“This year was a bust for markets. Stocks tumbled. Bonds were hit by their worst sell off ever. And cryptocurrencies were eviscerated, leading to the collapse of industry giants including FTX. The tumult across global markets had a chilling effect.”
— Akane Otani, Wall Street Journal
As 2022 came to an end, financial markets had little to celebrate. The value of companies across all stock exchanges fell about $25 trillion, while global government and corporate debt lost $9.6 trillion (-16%) in market value terms. Larger companies are displaying more grinch-like behaviour as they step up efforts to collect on their accounts receivables, get cash in the door and limit possible future write-offs ahead of future downturns around the globe in 2023. Small companies typically feel the early effects of this downward momentum. And we are mindful that longer payment schedules often make the most sense. We are in close and frequent communication with our financial partners and manage this process closely.
At AGC, we consider 2022 as our year of reckoning. We started the year with high cash levels; we fell short of our target annual return in 2021; we took some meaningful write-offs in December of 2021; and we had organisational headaches that caused distraction.
Through sheer hard work and grit on the part of our team, we worked diligently and methodically to “right the ship” during the year.
In April 2022, Sudha Bharadia and Hendrik van Deventer became Co-CEOs of Advance Global Capital Ltd. They have provided solid leadership whilst continuing in their functional roles of raising responsible capital and deploying responsible capital. They have been working together in order to ensure that the company is running efficiently and effectively, with our central ethos of impact front and centre. Their strong working bond and steady approach enabled the fund and the organisation to deliver meaningful progress in 2022.
Managing the portfolio actively and closely through the year has led to our fund delivering an annual net return within our range of 4-6% in 2022, for the first time in a few years. We start 2023 with our portfolio in good health, with strong impact, and with an optimistic mind-set for the future. It is quite possible that we will increase our target net return for 2023.
A contributing factor to the uptick in fund returns has been the move to charging floating rates on our revolving credit facilities, instead of fixed. Around 90% of our portfolio has now moved to a floating rate model, with floors (with a small tail of facilities to be converted during Q1 2023). This means that we are able to work in lock-step with global central bank movements whilst protecting the downside. Ultimately our goal is to work with SMEs who themselves are responsible business owners, so the rates that we or our partners charge will never be usury.
Whilst a steady financial return is important, our central ethos remains to deliver strong impact. In December, our Co-CEO Sudha Bharadia, visited some of our partners and their SME clients in Colombia. She was very heartened to see how hardworking people running small businesses rely on the kind of flexible funding that our investors’ capital provides. This is capital being put to work. In due course we will publish some of these stories, but to give you a small flavor, one of our partners helps to support the Carnival of Barranquilla, giving it the financial liquidity it needs — not only for the 4 days of the carnival celebration, but for its operation as an institution for the rest of the year, thereby helping to safeguard this most important cultural event.
Innovative Impact Fund Manager 2022
In other news, we are proud to announce that Advance Global Capital has been named as an Innovative Impact Fund Manager 2022 by Real Leaders magazine. The magazine’s special edition was a collaboration between Real Leaders and ImpactAssets. ImpactAssets is a non-profit impact investing firm focused on creating positive change for the world through impact investing and philanthropic giving. For the second consecutive year, ImpactAssets and Real Leaders came together to highlight some leading impact fund managers. Included are some of the most innovative private debt and equity fund managers in impact investing, with a focus ranging from climate change to racial equity and gender equality. Should you wish to read the digital version of this, please click here.
All of our hard work would not be possible without the commitment and dedication of our staff. In December, we added more team members including Cayo Davids who joined as our new Operations Analyst within the investments team, based in South Africa. Cayo’s core responsibility is supporting a portfolio of existing investments, through analysis and monitoring. She also provides structuring and execution support for prospective investments and works with the credit risk team to ensure compliance with credit limits. Prior to joining AGC, she worked as Client Co-ordinator at Growth Lending.
We also welcomed Sydnie Roper as a Marketing and Impact Analyst based in London. Sydnie will be implementing marketing and brand awareness programmes across all channels. She will also assist with assessing the global social impact of the fund and work on our impact reporting. She holds a master’s degree from Kingston University and comes with 6 year of prior marketing experience.
Ongoing support from loyal investors
Without our investors’ capital, none of our mission would be possible. In December we were delighted to onboard additional capital from one of our early institutional investors. Calvert Impact is a non-profit investment firm that works with investors to move capital into communities around the world. They were catalytic for us a few years ago when they first invested in our fund. And now they have provided additional capital to help us further our mission of providing responsible funding to SMEs all over the world.
Q4 case study
This quarter’s case study describes how a business based in Czechia is benefiting from the use of one of our partners facilities. We explain how since using this facility they have been able to modernize an existing business with fintech solutions to improve products and services while facing the logistical impact of the conflict with Russia and Ukraine.
As emerging markets continue to suffer as a result of the strong dollar, now is the time for impact minded investors to step up and do their bit. When we launched Advance Global Capital Ltd some years ago, one of Janet’s goals was to avoid the “casino” culture that stock markets feed on. The bets on bets…. Our mission remains solid — to focus on working with investors who are minded to support small business growth around the world. Particularly women-owned or run. And we are grateful that our investors share our values.
At the heart of AGC is staying true to our mission of providing liquidity to SMEs, particularly those that are women owned or women led. Please contact Sudha Bharadia, Co-CEO at firstname.lastname@example.org for further information.