Investing in Employment in the Middle East and North Africa Region

Capital Structure

The SANAD Fund for MSME is registered in Luxembourg as a SICAV-SIF*, an open-ended investment company able to issue shares and Notes at regular intervals and closings in line with future Fund growth.

SANAD’s unique public-private partnership model opens the Fund to development finance institutions, international financial institutions, but also private investors. The Fund’s tiered structure of tranches of shares or notes with different risk/return levels and maturities significantly broadens its appeal. This leveraging of public funds to mobilize private capital is also key to ensuring substantial and sustainable funding.



Debt Sub-Fund

Launched in August 2011, the Debt Sub-Fund rests on a junior tranche of C shares  financed mainly by donors. They bear the first net loss risk, with unique protection for private investors. L shares absorb the impact of local currency fluctuations.

B shares (mezzanine tranche) for tenors of 5 to 10 years are protected by C shares and L shares and affected only in the unlikely event that both are depleted. They also serve as a cushion for A shares (senior tranche) and notes. A shares for tenors of 3 to 10 years only suffer potential losses if B, L and C shares are fully depleted. Tiered risk sharing maximizes public fund leveraging.
 



L Shares - Local Currency Window

Local currency financing is the most effective means of mitigating foreign exchange risk and eliminating this potential burden on the loan customer. That is why SANAD established a unique feature: L shares. They address both sides of the same coin: the need for risk mitigation on the part of Fund shareholders; and the ability to provide local currency loans to partner institutions.

 

Equity Sub Fund                              

Launched in October 2012, the Equity Sub-Fund  (ESF) will be complementary to the Debt Sub-Fund while aiming to maximize the overall development impact of SANAD. The Equity Sub-Fund mainly focuses on investments that act as catalysts for market innovations and expand the region’s risk frontier. 

Junior shares (for which funding has already been secured) of the Equity Sub-Fund play a similar role to C shares in the Debt Sub-Fund. Junior shares are financed by donors and bear any first losses of the fund, thereby providing a unique protection for private investors in Senior shares.



* Société d'investissement à capital variable – specialized investment fund
 
Initiated by
 
http://www.kfw-entwicklungsbank.de/
 
 
Funded by
 
  • http://www.bmz.de/
  • http://ec.europa.eu/
  • http://www.kfw-entwicklungsbank.de/
 
 
Advised by
 
  • http://www.finance-in-motion.de/