Partnership provides financing option for MBA participants without bank involvement
INSEAD, the leading international business school, today announced a partnership with Prodigy Finance, a company specialising in international educational finance, to offer all of the school’s MBA applicants a new international loan programme. The Prodigy MBA Bond for INSEAD also provides alumni and other investors the opportunity to earn a return on their investment while funding a diversified pool of students.
‘We have worked with Prodigy Finance over the last four years to bring to market a comprehensive finance solution for our diverse group of globally minded MBA participants,’ stated J. Frank Brown, Dean of INSEAD. ‘This investment vehicle enables our students to expand their global business skills while alumni and other investors contribute to the development of tomorrow’s leaders and enjoy steady returns.’
Ryan Steele, one of the founders of Prodigy Finance, added: ‘In these uncertain markets, we have seen strong demand from individual alumni investors and family offices who appreciate the value of a bond. Our current portfolio includes assets of over €5.5 million and has delivered returns of five percent annually since 2007 despite the economic crisis.’
The project was founded by three INSEAD alumni to address a complex and global need to finance higher education without the involvement of any bank. The initial pilot was launched in 2007 and has expanded today to cover 198 INSEAD MBAs representing 57 nationalities. In December 2010, Prodigy will provide loans to an additional 160 students.
Each bond is linked to a pool of approximately 200 students, providing diversification while still maintaining a clear link with investors, who can see online which students are being funded. The first tranches totalling €10 million were issued to investors very recently.
The programme is a culmination of the €50 million ‘community education bond’ developed earlier this year by Prodigy Finance which will provide finance for INSEAD students over the next five years. The first tranches of the bond were listed on the Irish Stock Exchange last week, providing a simple way for family offices and other institutions to purchase and trade them. Prodigy’s lending model also takes into account students’ potential future earnings, as compared with the traditional historic model used by banks. This rigorous affordability scorecard is based on a predictive approach to help minimise risk while still allowing students, especially those from emerging markets with lower incomes, to access funding.
