Oikocredit updates NAV calculation

Oikocredit is adjusting the way it calculates its Net Asset Value (NAV) to ensure all investors, regardless of the currency they invested in, are treated equally.

 The new method calculates the NAV by first determining the total investor amount in euros. This is achieved by multiplying the number of participations outstanding in each currency, by nominal value and by exchange rate against the euro at the end of each calendar month. Next, the NAV of Oikocredit as a whole is determined by taking total assets and deducting the total amount of non-equity liabilities, before looking at what it means per outstanding euro. The resulting NAV quotient is used to calculate the NAV of the participations issued in every currency.

The NAV quotient tells us how many cents are available for each euro in the total investor amount.

To determine the exact net asset value of the participations issued in each currency we multiply the NAV quotient with the nominal value of the participation.

The updated NAV calculation will ensure that every participation gets the same share of reserves on every occasion.

The update also supports two additional outcomes. First, the total investor amount reflects the current market value of the member capital, and not the historical value. Second, the NAV corresponds more closely to currency exchange rate changes, allowing for a truer overall picture.

The NAV calculation now recognises participations in different currencies and accounts for currency fluctuations that have an impact on the NAV.

With the new calculations, the updated NAV figure for 2022 is €211.79, which differs slightly from the previous result of €213.95.

The change came into effect as of 1 March 2023.

Investors can refer to the participation terms for more information and examples related to the updated NAV calculation method.

Understanding Oikocredit’s updated NAV calculation

The 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.