Set up of a new investment fund

Abstract

The report provides a critical assessment and proposals for the set-up of a new impact Investment Fund, COOPEST2. The fund will leverage on the positive performance of the 1st fund, (COOPEST which is due in 2023), and diversify its portfolio and investment products to achieve greater performance, higher returns for investors and significant social impact which remains intake in Inpulse’s DNA. The investment strategy follows a more qualitative approach during the 1st phase of the research, followed by quantitative inputs to build on the business model with the necessary assumptions to arrive at best investment decisions. At first, the research focuses on the sector analysis and countries’ snapshot. This is an essential part of the research as the key findings will be fundamental drivers on the areas that the fund will eventually invest. The political and macroeconomic outlook; the currency risk; the ease of doing business in each region; the historical returns of the sectors and all the advantages and disadvantages were some of the parameters that were considered to reach the final investment decision. The business model of the fund is a key part of the project as it will serve investment decisions not only during the set-up of the fund but also during the next years. The model shows the link between the key parameters and their impact in case a different decision should take place in the future. For instance, a change in the hedging costs of the foreign currency will indicate the exact amount the financial intermediaries have to bear and eventually the interest rate that COOPEST2 will demand for providing a certain amount of investment. The management team decided to focus on one product of financing, which is through debt/loans number of specific sectors and a specific region to invest and keep a lower proportion for sub-ordinated debt and/or equity financing. This is mainly due to two main reasons: 1) they can leverage on the experience of COOPEST in debt financing, from the network of investors and financial institutions to investment returns and attracting the right investors 2) Helenos is another Equity Fund under Inpulse management and would be a direct competitor for specific investment decisions so it was carefully analyzed and suggested not to proceed with equity financing. There are certain parameters that must be precisely evaluated by the management team. The size of the fund, the ticket size of loans, areas of further diversification and entrance are some of the examples that will play a key role for the Fund. With the continuous support of the Inpulse Team and our project supervisor, we managed to provide the management team with a thorough analysis of each sector and regions on where to invest while the business model will enable the team to assess precisely the impact of each decision in their investment process. We are sure that with this in-depth research and all the details for every parameter, the team will make the right decisions to continue its successful investments and achieve greater results. It remains to be seen when exactly the success story of this fund will commence.