First phase of new capital-raising model has launched

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 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.

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 non-voting equity instruments governed by Dutch law, called participations. Participations are materially similar in financial terms to the depository receipts.

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?”.

We will implement the new capital-raising model in two phases (see question “What will change for me?”). The first phase came into effect from 1 March 2023, and the second change will come into effect as of 1 April 2023. 

• 1 March 2023: Participations replaced shares as the underlying product for depository receipts
  • With effect from 1 March 2023, Oikocredit has converted the member shares held by OISF into participations. As a result, all depository receipts held by investors now have, as the underlying product, participations instead of member shares.
  • You can continue to invest in OISF depository receipts until the end of March. 
  • As always, there is a delay between an investor's issuance request and OISF's issuance of depository receipts. Requests made in February are processed and, if approved, issued in March with the underlying product change applicable.
  • It is recommended you familiarise yourself with the updated terms and conditions and adjusted articles of associations for OISF (see list ‘New capital-raising model documents’).
  • More information about participations replacing member shares as the underlying product for depository receipts can be found in the 2nd supplement to the OISF prospectus (see list 'New capital-raising model documents'). 
• From 1 April 2023: Participations replace depository receipts as the investment product
  • • From 1 April 2023, any eligible individual or organisation in a country where Oikocredit has an active offer will be able to buy participations directly from Oikocredit, and OISF will no longer issue depository receipts.
    • With effect from the same day, all depository receipts held by investors will be exchanged for participations, and investors previously invested in OISF via depository receipts will become direct investors in Oikocredit via participations.
    • OISF will stop administration of all investments as of this date. It will eventually be liquidated and dissolved at a later date. 
    • As always, there is a delay between an investor's issuance request and Oikocredit's issuance of participations. Requests made for depository receipts in March are processed and, if approved, issued in April as participations.
    • All requests for depository receipts made on or after this date will be treated as requests for Oikocredit participations.
    • Before this happens, it is recommended you familiarise yourself with the information available on this website about investments in participations, including the participations prospectus and participation terms (see ‘New capital-raising model documents’).

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.

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 is calculated is explained in more detail in an annex to the participation terms. 

Examples of issue and redemption price calculations

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.

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.