Oikocredit paves way for new capital-raising model
Monday 31 October 2022 Under the new model, Oikocredit would issue participations instead of shares. Investors in the United Kingdom and Ireland would see their existing investments transferred to the new model in two phases.
Until 2021, investors in the UK and Ireland were 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 issued depository receipts for those shares to investors in the UK and Ireland. OISF ceased its offer in the UK and Ireland in 2021 but continues to serve existing investors. The introduction of the new capital-raising model will lead to changes for those existing investors. Oikocredit plans to introduce this new model once the required responses from regulators have been received. New investments are unfortunately not possible.
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 investors in the UK and the Ireland 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 investors in the UK and Ireland 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. To request a redemption, investors should complete and return a redemption form (individual redemption form). Organisations can contact oi.support@oikocredit.org to request a redemption form.
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 in other countries. 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 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 (EUR 200, GBP 200) or net asset value, whichever is lower. This means that the redemption price cannot exceed EUR 200 or GBP 200, 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 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 of continuing to hold depository receipts |
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. Please note that the depository receipts are no longer available for sale to, or subscription by, (prospective) investors in the UK and Ireland. For further information, click here. |
The risk profile is the same as for depository receipts. Please note that participations will not be available for sale to, or subscription by, (prospective) investors in the UK and Ireland. |
| 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. Investment 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. |
