Changes coming to OISF investors in 2023

Under the new model, Oikocredit would issue participations instead of shares. Investors would see their existing investments transferred to the new model in two phases.

31 October 2022

Investors have been able to invest indirectly in OIKOCREDIT, Ecumenical Development Cooperative Society U.A. (Oikocredit) through Stichting Oikocredit International Share Foundation (OISF). OISF is a member of Oikocredit. It holds shares in Oikocredit and issues depository receipts for those shares to investors.

Under the new model, existing OISF investors will become direct investors in Oikocredit. Oikocredit plans to introduce this new model once the required responses from regulators have been received.

Implementation to take place in two phases in 2023

The new model is expected to be rolled out in two phases in 2023. In the first phase, expected to start as of 1 January 2023, Oikocredit will convert outstanding member shares to participations. Participations are non-voting equity instruments and are materially similar in financial terms to the current shares and depository receipts issued for shares (for more details, see the table below). From this date on, the underlying product of all depository receipts held by existing OISF investors will be a participation instead of a member share.

In the second phase, expected to be in effect as of 1 April 2023, all depository receipts will be exchanged for participations and all existing OISF investors will have a direct investment in Oikocredit.

Investors don’t have to take any actions to convert or exchange their depository receipts. If investors disagree with the aforementioned changes, they can request a redemption of their investment.

New model expected to unify Oikocredit’s work and increase its impact

Participations are intended to eventually replace the shares issued by the cooperative, the depository receipts offered by OISF and the other investment products that Oikocredit's support associations offer. This will allow Oikocredit to simplify its investment offer and enable it to invest more resources in partnerships and projects that benefit low-income communities, as well as in promoting sustainable development together with its global network of investors, members and partners.

Mirjam ‘t Lam, Managing Director, Oikocredit, said: “Oikocredit’s dedication to its mission of social impact will continue unaltered by the new capital-raising model. Investors can expect the same focus on creating impact with their money while experiencing a smooth transition to the new model.”

Changes conditional on regulatory processes

The possibility to offer participations was approved by Oikocredit’s members at an Extraordinary General Meeting held on 14 October 2022 in Amersfoort, the Netherlands.

Oikocredit plans to introduce this new model once the required responses from regulators have been received. It expects to receive these by the end of the year and will share more details about the planned changes with OISF investors, including amended terms and conditions for OISF depository receipts.

Investors can read more about the new model in the comparison table and Frequently Asked Questions section below.

Comparison of key features of the current depository receipts and the participations

Depository receipts (current product) Participations (new product)
Issuer Stichting Oikocredit International Share Foundation (OISF), based in Amersfoort, the Netherlands. Oikocredit Ecumenical Development Cooperative Society U.A. (Oikocredit), based in Amersfoort, the Netherlands.
Type of investment Non-voting depository receipt issued by OISF for a share issued by Oikocredit. Non-voting equity instrument issued by Oikocredit, called a participation.
Minimum investment One depository receipt. One participation.
Redemption price Nominal value (€ 200 or the equivalent value in other currencies) or net asset value (NAV), whichever is lower. This means that the redemption price cannot exceed € 200 (or the equivalent value in other currencies), but can be lower. Same as for depository receipts. It has been made explicit in the participation terms how the net asset value (NAV) in foreign currencies is calculated should the net asset value fall below the nominal value. Read more below.
Dividend As decided by Oikocredit’s members at the annual general meeting. Past dividend levels have included 2%, 1% and 0.5%. There have also been years in which no dividend has been paid. Same as for depository receipts.

Costs for investment
administration

Allowed in principle, but none are in place. Allowed in principle, but none are in place.
Risks

An investment in depository receipts carries financial risks typical for an investment in the equity of a company. An investment is fundamentally associated with considerable risks and can lead to the complete loss of the invested capital.

Oikocredit seeks to protect the capital of the investors through careful business decisions and diligent provisioning for expected losses, although a residual risk can never be completely ruled out. Since Oikocredit began in 1975, no investor has lost any of their capital. However, past performance is not a guarantee of future results.

The risk profile is the same as for depository receipts.
Redemption

You can submit a redemption order by filling in a redemption form at any time to request your money back. Redemption requests are processed on a monthly basis.

Redemptions are always at Oikocredit’s discretion.

As is the case with depository receipts, you can submit a request for redemption. Redemptions are processed on a monthly basis and are always at the discretion of Oikocredit. In addition, Oikocredit can also decide to redeem in case an investor no longer meets the eligibility requirements or holds less than one participation.
Liability Investors’ liability is limited to the amount they have invested. This means an investment is subject to full loss, but investors cannot be held liable for debts of the cooperative beyond the amount they have invested. Same as for depository receipts.

Frequently Asked Questions for OISF investors

  • Why is Oikocredit transitioning to a new capital-raising model?

    Oikocredit wants to simplify and unify its capital-raising model across different countries by replacing different investment products with participations. This is expected to free up more resources for investing in loans, equity stakes, capacity building and community-focused projects that benefit Oikocredit’s partners and the low-income clients served. It will also allow Oikocredit and its support associations to focus more on activities promoting sustainable development, together with the cooperative’s network of investors, members and partners.

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  • What are the differences between the new and the old models?

    Under the new model, your depository receipts will be converted to participations, a non-voting equity instrument which is issued by Oikocredit. Participations are materially similar in financial terms to the depository receipts.

    Compared to depository receipts issued by OISF, there continue to be no costs for the administration of your investment. Furthermore, there will be no change to your opportunity to redeem, dividend provisions, the risk profile of the investment or who you can contact if you have questions about your investment.

    In addition, it has been made explicit in the participation terms how the net asset value (NAV) in foreign currencies is calculated should the NAV fall below the nominal value. Read more below in question “At which price will I be able to sell participations under the new model?”.

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  • When will the new capital-raising model come into effect?

    Subject to receipt of required responses from regulators, expected by the end of 2022, we plan to roll out the new capital-raising model in two phases (see question “What will change for me?”). The changes are planned to come into effect as of 1 January 2023 and 1 April 2023. The definite timeline will be confirmed via an announcement on this website. Investors will also be updated on the progress via letters.

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  • What will change for me?

    The changes will take place in two phases. Before each phase, more detailed information will be made available on this website.

    1. January 2023 → 1 April 2023: Subject to the outcome of regulatory processes, as of 1 January 2023, Oikocredit will no longer offer shares but participations. As of this moment, the underlying product for all existing investments through OISF depository receipts will be Oikocredit participations instead of shares.
    2. From 1 April 2023: With effect from 1 April 2023, all depository receipts that you hold will automatically be exchanged for participations and you will become a direct investor in Oikocredit.

    If existing investors do not agree with the change from depository receipts to participations, they may request a redemption of their depository receipts.

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  • At which price will I be able to redeem participations under the new model?

    How the redemption price is set is unchanged compared to depository receipts. Oikocredit will redeem investors at the net asset value (NAV) per participation. If the NAV per participation is equal to or higher than the nominal value of EUR 200/CAD 200/CHF 250/GBP 150/SEK 2000/USD 200, then redemption will be at the nominal value of EUR 200/CAD 200/CHF 250/GBP 150/SEK 2000/USD 200. While Oikocredit International and OISF have never redeemed investors at a lower price than the nominal value in the past, it has always been possible to do so under the current model, and investors have always faced the risk of receiving back less money than they invested.

    How the redemption price of a participation will be calculated will be explained in more detail in an annex to the participation terms. These terms will be made available on this website before the change takes place.

    Example of redemption price calculation
    Scenario: NAV above nominal value Scenario: NAV below nominal value
    Investor Jones submitted a redemption request for EUR 750. This investor holds 21.3 participations. The net asset value of the euro participation was determined at EUR 212, and hence the redemption price was determined at EUR 200 per participation (the nominal value). Following Oikocredit’s positive decision on the issuance and redemption of participations, Oikocredit will pay EUR 750 to investor Jones, assuming no taxes must be withheld. His investment will be reduced by 3.75 participations and will be 17.55 participations. Investor Jones submitted a redemption request for EUR 750. This investor holds 21.3 participations. The net asset value of the euro participation was determined at EUR 176, and hence the redemption price was determined at EUR 176 per participation. Following Oikocredit’s positive decision on the issuance and redemption of shares, Oikocredit will pay EUR 750 to investor Jones, assuming no taxes must be withheld. His position will be reduced by 4.26 participations and will be 17.04 participations.
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  • What is the net asset value per participation and how will it be determined?

    The net asset value (NAV) describes the value of a participation as at the last calendar day of the month. The net asset value per participation is calculated in four steps:  

    1. Determining the ‘total investor amount’ by multiplying the number of participations outstanding for each currency, by the nominal value and by the exchange rate against the euro (obtained from Bloomberg on the last calendar day of the month). This provides us with the total investor amount in euros.
    2. Determining the ‘net asset value (NAV)’ of Oikocredit by deducting the non-equity liabilities amount from the total assets amount. We establish this from Oikocredit’s balance sheet as at the last calendar day of each month.
    3. Determining the ‘net asset value (NAV) quotient’ by dividing the net asset value of Oikocredit (from step 2) by the total investor amount (from step 1). The NAV quotient will tell us how many cents are available for each euro in the total investor amount. If the quotient is higher than 1, it follows that the net asset value per participation is above the nominal value. If that is the case, issuance and redemption will take place at nominal value.
    4. Determining the exact net asset value of the participations issued in each currency by multiplying the NAV quotient with the nominal value of the participation.
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  • I have more questions. Who can I ask?

    You can contact the investor support team in the Netherlands via the email oi.support@oikocredit.org.

    If you would like to speak with someone, email us at oi.support@oikocredit.org with your preferred time(s) and phone number, and we will do our best to accommodate your shared preferences.

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This page was last updated on 31 October 2022.