LGT Venture Philanthropy

Q3 2013

LGT Venture Philanthropy: Our team

Our global team is based in six regions and passionate about creating societal impact

Board members

Countries with local team members

LGT Venture Philanthropy is supported by different competence centers within LGT Group such as HR, accounting, marketing, legal department and asset management.
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LGT Venture Philanthropy: Our impact

Since inception, our over 25 portfolio organizations improved the quality of life of more than 7 million less advantaged people
Impact * (cumulative) USD allocated (cumulative) # of organizations 1100 lives improved USD 2.2m 1 1.7m lives improved USD 5.3m 10 4.2m lives improved USD 8.3m 13 5.5m lives improved USD 12m 19 7.9m lives improved USD 16m 26

Portfolio organizations Time

2007/08

2009

2010

2011

2012
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*Most organizations have several donors/investors; therefore, the # of people reached is not only correlated with our donations or investments.

LGT Venture Philanthropy: Our approach

We use 8 Principles of Venture Philanthropy: Long-term, deep engagement; growth orientation; customized support
Applying the Venture Philanthropy approach, we provide more than just financing: Management know-how and access to relevant networks can be even more important to achieving sustainable growth.

We want to be as efficient and transparent as possible in our impact investing / philanthropic efforts. With this objective in mind we have applied many proven principles and processes from the venture capital and consulting industry to our impact investing / philanthropy approach. H.S.H. Prince Max von und zu Liechtenstein

Focus on few organizations Optimization of long-term social & environmental return Young, rapidly growing organizations

Continuous controlling

Venture Philanthropy

Intense local due diligence to build knowledge and relationship

Long-term engagement Financing combined with management know-how and networks

Tailored financing: Equity, debt and grants

LGT Venture Philanthropy: Our approach

Our investment process uses deep analysis to select the best organizations, as the number we can work with at once is limited
Timing Process # deals to date Main activities

Due Diligence 6 12 months

Deal sourcing Deal screening Preliminary review Deal execution

5 10 years
Portfolio controlling & reporting

1 week 3 months
Exit

5000
Sourcing of potential deals Information exchange with cooperation partner/ reference calls Stop-go decision partners

700
Screening of organizational information Gathering of basic information Calls or first meeting with senior mgt members Stop-go decision team/partners

70
Evaluation of business plan/ proposal Intensive discussions with senior mgt team members Stop-go decision board/client

40
Intensive on-site due diligence Reference calls for each management team member of investee KPI and milestones determination Final investment decision board/client

26*
Continuous support/meeting (management know-how and networks) Each investment manager covers on average 5 investments, spending min. 0.5 day/week with each organization

5*
Options for exit are: MBO Sell to social strategic buyer Sell to social investor Exit is clarified and agreed on with the organization upon deal execution (preinvestment)
Contract(s)

Tools/ Tracking database Documents Quick-screen checklist

Factsheet (~2 pgs) Capabilities Assessment (light)

Preliminary Review

(~7 pgs)

Business, risk and capabilities assessment Depth and scale of impact assessment Termsheet Investment Memo (~30 pgs) Contract(s)

Monthly reports Quarterly KPI Annual report Post investment monitoring Business, risk and capabilities assessment Depth and scale of Impact assessment

* 26% grants, 19% debt, 6% convertible debt, 49% equity (including SWAP deals with average deal size USD 50k ) ** Exit: 1 debt, 4 grants

LGT Venture Philanthropy: Our approach

We typcially invest $200k - $5mm in the early growth stage, using the following criteria
Funding need: USD 200K to 5M Growth stage: Early to growth phase At least 1-2 years old Sectors: Education, Health, ICT, Agriculture, Renewable Energy Track record: Not pre-revenue Team / legal entity should exist

Org. & Mgt. Quality: Relevant experience / track record of CEO + mgt. team Effectiveness of solution: Proof of solution / business model? Growth potential: Potential / ability to scale ops. across regions / countries? Efficiency of implementation: Focus; presence of systems / processes; plans Impact: Potential to reach a high number of beneficiaries?

LGT Venture Philanthropy: Sample investments

Impact Measurement: Varthana

India
ENGAGEMENT OF LGT VENTURE PHILANTHROPY USD 200000 investment through compulsorily convertible zero coupon debentures Varthana has access to LGT Venture Philanthropys iCats Program, its network as well as ongoing mentoring support

pablosalgado.com

IMPACT Varthanas loans help in increasing schools capacity by constructing new classrooms, putting additional benches etc., and thereby increasing the access to education for low-income household students Financing by Varthana also helps in improving the quality of education by enhancing school infrastructure and adding key learning resources such as a computer/science lab or expanding a library
Reach 2013e # schools funded p.a. # students (000) p.a. Depth Improved material well-being: Increase in education is directly proportional to increase in income 150 75 2014e 1191 595 2015e 3924 1962 2016e 9876 4938 2017e 20940 10470

PROBLEM Lack of expansion capital is a major hurdle to the progress of affordable private schools that offer low cost (avg. monthly fee of USD 5 to 20 per student) high quality education to low-income household children These schools are not viewed as business entities by banks; their typical loan requirement (~USD 15000) is too small for banks and too big for Micro Finance Institutions As a result, they cannot access the right type of financing, and therefore have to compromise on quality of infrastructure as well as the capacity to enroll students SOLUTION Varthana aims to fill the current gap of financing affordable private schools by providing loans to help school proprietors grow and improve their schools infrastructure Varthana offers loans ranging from USD 2000 to USD 80000 at interest rates ranging from 20% to 25% with monthly repayments over a 2 5 year period

Improved physical well-being:

Improved social well-being: Improved security: Improved freedom:

Better education increases awareness about sanitation, nutrition etc.

Increase in self-esteem as well as more respect in the society NA Increased freedom to choose an occupation depending on the education
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LGT Venture Philanthropy: Sample investments

Impact Measurement: M-Kopa Solar

Kenya
ENGAGEMENT OF LGT VENTURE PHILANTHROPY LGT VP invested USD 500000 debt and USD 37500 equity to fund initial rollout of M-Kopa Solar commercial product targeting low-income households M-Kopa has access to LGT Venture Philanthropys iCats Program, LGT Venture Philanthropys network as well as ongoing mentoring support IMPACT M-Kopas inaugural product makes clean and renewable solar energy available to low-income households, thus potentially increasing productive work days, improving income opportunities and reducing health-related hazards . Through pre-payments, low-income households can re-direct daily energy expenditures from inefficient, wasteful and unsafe sources such as kerosene lamps towards purchase and ownership of affordable solar home systems. M-Kopa will bring energy access to a considerable portion of Kenyas unelectrified households. Reach M-KOPA Solar seeks to address energy needs of up to 300000 low-income households across Kenya with its solar home system and could introduce new products for micro-entrepreneurs. To date over 20000 have been sold in just over one year. Depth
Improved material well-being: Increases household productivity and income
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PROBLEM Over 63% of Sub-Saharan Africas population are rural, lower-end consumers with small inconsistent incomes/revenue streams. They can barely afford basic services but end up allocating up to 70% of their household expenditures on poor, inefficient and potentially hazardous energy sources e.g. kerosene. Studies show that 110 million households across Africa spend USD 160 or more every year on kerosene for lighting and cooking despite the poor quality of light provided by kerosene lamps and related health risks of smoke fumes.

SOLUTION M-KOPA Solar enables low-income households purchase quality d.light solar home systems through an affordable and convenient pay-as-you-go payment plan using the renowned mobile payment system M-PESA. The d.light solar home system has 3 bright lights and mobile charging abilities. Customers pay a USD 15 deposit followed by 85 US cents daily for up to one year; owning the product outright after completing payments. M-Kopa plans to reach over 300000 households with clean energy by 2015.

Improved physical well-being: Improved social well-being: Improved security: Improved freedom:

Reduced health risk though cleaner energy and light sources Increased social interactions due to microenterprise activities Secure access to electricity and light Greater freedom of choice of products through pay-per-use system

LGT Venture Philanthropy: Industry insights

Suggestions for working with impact investors

CAPTIAL RAISING PROCESS: Find a lead investor, negotiate terms with the lead first, the rest will follow. Understand the different types of investment and the terms that go with them or find an attorney to consult Choose investors that share your values and approach whether debt, equity or grant, impact investors will see themselves as your partner and be heavily engaged in your businessits like a marriage KEY INVESTOR CRITERIA: Quality management with proven track record/expertise to execute Ability to scale Impact Financial Sustainability USE OF FUNDS: Know precisely how much capital you need, how youre going to use it, and how its going to grow your business and impact IMPACT: Have at least a few relevant key impact metrics including lives improved EXIT: Be able to articulate possible exits or payback period loan repayment, share buybacks, strategic sale, IPO

LGT Venture Philanthropy: Contact

Contact information
It all starts with a personal conversation. Contact us to arrange a meeting. We are looking forward to meeting you.
En Lee Co-Head, Asia Pacific Phone: +65 9868 8820 Email: en.lee@lgtvp.com

Raya Papp Co-Head, Asia Pacific

Phone: +65 8103 2780 Email: raya.papp@lgtvp.com

Joan Yao Investment Manager

Phone: +63 917 811 5831 Email: joan.yao@lgtvp.com

Website: www.lgtvp.com
Support LGT Venture Philanthropy is funded through substantial contributions from each of the following LGT Group companies: LGT Bank Ltd., LGT Bank (Switzerland) Ltd., LGT Bank (Austria) Ltd., LGT Bank (Singapore) Ltd., LGT Capital Management Ltd. and LGT Capital Partners Ltd.
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Legal Information
This document is intended solely for the recipient and may not be duplicated, distributed or published either in electronic or any other form without the prior written consent of LGT Group Foundation. This publication is for your information only and is not intended as an offer, solicitation of an offer, public advertisement or recommendation to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any undertaking or guarantee as to it being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published, therefore, information shall not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decisionmaking in relation to financial, legal, tax or other consulting matters, nor should any investment or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Forecasts are not a reliable indicator of future value developments. The risk of price and foreign currency losses and of fluctuations in return as a result of unfavorable exchange rate movements cannot be ruled out. There is a possibility that investors will not recover the full amount they initially invested. We disclaim without qualification all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. It is up to potential investors to obtain comprehensive information and appropriate advice in their home country, country of residence or country of domicile about the applicable legal requirements and any tax consequences, foreign currency restrictions or foreign exchange controls and any other aspects that are of relevance prior to any decision to subscribe to, purchase, own, exchange or redeem such investments, or enter into any other transaction in relation to same. The securities and rights mentioned in this document may not be purchased or held by investors or for investors domiciled in the USA and/or with US citizenship, nor may such securities and rights be transferred to them.

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