Chancen eG issues BildungsCHANCEN bond 2019/31
The higher education market in Germany is growing. According to the Federal Statistical Office, about half of all students, who graduate from high school today are aiming for an academic education. In the academic year 2018/ 2019 this was 500,000 people, a 25% increase in ten years. But the growing number of students is not matched by a similar increase in the number of courses on offer. Particularly in numerus clausus-limited subjects such as medicine and psychology, there is much greater demand than public universities can offer. Therefore, private universities are expanding their offerings. However, since private universities are also financed by tuition fees, a decision in favour of private offerings is highly dependent on the financial background of students.
Since Chancen eG was founded in 2016, it has enabled young people, regardless of their financial background, to study at private universities. CHANCEN eG finances tuition fees for students through an Income Share Agreement. After graduation, the alumi pay back a fixed percentage of their income, but only if they exceed a minimum income threshold. The Income Share Agreement enables students to choose their studies regardless of their financial background. As of August 2019, Chancen eG is supporting almost 500 students at 22 universities in 75 courses of study. Through its subsidiary Chancen International gGmbH, Chancen eG is also currently financing 1,000 students in six courses at two training institutes in Rwanda.
Recently, the Economist reported on Chancen eG and its activities in Rwanda: "The biggest barrier to expanding access to tertiary education is student financing. This is true for private and public universities, since in most African countries public ones charge upfront tuition fees. [...] The average gap between wages earned by graduates and non-graduates in sub-Saharan Africa is wider than in other regions. [...] Kepler and Akilah Institute, an all-female college in Kigali, are working with Chancen International, a German foundation, to try out a model of student financing popular among economists -Income Share Agreements."
In order to meet the growing demand for education financing, Chancen eG has issued a bond (ISIN: DE000A2TSCT2) with a volume of up to EUR 13 million. The "BildungsCHANCEN bond", which matures on August 19, 2031, bears a fixed interest rate of 3.0 % per annum. The proceeds from the bond will be used to finance the studies of new junior specialists and managers. Interested investors have the opportunity to use their money to finance the development of future generations.
SDG INVESTMENTS and its sister company AHP Capital Management GmbH were significantly involved in the structuring of the BildungsCHANCEN bond. The bond will be placed in two tranches in summer 2019 and spring 2020 by GLS Gemeinschaftsbank eG and Chancen eG itself. The "BildungsCHANCEN bond" is secured by a negative pledge and a payout block, as well as by an external control of the use of funds. The trustee, HmcS Treuhand, will only release the proceeds from the bond if the Chancen eG can prove its use for tuition fees. This ensures that this income is only used for new contracts with students.