The EFSE offers attractive investment opportunities to institutional investors who seek attractive and reliable financial returns from investments with a demonstrated social impact. The EFSE is clearly focused on supporting micro and small enterprises and low-income households, and has a social responsibility orientation.
Capital provided by international financial institutions and private investors assures the EFSE's positive development and stabilising impact on the financial markets of Southeast Europe and the European Eastern Neighbourhood Region. At the same time, these investors expect an attractive rate of return over the long term.
The EFSE’s investments consistently show a robust performance even in areas of political and economic turmoil. Investors who have placed their trust in the EFSE can look back on a success story that is unique in the sector. Since its inception in December 2005, the EFSE has recorded no losses or asset impairment, and external audit reports have always been unqualified.
This high level of security is the result of very robust risk management, which mitigates risks to investors by a variety of measures.
Investor protection
Stringent eligibility criteria for partner lending institutions
The EFSE only invests in partner lending institutions that meet a comprehensive set of eligibility criteria (including sound financial performance, good governance, prudent management, clear target group orientation). The fulfilment of these criteria is rigorously analysed and regularly tracked.
Investment monitoring
The EFSE's risk management is founded on: Credit risk management, which includes an internal rating system to measure the financial strength of partner lending institutions and regular monitoring through on-site visits by the local offices of the Fund Advisor.
Partner lending institutions must submit quarterly reports on their performance in serving the EFSE’s final target group. they must also submit financial reports on a quarterly basis.
Currency hedging
EFSE investments are primarily Euro -denominated. The EFSE may engage in currency hedging for investments denominated in other currencies. Any losses and gains from foreign exchange operations are borne by C Shares.
Capacity building
The EFSE Development Facility supports partner lending institutions in strengthening their human and institutional capacities.
Exposure limitation
Loan ceiling
The loan portfolio to one specific partner lending institution may not exceed 100% of the institution's equity.
Equity limit
Equity participation in any single partner lending institution may not exceed 30% of the institution's capital. The ESFE may not be the single biggest equity investor.
The following guidelines ensure portfolio diversification at the fund level:
- A national portfolio may not exceed 20% of the EFSE’s total assets.
- The EFSE may not invest or provide financing for more than 10% of its total assets in a particular partner lending institution.
- The Fund may not invest or provide financing in a particular partner lending institution for more than 150% of the relevant C Shares.
Asset liability management
Market and asset/liability risk management is run by an Asset-Liability Committee (ALCO) formed by the Fund Manager and the Fund Advisor.
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Hauck & Aufhäuser Asset Management Services Thomas Albert 1c, rue Gabriel Lippmann 5356 Munsbach Luxembourg
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