Investment StructuresInvestors have a broad array of investment vehicles to choose from. Instruments have been created to meet investors' needs in terms of size, maturity, security, and volatility. They range from mutual-fund type vehicles; or fund of funds like the Gray Ghost Fund; to certificates of deposit; medium-term debt securities; limited partner interests; and direct investment in venture capital investment companies.Retail OpportunitiesPrograms are offered on the retail side for as little as $1,000, and for as short a term as one year. For amounts of $100,000 and greater, senior-debt funds are periodically open to qualified investors. While maturities can be as short as one year, these vehicles usually have end dates from three to five years. Structured DebtA number of structured-debt financings have come and are coming on the market. These generally have several levels of investment with senior-debt protected by a cushion of subordinated capital, and, in some cases, a government guarantee as well. These structured transactions have a life of five to seven years. Interest rates reflect the relative subordination of the various tranches. Minimum investment amounts can start as low as $100,000. Debt and Equity FundsA number of partnerships and investment companies have also been formed to offer hard currency and local debt to microfinance institutions (MFIs). Qualified investors can participate as either equity investors or lenders to such funds. Similarly, a number of equity funds, which focus on convertible debt and equity in MFIs, have patterned themselves on the ProFund model, which successfully liquidated after a 10-year life in 2005. Several are focused on specific geographic regions, while others take a multi-region or even global view. All are professionally managed, increasingly by staff based in the target areas. Most of these funds have an expected life of eight to 12 years. |
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