In science, symbiotics is the study of different species of organisms that are interdependent and benefit from their mutual relationships. An appropriate name, then, for a market access platform for impact investing that aims to foster sustainable development in emerging and frontier economies by connecting investors to local financial intermediaries, enterprises and projects.
Symbiotics Investments CEO Yvan Renaud explains that the platform was launched to link institutional investors with providers of impact investment opportunities, who were initially local microfinance institutions and banks focused on small and medium-sized enterprises (SMEs). The narrative has evolved to facilitate impact investing within the broader framework of the UN’s 17 Sustainable Development Goals (SDGs).
“Among SDG financing, gender bonds [SDG 5: gender equity] respond to a huge need as we see it in the field,” he says.
Symbiotics offers investment, asset management and capacity building services. Since 2005, the firm has originated more than 7300 investments representing more than $9.2bn for 570 companies in 95 countries.
“India is a big market with huge potential in terms of making an impact, especially with micro-entrepreneurs,” Mr Renaud adds. “Many women work in India or have a small business, so these elements made it a bit easier to issue this first gender bond.”
He says that while the number of female entrepreneurs in frontier and emerging markets is much bigger than most imagine, they are under-represented among female borrowers from SME banks or microfinance institutions.
In December 2022, Symbiotics Investments sponsored the first gender-focused social bond denominated in Indian rupees. The bond proceeds, Rs244.6m ($2.9m), went to an Indian microfinance institution to ultimately fund about 6000 loans exclusively to female entrepreneurs. The bond buyers were institutional investors, including pension funds, private banks and an asset management arm of a banking group.
There’s enormous growth potential considering the number of women entrepreneurs in emerging markets
“It is the best possible validation of our value proposal to see these mainstream institutional investors willing to purchase this type of investment,” says Mr Renaud.
A key success factor in sustainable bond issuances, such as gender bonds, is the governance of the local lending institutions, according to Mr Renaud. Since launching, Symbiotics has regularly almost 600 lending institutions it has worked with and also visited their clientele, which he says is instrumental to success.
Reporting requirements
Spyridoula Paretzoglou, transaction legal and structuring senior analyst at Symbiotics Investments, explains that the platform agrees on certain reporting indicators with the investee institution to ensure that the proceeds of the bond are used for their stated purpose. Indicators can include, for example, the number of loans the investee institution makes to women and female-owned and/or female-managed enterprises.
The investee institution is obligated to provide a use-of-proceeds report on an annual basis and an impact report, such as the loans advanced and their use. In addition, borrowers are obliged to make sure that they have fully channelled the proceeds towards the pre-agreed purpose of making loans to female borrowers within a certain period, in this case 12 months. If the borrower fails to do so, there is a mandatory pre-payment clause.
“The International Capital Market Association has not formulated specific reporting indicators for gender, but we follow its guidelines in relation to social bonds,” says Ms Paretzoglou. “Reporting indicators are being formulated between issuers, investors and investee institutions, because the situation is constantly evolving and more market participants are showing interest in this relatively new product.”
The bond was expected to be the first in a series of gender-focused bonds arranged by Symbiotics Investments and displayed on the Luxembourg Green Exchange (LGX) with a gender-focused bond flag. In June, Symbiotics also arranged a $10m gender-focused bond for Khan Bank, a commercial bank in Mongolia. It was the first bond in Mongolia with the explicit purpose of supporting SDGs through a gender lens.
The sustainable finance expert team at LGX also provided insights into best practices in the field of gender reporting and assisted Symbiotics Investments in integrating the gender dimension into its social bond framework. “It’s very important to be able to list our bonds to gain visibility and bring this type of investment to the eyes of investors,” says Ms Paretzoglou.
Read more on gender bonds
LGX added the dedicated gender-focused flag to displayed debt securities on LGX following a memorandum of understanding in May 2022 between the Luxembourg Stock Exchange (LuxSE) and UN Women to promote joint initiatives to advance financing for gender equality and women’s empowerment across the globe.
Dr Jemimah Njuki, chief of the economic empowerment section at UN Women, says it is vital that bond issuers and investors mobilise capital to effectively improve the lives, livelihoods and wellbeing of women and girls.
In May this year, LuxSE published an analysis of globally listed bonds with a gender component, which comprised 169 outstanding green, social, sustainability and sustainability-linked (GSSS) issues. Gender-focused bonds accounted for almost 2% of all listed GSSS bonds.
“There’s enormous growth potential considering the number of women entrepreneurs in frontier and emerging markets,” says Mr Renaud. “It’s definitely something that we look forward to developing.”
