Cafesjian Family Foundation and Cascade Capital Holdings CJSC AIPRG Tsakedzor 29th May 2005
Cafesjian Family Foundation • A United States non-profit, tax exempt, 501(c)3 organization • Significant financial resources • Leading investor and donor in Armenia • Mission • Promote the well being of Armenians • Foster economic development and western-oriented values in Armenia.
Cafesjian Family Foundation Program Investments • Armenian Genocide Museum in Washington D.C., USA • Gerard L. Cafesjian Museum of Modern Art in Yerevan, Armenia • CS Media Group: Armenia TV, Supersystems • Renewable Energy: H2Economy, Hydro, Wind, Solar • Financial Sector: Cascade Capital Holdings and Affiliates
Cafesjian Family Foundation Grant Recipients include: American University of Armenia Armenian General Benevolent Union Armenian Assembly of America Armenia Tree Project Orran Benevolent NGO Armenia Fund
CCH logo Established in 2004 • Create and manage commercial financial companies • Facilitate investment into Armenia and the Caucasus • Improve trust, service and innovation across the sector • Introduce a comprehensive, integrated product range • Become a regional financial market leader
Cascade Investments: Private and corporate wealth management; Asset and Fund management; strong portfolio of investment opportunities, including access to western markets. • Cascade Credit: supporting Armenian exports and import substitution, through trade finance, leasing and factoring. • Cascade Insurance: Offers comprehensive Life and Non Life coverage to retail and corporate clients. The first domestic reinsurer in Armenia • Cascade Bank: Development of a full service retail and corporate Bank Positions Cascade Capital as a fully integrated financial one stop shop
CCH logo USAID : Technical Assistance to Cascade Credit DCA : United States Treasury guarantee for debt securities EBRD : Equity share in Cascade Insurance Equity share in Cascade Bank? World Bank / EBRD / CFF: Partners in alternative energy World Bank / CFF: Partners in EIF International Financial Institutions
Mortgages Growth in past three years Repossession under Civil Code and Bankruptcy Law More lenders Improved risk assessment GTB 1999: 65%, 2005: 5% Therefore lenders need to lend to the private sector.
Mortgages Market profile: Distorted by high end focus and vertical spikes. Artificial pressure to maintain inflated prices. High end more vulnerable to housing market fluctuation
Mortgages Target horizontal portfolio spread. Emerging domestic middle class Improves risk Quantitative and Qualitative Greater portfolio spread = better stats = better risk assessment. Yerevan and the regions
Mortgages Client base: Job security and provable (legal) income; Family income $1000 / month More start up businesses More domestic companies prepared to invest in quality Increasing management awareness and sophistication
Mortgage Profile Value: $600 m2 x 50-150 m2 apartments Loan $30k Loan 70% of value Period: 7 years Annual rate: 14% (US$), 15% (AMD)
Mortgages Cascade and mortgage backed securities Start with DCA then introduce MBS-in series or parallel Virtuous circle: Lend, securitize portfolio, recycle funds and re-lend.
Future steps Target: Extend period and reduce cost With more IFI loc and guarantees, we could go 15 years. Securitize at 3% + reduce mortgage rate to 5% for 20 years. Encourage professional approach Trade Associations-encourage thresholds and self regulation
Future steps Improve legal environment for easier repossession Loan agreement accepted as collateral Loan register agency Enlightened regulation Electronic e-governance for Cadastre Improved notary service
Future steps Validate electronic exchange; move away from paper and seals Securitization (MBS); requires a standard lending product Issue Civil Code friendly bonds Introduce Title insurance
Cutting edge, innovation. Regional leader