December 15, 2015
I recently read the Center for Financial Inclusion at Accion's excellent report, "The Microfinance Industry Needs an Infrastructure Fix: Summary of Findings and Recommendations", and commend it for its focus on the important subject. of a global information infrastructure to bind together the very diverse players in this industry
The problems noted in the report are long-standing, but its suggested solutions are not. I believe radical new approaches are called for to finally resolve the problems - namely, get the information infrastructure service providers in the hands of new owners
Microfinance as a global financial industry does not have today, and seems unlikely to have in the next decade, the critical mass of demand (as indicated by assets under management and fund flows) needed to make important information infrastructure services commercially sustainable, and donor subsidies are unreliable over the long term. The information service providers need new owners, ones with long-term commitment to fostering financial inclusion infrastructure and "deep pockets" - such as the World Bank, its affiliates and/or other development finance agencies..
My full argument and proposal can be seen here
WSAS has added pages of answers to Frequently Asked Questions on the topics of what are Financial Benchmarks and what are Emerging Markets, in response to our clients and potential clients' ongoing queries.
The answers are necessarily presented at high-level, but to help our users, we have included references to very useful sources which go into much more details on the topics.
We thank our users for their interest and will continue to expand our website in response to their needs.
December 4, 2013
Campollo Consulting LLC and WSAS LLC, the producers of The Guide to Latin America Pension Funds tminformation service announce the release of the 2013 version of this comprehensive market intelligence service on some of the largest and fastest-growing pools of investment capital.
The 2013 Guide to Latin America Pension Funds tm service illustrates that Latin America's private pension funds are dynamic marketplaces, offering attractive business opportunities for financial services providers. Pension assets across eleven markets tracked grew at a compound annual rate of almost 13% on a dollar-weighted basis from 2007-2012, to reach over $800 billion in assets. But like pension funds in many countries, they have had a 'home bias' for their investment portfolios, and thus a lot of potential capacity to diversify their asset allocations overseas, opening opportunities for international managers.
The overall management of these assets represents great business opportunities. The 2013 Guide identified 16 mergers or acquisitions of pension funds during 2012 and into mid-2013, that involved almost 35% of all the assets under management, involving acquisitions by companies such as MetLife, Principal Financial, ScotiaBank, and Grupo Sura .
The complete news release can be seen here
September 23, 2013
Carmen Campollo and I, as co-authors of The Guide to Latin America Pension Funds 2013, were invited by the Chartered Alternative Investment Analysts Canada and the CFA chapter for British Columbia to present our overview of Latin America's funded pension plans, the content and performance of their investment portfolios, and what the near future may hold for these, to their members. We presented our overview on Sept. 11, 2013 in Vancouver, and on Sept. 12 in Victoria.
Carmen & I were happy with the audiences' interest and attention. It seems there is some similarity in historical development between Canada's pension funds' investment portfolios and those in Latin America.
A copy of the presentation can be found here.
June 11, 2013
WSAS' Peter Wall was interviewed recently by Institutional Real Estate Investors reporter Michael Consol about trends in Latin American pension funds' investment activities in the real estate and infrastructure sectors.
The interview, in the form of a podcast, asked Wall and Carmen Campollo, co-authors of the white paper How Latin America Pension Funds Invest Their Assets, to summarize findings from the white paper in this regard across the 11 countries and 400+ pension funds covered, and to look forward to what one might expect.
You can hear the 15-minute podcast in its entirety at:
April 15, 2013
WSAS and Campollo Consulting LLC are pleased to announce the release of a new White Paper, "How Latin America Pension Funds Invest Their Assets".
The White Paper covers the five-year pattern of asset accumulation and allocations among the $630 billion of assets of over 400 pension funds from 11 Latin American countries, illustrating both the great growth of assets held among the pension funds as well as the trend to diversification of asset classes in which they invest. The research covers the period from year-end 2007 through end-2011, and highlights some of the leading outcomes available from the research service, The Guide to Latin America Pension Funds.
The report also has a section highlighting important changes in the pension fund asset management industries in the region in recent years.
Copies of the White Paper are available upon request from WSAS, at firstname.lastname@example.org .
Features about The Guide to Latin America Pension Funds service can be seen at http://wallsstreetadvisorservices.com/the_guide_to_latin_america_pension_funds
March 15, 2013
WSAS is pleased to announce the public release of the second edition of "Trailblazers'' Tales - Stories from IFC Capital Markets Veterans".
This edition includes a contribution from a leader in emerging stock markets investment - Antoine van Agtmael. His contribution discusses how he came to IFC's Capital Markets Department through his perseverance and luck, his business activities in the capital markets of developing countries on behalf of IFC, and how he came to coin the term 'emerging market'.
You can see a copy of Trailblazers' Tales- 2nd edition here.
December 12, 2012
WSAS is pleased to host a recently released collection of stories by veteran members of the International Finance Corporation's Capital Markets Department, during the period when IFC played catalytic roles in introducing and modernizing capital markets in emerging markets. Indeed, these are the stories from people who first coined the term "emerging markets", and who helped establish some of the emerging markets' leading financial institutions, stock markets, and entire financial industry segments such as leasing and private equity, not to mention emerging market investment funds.
Researchers who want to know more about 'how it happened' - how the emerging markets and frontier markets got their names, how the first private sector financial institutions of their types got set up in places like Korea and India, what it was like to travel and work in developing countries in the 1970s, 1980s and early 1990s, and what lessons one might take away from that work - will find much to value in Trailblazers' Tales.
You can see a copy of Trailblazers' Tales -1st edition here.
This collection is a 'spin-out' of background work David Gill undertook for his memoir, Tales of a Financial Frontiersman, which WSAS reviewed earlier. Many of the contributors are well-known professionals who continue to be active in some aspect of financial services, and whose time in IFC's Capital Markets Department represented important formative experience. As a collection of tales from 29 individuals, many of whom worked together at one time or another within CMD, there is some overlap of content while the styles vary greatly, but the result is effective in giving a reader the sense of the differing personalities and perspectives.
It is the editors' (CMD founder David Gill and WSAS' Peter Wall) intentions to add stories as contributors come forward with new tales. So, this is very much a 'first edition'.
I had the unique opportunity and experience to work at International Finance Corporation in its Capital Markets Department for twenty years, starting in late 1979. I was lucky ‘way back then’ because:
a) It offered a steady paycheck & benefits in an exciting field,
b) It was an exciting and exotic place to work, and
c) My boss was David Gill, a legend in his own time for his impact on promoting and investing in ‘third world’ financial markets and for dominating his staff and peers, as well as for his occasional dust-ups with the World Bank establishment.
I have often thought, sadly, that David’s very significant contributions to developing the world's emerging markets would be overlooked or simply forgotten, since so much took place before the Internet age, and he & his generation haven't been widely cited. Then, lucky me, I learned that David had done the work, putting it all down on paper – a book five years in the making. I think this book fills that gap, and I am working to promote it as much as I can.
In Tales of a Financial Frontiersman, Gill recounts his professional life, of how he came from one of Canada's leading investment banks to be recruited by Bob McNamara to start-up IFC's Capital Markets Department in 1971, of his adventures in nearly 18 years in IFC's service, and of his years of investment activity after leaving IFC in 1989, such as tramping through the former Soviet Union looking for good deals. I believe his book captures well the now almost-forgotten state of the emerging world's financial markets back in the 1970s, 1980s and 1990s.
In my humble opinion, his sections on 'lessons learned' should be kept close to heart by anyone interested in 'development finance'.
Truly, he is one of those people who can be cited as 'present at the beginning' of a significant portion of the modern world – helping to set up financial institutions that today are giants, launching investment products like emerging market equity funds that today have hundreds of billions of dollars in assets, helping young executives and regulators become leaders and policy-makers.
His reminiscences about his personal life, his childhood & college years, time in His Majesty's Royal Canadian Navy's aviation arm at the close of WWII, and other times spent with family and friends till today, rubbing shoulders with movie stars and prime ministers, also make for marvelous reading and add a new look at the world that was. To say David Gill is ‘widely travelled’ would be quite the understatement, and readers of all sorts can enjoy his comments and travelogues.
All in all, Tales of a Financial Frontiersman is a good read, and copies are now available from the World Bank's InfoShop (see below for details).
Tales of a Financial Frontiersman (Sixty Years 1952-2011) – by David Bertram Gill (ISBN 978-0-0578-10303-7) April 2012, self-published
How to Get Your Own Copy of "Tales of a Financial Frontiersman"
Copies may be ordered from the World Bank InfoShop. Their contacts are:
fax: (202) 522-1500
phone: (202) 458-4500(202) 458-4500 (202) 458-4500(202) 458-4500
August 3, 2012
Consulting Campollo LLC and Wall’s Street Advisor Services LLC are pleased to announce the launch of a new research service covering Latin America’s pension funds and their investment practices.
The service, called The Guide to Latin America Pension Funds, will prove invaluable to international financial services providers like money managers and custodians looking to enter these markets, increase market share, or develop a product for pension funds in all or one of the 11 countries covered, as well as to researchers needing a one-stop reference guide to the region’s pension funds.
The service offers extensive details in easy-to-use digital formats about the asset allocations among 23 asset categories and executive contacts for over 400 individual pension funds, with combined assets of over $700 billion, from this fast-growing and exciting region. The five year histories of the assets information through the end of 2011, expressed in both local currencies and US Dollar terms, provide unprecedented views of the patterns of asset growth and asset allocation.
The service also includes detailed country reports on the current investment regulations and operating contexts facing the pension fund management companies.
Details about the service can be seen at http://www.wallsstreetadvisorservices.com/the_guide_to_latin_america_pension_funds
November 22, 2010
The newly-launched WSAS Microfinance Institutions Shareholder Value Index for vintage 2007 investments (WSAS MFI SVIX 2007) declined sharply over the 2-year period 2007-2008, as three especially large investments made at high multiples to book values dragged greatly on the 2007 vintage index and on WSAS MFI SVIX Composite’s results.
The WSAS MFI SVIX 2007 lost nearly 72% of its value during 2007, based on shareholder values measured at year-end book values. A small 2008 rebound (+17%) meant the vintage 2007 index finished the 2-year period down -67% in value. The index contains investor vintages from 27 MFIs from 15 countries, 17 representing new investor vintages formed in 2007 among MFIs previously covered in the 2005 and 2006 vintage indexes, and 10 from MFIs first qualifying for index coverage in 2007.
November 11, 2010
WSAS is pleased to note that the US venture capital industry now has a performance benchmark equal in purpose to those available to the microfinance industry with the launch of the WSAS MFI Shareholder Value Indexes (WSAS MFI SVIX) earlier this year.
Dow Jones Indexes recently launched a “… index to track the value of VC- financed companies rather than VC-fund performance. Because the universe of VC-financed companies is more narrowly defined and cross-sectioned than the universe of funds, the index provides a better representation of the asset class as a whole.” ( from the index’s Fact Sheet, available at www.djindexes.com/venturecapital) .
While there are substantial differences in methodologies in how changes in shareholder value are measured between the WSAS MFI SVIX and the DJ U.S. Venture Capital Index, the logic for the Dow Jones index is exactly that behind the WSAS MFI SVIX – performance measurement, measuring changes in values of asset classes, shouldn’t be based on funds’ performance. One has to look to the true assets.
Glad to see this U.S. asset class is catching up to microfinance in this regard!
November 10, 2010
Women's World Banking CEO Mary Ellen Iskenderian posted an insightful blog on Harvard Business Review's website, suggesting 5 courses to righting microfinance in India after its recent crisis. You can see the original blog here:
WSAS' CEO Peter Wall found the suggestions to be thought-provoking, particularly her thesis that "MFIs founder when they lose deep knowledge of customers". The latter thesis has deep implications for MFIs and their stakeholders, particularly for social investors. You can see Peter's comments here.
October 26, 2010
Microfinance Institutions (MFIs) are expected to increasingly approach the public stock markets to raise equity capital and provide entry and exit points for investors, with SKS Microfinance (India) providing the most recent example of this.
But, listing shares for public trading opens questions about how such shares are to be valued and how MFI shareholder value should be measured. WSAS has released a new report, "Listed Microfinance Institutions' Shareholder Valuations and Their Stocks' Results", which looks into this subject.
The report looks at share price performance for 4 major listed MFIs and compared these to the WSAS MFI Shareholder Value Index valuations. The report also investigates the historic liquidity of the stocks and the implications of limited liquidity for determining valuations, especially for indexes where many constituents don't have public markets.
August 8, 2010
I wanted to bring attention to recent reports on record-setting levels of cross-border investment in Frontier Market Equities and EM private equity, and to provide my thoughts on possible implications of such interest on microfinance institutions' capital-raising.
As reported yesterday in the Wall Street Journal,
"Investors seeking higher returns, low correlation with other markets and
alternatives to conventional stock markets have sunk a record $1.1 billion into
so-called frontier funds so far this year—more than in any previous year,
according to EPFR Global, a Boston firm that tracks fund flows. The previous
record: $442.7 million of inflows in 2007. "
( You can see the full article here,
On August 4, the Emerging Markets Private Equity Association (EMPEA) released its investors survey, noting tremendous growth in investment flows in 2010:
Private equity investment in emerging markets is again on the rise, with a 55% year-on-year increase over the first half of the year, research shows.
Data compiled by the Emerging Markets Private Equity Association (EMPEA) found fresh investment in the area stood at $13bn for the first six months of 2010, compared with $8bn at the same time last year."
You can see the full news release here:
I cannot help but think that these record level of investor activity in the exotic investment category of listed and unlisted equities in concentrated, illiquid and often highly unstable frontier markets, also has a broad & favorable reflection in MFIs' capital raising, cross-border.
Certainly, Indian MFIs' loans and equities (for example) are "frontier assets"
for most investors, even if these days BRIC private equity doesn't usually get this status.
All the key arguments for investor interest in Frontier Markets apply to MFI equity, too; PLUS, MFI ownership offers an attractive SRI angle, supposing the investee MFIs have commitment to a mission to serve the poor.
The SKS Microfinance IPO results concerning its new investor base will likely provide illustrations of this thesis, that mainstream cross-border investor groups are buying-in to microfinance, outside of specialized MIVs as well as through investments in these.
As I progress work on the WSAS Microfinance Institution Shareholder Value Indexes, I intend to put a special focus on tracking the sources of interest in MFI equity.
I hope you found this background note useful. Your feedback is, as always, most
PS - EPFR Global (www.epfr.com) is an excellent source about financial flows
among asset categories and about geographic origins/destinations of all kinds.
Its well-worth its price if you are managing assets or influence policy and
value having financial flows data (history and updates!) at your fingertips!
EMPEA's website (www.empea.net) is a great free resource for understanding and tracking developments in the emerging markets private equity industry.
July 21, 2010
Investors in MFI equity capital in 2005 and 2006 experienced overall increases in shareholder value in US$ terms of 308% and 148% respectively, and a Composite increase of 295%, by the end of 2008, according to a new series of benchmarks.
Wall’s Street Advisor Services announced today the release of the first of a new series of benchmarks for equity investments in microfinance institutions (MFIs) – the WSAS MFI Shareholder Value Indexes (WSAS MFI SVIX). See the full news release here.
July 19, 2010
On Sunday, July 18, 2010, the Washington Post published an editorial by Ms. Chrystia Freeland, "The real corporate responsibility", to which WSAS CEO Peter Wall took some objection. To see his response, click here ; but to excerpt the conclusion:
...I cannot agree with her that the chief 'social' responsibility of 'business is to make a buck'. An investor has a reasonable right to expect that undue risks are not assumed to make that buck.
The many layers of bad business decisions leading up to the Deepwater Horizon disaster that are coming to light, I believe, will highlight once again the real costs to business owners of emphasizing short-term results.
Like credit-rating agencies, mortgage origination cos., and even the buyers of mortgage-backed CDS, high margins combined with the attitude that what was being done wasn't illegal (and therefore was allowable), allowed Management to be blind to the business risks to which they exposed business owners (and society at large), so long as profits flowed.
Of course, in the final analysis, insofar as most companies' owners and customers are the investing public (including public pension funds, corporate pension funds, mutual funds, 401(k)s etc.), the investing public must accept that we have responsibilities to insist on profits achieved through best business practices, and to fire with extreme prejudice (no golden parachutes!) managers who achieve 'great results' by putting companies at great risk."
You can see more about Peter Wall's career work on some of the online references in the document attached.
I am particularly proud that MIX (the Microfinance Information Exchange, Inc.) which I led from mid-2005 to mid-2009, was voted #4 most effective non-profit institution in global microfinance in 2009. You can see the original reference at http://www.myphilanthropedia.org/top-nonprofits/international/microfinance/2009