 60 transacFons totaling over $6 billion across the credit spectrum and in emerging markets.

Minlam Asset Management, Managing Director and Sr. Investment Officer: Created and implemented protocol for Minlam’s investment strategy for MFI investments including the underwriFng and deal originaHon process, overseeing investment analysis, leading in-‐country due diligence

Deutsche Bank Microcredit Development Fund, Senior Consultant: Originated and structured financial transacHons for start-‐up, intermediate and mature microfinance insFtuFons worldwide. Evaluated mission, strategy, governance, business plans, internal controls and sustainability of socially moFvated organizaFons.

Blue Orchard, Geneva, Switzerland: Member of the credit commiXee

CGAP, Washington, DC: Created disclosure guidelines and benchmark performance metrics (financial and social) for MFI investment vehicles to improve transparency and promote internaHonal investment

TROY BERENS Engineering Manager with 18 years experience in R&D and manufacturing of semiconductor and solar products GEORGE ECONOMY Senior Investment Banker & Seasoned Entrepreneur and Investor HANS MICHAEL HOELZ Former Global Head of CSR, Deutsche Bank MIRA INBAR Director of Strategic SoluHons at NRG Energy FREDERIC OTTESEN Senior ExecuHve, Storebrand JOE POLIZZOTTO Former General Counsel, Deutsche Bank, Americas ULRICH SCHURENKRAMER Managing Partner, Machlaan & Cie RICHENDA VAN LEEUWEN Former ExecuHve Director, Energy and Climate, Energy Access, United NaHons FoundaHon RICHARD WILCOX Former CEO of Unitrust Bank, London

A DV I SORY COMMI T T E E :


Asad Mahmood, CEO & Managing Partner Ph.: +1 (732) 713-‐4731 Email: [email protected] Michael Rauenhorst, Managing Partner Ph.: +1 (917) 750-‐5588 Email: [email protected] Xavier Pierluca, Managing Partner Ph.: +41 78 750 4706 Email: [email protected] Erin Davis, Vice President Ph.: +1 (203) 767-‐9957 Email: [email protected] Address: 157 Columbus Avenue New York, NY 10023 Website: www.simafunds.com

CONTACT US

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