ESATF Investment Strategy

ESATF will predominantly invest in trade finance, structured-trade finance, and export finance or related obligations of companies or other entities (including sovereign entities) located primarily in or having exposure to the Tripartite Region (SADC, EAC & COMESA.

The types of Investments which ESATF will acquire can be expected to include, but not be limited to, facilities for pre-export finance, project and commodities finance, receivables financing, financing of letters of credit and other documentary credits, promissory notes, bills of exchange and other negotiable instruments, as well as trade finance transactions supported by insurance policies covering trade and trade credits. Investments may be undertaken via purchase, assignment, participation, guarantee, insurance or any other appropriate financial instrument. ESATF may also acquire other Investments including, but not limited to, physical commodities, bonds, loans, equities, foreign exchange transactions, as well as derivatives for the purpose of hedging and investment.

ESATF will seek to achieve its investment objectives, in a manner that is consistent with the objectives of TDB, through:

  1. exploiting the advantage of providing non-bank financing and capital to the trade-related asset class;
  2. a methodical risk assessment of countries, commodities, sectors and situations within the Tripartite Region where fundamental factors offer attractive risk adjusted returns, and complement ESATF’s then existing portfolio of Investments;
  3. an individual and detailed value assessment of the risks and returns as well as the anticipated social and environmental impacts of specific transactions; and
  4. an active approach to portfolio management and construction with the aim of ensuring a diversified spread of risk as well as achieving and preserving target absolute returns with low volatility, subject to limitations set forth in the ESATF prospectus.

Trade finance can be a risk mitigated asset class and these benefits may manifest themselves at the transactional, obligor and sovereign level. Individual transactions can potentially benefit from a range of security structures and enhancements that may reduce default risk and/or improve recovery risk in the event of default. The aim of ESATF will be to select transactions where positive social and economic impacts can reasonably be expected to materialize over time and provide investors with attractively priced risk and return opportunities.

ESATF has the following principal investment objectives:
  • To invest in short duration instruments (with weighted average portfolio life of less than two years)
  • To deliver returns which have very low correlation with returns on other major asset classes
  • To provide unique access to investment opportunities in some of the fastest-growing economies of the world
  • To seek to advance development and social objectives in addition to providing attractive investment returns

ESATF’s portfolio construction is designed to mitigate risk through diversification. ESATF’s investments are actively managed in terms of geographic, structure, sector, duration and liquidity risk.