Changes coming to OISF investors in 2023

Oikocredit plans to create a simpler and more direct way for people and organisations to invest in the cooperative and to increase social impact.

31 October 2022

Oikocredit's new capital-raising model would offer investors a single channel to invest directly in the international cooperative. Investors currently 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 member shares in Oikocredit and issues depository receipts for those shares to investors. Under the new model, subject to the outcome of regulatory processes, investors would be able to invest directly in Oikocredit by buying participations issued by the cooperative.

Participations are non-voting equity instruments and are materially similar in financial terms to the shares and depository receipts issued for shares. Investors would still deal with the same team at Oikocredit for the administration of the participations.

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 offered by Oikocredit's support associations. This will allow Oikocredit to simplify and standardise its investment offer in its active markets.

It will enable the cooperative to invest more resources in partnerships and projects that benefit low-income communities, as well as in promoting sustainable development together with its network of investors, members and partners.

Changes to take place in 2023, conditional on regulatory processes

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 subsequently proceed with the changes in a two-phased approach.

In the first phase, expected to start as of 1 January 2023, Oikocredit will convert outstanding member shares into participations. The underlying product of all depository receipts currently held by investors will be a participation instead of a member share. Depository receipts issued after this date will have as the underlying product a participation.

In the second phase, expected to be in effect as of 1 April 2023, investors will be able to buy participations directly from Oikocredit and all depository receipts will be exchanged for participations.

Investors do not have to take any action to convert or exchange their depository receipts. If they disagree with the changes, they can request a redemption of their investment in the same manner as they can at present.

More information about participations can be found in the supplement to the OISF prospectus (see right hand side) and below in the table and FAQ section. We will share more details about the planned changes on this website in due course, including amended terms and conditions for OISF depository receipts.

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.
Issue price The issue price of a depository receipt is the nominal value (€ 200 or the equivalent value in other currencies). Issuance at net asset value below € 200 requires amendment of Oikocredit’s articles of association with approval of the general meeting of its members. The issue price of a participation is the nominal value (€ 200 or the equivalent value in other currencies) or net asset value (NAV), whichever is lower. This allows Oikocredit to issue participations should the value of the participations drop, without needing to amend the articles. It has been made explicit in the participation terms how the NAV in foreign currencies is calculated should the NAV fall below the nominal value.
Redemption price Nominal value (€ 200 or the equivalent value in other currencies) or net asset value, 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 NAV in foreign currencies is calculated should the NAV fall below the nominal value.
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. These risks and others are described in the OISF prospectus. 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. The risks for investing in participations will be described in a new prospectus to be published upon approval from the relevant regulator.
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 offer investors a simpler and more direct investment. With participations, any eligible person or organisation can invest directly in Oikocredit. This will unify Oikocredit’s work by standardising its capital-raising model across different countries and 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 is the main difference between the new and the old models?

    Moving forward, Oikocredit wants investors to invest directly in the cooperative as opposed to investing via Stichting Oikocredit International Share Foundation (OISF). Under the new model, investors will be able to invest in a cooperative non-voting equity instrument, called a participation. Participations are materially similar in financial terms to the depository receipts.

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  • What is the main difference between the depository receipts and the participations?

    The differences between participations and depository receipts are minimal.

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

    The main difference between participations and depository receipts in financial terms is that Oikocredit is allowed to issue participations at a value lower than the nominal value (EUR 200/CAD 200/CHF 250/GBP 150/SEK 2000/USD 200). This will only happen if the net asset value of participations fell below EUR 200 which is the nominal value in Oikocredit’s benchmark currency. With depository receipts, issuance below EUR 200 was not possible without changing Oikocredit’s articles of association. Learn more about this change in questions “At which price will I be able to buy or sell participations under the new model?” and “What is the net asset value per participation and how is it determined?”.

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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?

    • Now → 1 January 2023: Nothing will change for any investments made in this timeframe. You can continue to purchase depository receipts from the Stichting Oikocredit International Share Foundation (OISF). These depository receipts are issued by OISF for the member shares that it holds in Oikocredit.

    • 1 January 2023 → 1 April 2023: Subject to the outcome of regulatory processes, as of 1 January 2023, Oikocredit will convert outstanding member shares into participations. The underlying product of all depository receipts currently held by investors will be a participation instead of a member share.

      Depository receipts issued after this date will have a participation as their underlying product. Before this change happens, more detailed information will be made available on this website, including updated terms and conditions and adjusted articles of associations for OISF. You can continue to invest in OISF depository receipts until the end of March, with the underlying product being Oikocredit participations.

    • From 1 April 2023: You will be able to purchase participations directly from Oikocredit, and OISF will cease issuance of depository receipts. With effect from the same day, all depository receipts that you hold will automatically be exchanged for participations and you will become a direct investor in Oikocredit. Before this happens, detailed information will be made available on this website about investments in participations, including a participations prospectus and participation terms.

    If you are already an investor and do not agree with the change from depository receipts to participations, you may request a redemption of your depository receipts per the usual process. Please note that investment redemptions are always at Oikocredit’s discretion

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  • At which price will I be able to buy or sell participations under the new model?

    Issue price

    Each participation will be issued against the net asset value (NAV) per participation, or the applicable nominal value (EUR 200/CAD 200/CHF 250/GBP 150/SEK 2000/USD 200), whichever is lower. This means that if the NAV per participation is equal to or higher than EUR 200, which is the nominal value in Oikocredit’s benchmark currency, the issue price is EUR 200/CAD 200/CHF 250/GBP 150/SEK 2000/USD 200. If the NAV per participation is lower than EUR 200, the issue price is the lower NAV per participation expressed in EUR/CAD/CHF/GBP/SEK/USD. To learn more about the NAV and how it is calculated, see question “What is the net asset value per participation and how is it determined?”.

    This is a change from the current situation where depository receipts can only be issued at nominal value. It is currently not specified in Oikocredit’s articles of association what would happen if the NAV fell below the nominal value. In such a scenario, Oikocredit’s Managing Board would have to suspend issuance (and redemption) altogether and amend the articles of association with the approval of the general meeting to allow issuance below nominal value. For OISF investors, this could mean a longer period in which they are not able to redeem their investment.

    With the new capital-raising model, issuance may continue below the nominal value upon resolution of the Managing Board. The existence of this possibility would allow the Managing Board to have a larger toolbox at its disposal to respond in difficult times to protect the cooperative and its investors.

    Redemption price

    Importantly, how the redemption price is set is unchanged compared to depository receipts. Oikocredit will redeem investors at the 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 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.

    This change and how the issue and 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.

    Examples of issue and redemption price calculations
    Scenario: NAV above nominal value Scenario NAV below nominal value
    Issue price Swedish investor Jansson submitted an issue request for SEK 10,000. The net asset value of the Swedish krona participation was determined at SEK 2,120 and therefore the issue price was determined at SEK 2,000 per participation (the nominal value). Following Oikocredit’s positive decision on the issuance and redemption of participations, investor Jansson will receive 5 participations. Swedish investor Jansson submitted an issue request of SEK 10,000. The net asset value of the Swedish krona participation was determined at SEK 1,760, hence the issue price was determined at SEK 1,760 per participation. Following Oikocredit’s positive decision on the issuance and redemption of participations, investor Jansson will receive 5.68 participations.
    Redemption price French investor Molet 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 Molet, assuming no taxes must be withheld. His investment will be reduced by 3.75 participations and will be 17.55 participations. French investor Molet 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 Molet, 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.