Deals in microfinance: The Players

[MicroCapital Society]

The following discussion provides a selection of the most important microfinance deals since 2005.

[MicroCapital Society]

Tuesday, October 18, 2005 from MicroCapital.org
$4.5 Million Microfinance Investment into Azerbaijan Micro Finance Bank Helps Establish Credit Line

The Azerbaijan Micro Finance Bank (AMFB) recently received a $3 million loan from the Black Sea Trade and Development Bank and a $1.5 million loan from the Triodos-Doen Foundation to be used as credit lines for small businesses. Established in 2002 by the European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC), Black Sea Trade and Development Bank, and German LFS Financial Systems GmbH, AMFB provides financial services to micro and small business within the country. The bank’s typical microloans are between $400 and $10,000 for a maximum of 9 months. In June 2005, the Azerbaijan Microfinance Association reported that AMFB had a total loan portfolio of more than $11.4 million. It is the only one of the 45 commercial banks in Azerbaijan that focuses on microfinance services.

AMFB’s investor, the Black Sea Trade and Development Bank, is an “international financial institution” created in 1998 by the governments of Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Russia, Romania, Turkey, and Ukraine. In 2003, the bank had $1.325 billion in capital, and since its inception, has invested over $430 million in public and private enterprises in its member countries.

Another AMFB investor, The Triodos-Doen Foundation, founded by Dutch Triodos Bank and the Doen Foundation in 1994, provides loans ranging from $200,000 to $1 million for a maximum of five years to microfinance institutions (MFIs). The terms offered to MFIs are “Libor plus full cost plus full risk” and the “interest rate must be sufficient to cover potential devaluation against the Euro plus to cover costs of 8%.” The fund’s total assets stand at $34.822 million; $30.643 million of which has been allocated to microfinance investment.

Additional Resources

1) Consultative Group to Assist the Poor (CGAP): “Microfinance Capital Markets Update” is the best source for monthly updates on debt and equity deals in microfinance.
2) “Social and Economic Background of Azerbaijan.”
3) “Micro Finance Bank of Azerbaijan: Overview.”
4) “Micro Finance Bank of Azerbaijan: Mission.”
5) “Qualisteam: Black Sea Trade and Development Bank.”
6) Black Sea Trade and Development Bank (BSTDB) Press Release: “Black Sea Trade and Development Bank.”
7) MIX Market: “Triodos-Doen Foundation: Fund Instruments.”
8) MIX Market: “Triodos-Doen Foundation: Fund Description.”
9) “Black Sea Trade and Development Bank: A New Financial Player in the Balkans.”
10) “Microfinance in Azerbaijan.”

[MicroCapital Society]

Thursday, October 13, 2005 from MicroCapital.org
Microfinance Institution Swaziland Development Finance Corporation (FINCORP) Lands $3 Million Loan from OPEC for Microcredit Investment

The Swaziland Development Finance Corporation (FINCORP), formerly known as the Enterprise Trust Fund, received a $3 million loan from the Organization of Petroleum Exporting Countries (OPEC) Fund in September. Microfinance institution (MFI) FINCORP, which was founded by the government in 1995, provides “individual loans along with wholesale lending.” In April 2004, FINCORP had a gross loan portfolio of approximately $15.17 million and total assets of about $15.62 million.

FINCORP’s recent investor, the OPEC Fund, is an “intergovernmental development finance institution” headquartered in Vienna, Austria. In 2004, the OPEC Fund had $528.624 million in committed investment and $287.722 million in disbursed investments to the private and public sectors. Typically, these monies are directed to public and private sector project and program financing, technical assistance, and research—among other areas. Since the fund’s inception in 1976 by OPEC’s member states, the OPEC Fund’s cumulative total committed investments stand at $7.474 billion and total disbursed investments stand at $4.925 billion, as of the end of 2004.

Additional Resources
1) Consultative Group to Assist the Poor (CGAP): “Microfinance Capital Markets Update” is the best source for monthly updates on debt and equity deals in microfinance.
2) “Investment: Swaziland Development Finance Corporation.”
3) MIX Market: “FINCORP: Financial Data.”
4) “OPEC Fund for International Development.”
5) “OPEC Fund Headquarters.”
6) “The OPEC Fund for International Development: Annual Report 2004.”
7) “OPEC Fund at a Glance.”

[MicroCapital Society]

Wednesday, October 12, 2005 from MicroCapital.org
The Swiss ResponsAbility Fund, Oikocredit, and MicroVest Make $5.8 Million Microfinance Investment in Fund Opportunity Russia

Fund Opportunity Russia (FORA), “the largest non-bank microfinance organization in Russia,” recently received a $2 million loan from the Swiss ResponsAbility Fund, $1.8 million from Netherlands based Oikocredit, and $2 million from U.S. MicroVest. FORA’s total assets were $16.39 million as of December 2004 and it was founded by Opportunity International Network, a US non-profit “network.” Opportunity has 48 member MFIs that post a combined total loan portfolio of $241.55 million. FORA is therefore larger than the average Opportunity member with a total loan portfolio to microentrepreneurs of approximately $15.28 million. Founded by Swiss financial service companies Credit Suisse, Raiffeisen Banking Group, Baumann & Cie Banquiers, and the Andromeda Fund, the Swiss based ResponsAbility Fund seeks investment opportunities with both financial returns and social benefits. The fund’s assets in April 2005 were about $11.44 million. The ResponsAbility Fund typically provides loans from $50,000 to $1.5 million for a maximum of five years and at a rate equal to “LIBOR plus full cost plus full risk” to MFIs.

FORA’s second investor, Oikocredit, is an investment fund seeking “social investment opportunities in the South”. Oikocredit’s assets were at $304.66 million at the beginning of 2005, and it provides loans at a minimum of $50,000 and a maximum of $5 million to microfinance institutions (MFIs) for a maximum of ten years. Its “near market rates are equal to LIBOR plus partial cost plus partial risk.”

The third investor into FORA, MicroVest, is an investment firm that provides debt and equity capital to MFIs. With total fund assets at $14.4 million as of July 2005, MicroVest’s loans go from $500,000 to $3 million for a maximum of 30 years. No guarantees are required and its rate terms are “LIBOR plus partial cost plus partial risk, or LIBOR plus full cost plus full risk.”

Additional Resources

1) Consultative Group to Assist the Poor (CGAP): “Microfinance Capital Markets Update” is the best source for monthly updates on debt and equity deals in microfinance.
2) MIX Market: “FORA: Financial Data.”
3) MIX Market: “FORA: General Information.”
4) MIX Market: “ResponsAbility Fund: Fund Description.”
5) MIX Market: “ResponsAbility Fund: Fund Instruments.”
6) “Oikocredit: About Us.”
7) MIX Market: “Oikocredit: Fund Instruments.”
8) MIX Market: “Oikocredit: Fund Description.”
9) MIX Market: “MicroVest I: Fund Description.”
10) MIX Market: “MicroVest I: Fund Instruments.”
11) MicroCapital Blog: “Microfinance Networks (wholesale transnational): Defined and Listed.”
12) “Opportunity International Network: What We Do.”
13) “2004 Annual Report: Opportunity International.”
14) “ResponsAbility: Founding Institutions.”

[jame]

Russia has a huge potential and no doubt that the investor are investing in russia.this is ust the begining in future we will see many such kind of investment happening there.Jut we have to count How Many investors will invest there.They also have to make sure about the Tax Problems which they can face.
Regards
jame
Interactive Agency

[MicroCapital Society]

Monday, October 10, 2005 from MicroCapital.org
Four Groups Syndicate a $35 million Fund for African Microfinance Investment

Four organizations have joined forces to create a $35 million syndicate fund for microfinance investment in Africa. The fund will loan money to African microfinance institutions (MFIs), and by coordinating lending, seek to lend more efficiently.

The contributors are no strangers to microfinance investment. Most significantly, the Dutch social investment society OikoCredit is one of the world leaders in microfinance investment with a loan portfolio of E60 million. Also on board is Stromme Microfinance, a Norwegian Christian charity that has funded NGOs and churches since 1976. Less information is available on the other two contributors. Jitegemee Trust, which was created as a joint venture between the Kenyan and Dutch governments, is dedicated to providing aid to arid regions. The European Union and Kenyan government fund the Micro Enterprise Support Programme Trust (MESP). The MESP provides monetary and institutional support for MFIs. But it appears to be typical of quasi-governmental agencies that try to do everything from making loans to developing products to providing technical assistance to public policy.

The syndicate will be based in Kenya, which is home to 56 MFIs in addition to the four commercial banks involved in microfinance. The United Nations Capital Development Fund estimates that 1.1 million Kenyans depend on informal organizations for financial services, while another 3.8 million are served by MFIs, banks, and NGOs. Kenya’s largest MFIs are Equity Bank with a loan portfolio over $40 million and K-Rep Bank with a portfolio of $27 million.

In addition, the syndicate will consider loan applications from MFIs throughout Africa. Africa is home to untold thousands of MFIs—only nine have loan portfolios of $30 million or more—but the need is still immense. According to a Microfinance Information Exchange report on African microfinance, only 1.5% of Africa’s population has access to financial services.

Additional Resources

1) Consultative Group to Assist the Poor (CGAP): “Microfinance Capital Markets Update” is the best source for monthly updates on debt and equity deals in microfinance.
2) “Group Raises Sh2.6bn to Fund Small Business”
3) “Overview of the Outreach and Financial Performance of Microfinance Institutions in Africa”
4) Microfinance Information Exchange

[MicroCapital Society]

Friday, February 17, 2006 from MicroCapital.org
Best in Class Just Keeps Getting Better: Swiss responsAbility Microfinance Investment Fund Lends $1,755,095 to German ProCredit Holding.

The responsAbility Global Microfinance Fund, ProCredit’s first private investor, augmented its stake in the holding company with loan of $1,755,095. Information on the duration of the loan is not publicly available.

Swiss-based ResponsAbility Global Microfinance Fund was founded in 2003 by Swiss financial institutions Credit Suisse, which is also the fund manager, Raiffeisen Banking Group, Baumann & Cie Banquiers, and the Andromeda Fund. Investment advisory services to the ResponsAbility Fund are provided by: Alterfin, BlueOrchard Finance, IPC/ProCredit Holding, FINCA International, Symbiotics, Opportunity International, and PlaNet Finance. ResponsAbility loans between $50,000 and $1.5 million to MFIs for a maximum of 5 years at a rate equal to “LIBOR plus full cost plus full risk.” The Fund’s total assets amounted to just over $45 million as of January 2006 with over $43 million allocated to microfinance investments.

Established in 1998 as the leader and main shareholder of the ProCredit Group, which consists of 19 microbanks with microcredit programs in different countries, ProCredit Holding controls its subsidiaries closely, their website stressing investment in training and professional development. The ProCredit group had approximately å¥1.9 billion in total assets and a total loan portfolio of å¥1.3 billion as of October 2005. To date, the 19 microbanks have made about 526,000 loans to microentrepreneurs and small businesses, approximately 90% of which are under å¥10,000 and about 50% of which are below å¥1,000. ProCredit Holding reports its Return on Average Assets as of December 2004 2.4% and its Return on Average Equity as 19.5 %. ProCredit continues to distant itself from the micro-bank pack

[MicroCapital Society]

Monday, November 7, 2005 from MicroCapital.org
Deutsche Bank Leads New Global Commercial Microfinance Consortium, a $75 Million Microfinance Investment Fund

Just recently, a group of private and public sector institutional investors and economic development agencies launched the U.S. based Global Commercial Microfinance Consortium, a $75 Million microfinance investment fund that will provide microfinance institutions (MFIs) worldwide local currency financing for up to 5 years. The fund’s capitalization is comprised of $15 million in equity and $60 million in debt, 25% of which has been guaranteed by the U.S. Agency for International Development (USAID). Close to $30 million has already been committed to MFIs with operations in Kosovo, Peru, Nicaragua, Azerbaijan, Colombia, Pakistan, Mozambique, and India.

Investors include Merrill Lynch, AXA Group, HP, and the Calvert Social Investment Foundation. For a full list of investors visit: “Leading Institutions Investors and Development Agencies Launch the Global Commercial Microfinance Consortium.” Deutsche Bank, a full global financial services company with å¥972 billion in assets, led the arrangements to establish the fund and also facilitated its sale.

This Consortium is “microcapital” at its best. First, expert management by Deutsche Bank’s long-established and well-respected microfinance unit provides the leadership. Second, the investor group mixes mainstream investment banks, rational development agencies, and flagship social investment foundations. Third, the role of government as guarantor uses your tax dollars to support (not execute) for-profit, private innovation. Fourth, the fund investment in MFIs is well-diversified across countries, regions and types of MFIs.

With such leadership and innovation, we might one day soon establish a secure asset class for the investing public.

Additional Resources

1) Main article discussed in entry, Thames Techwire: “Group Unveils å¥63 Million ‘Micro-Entrepreneur’ Fund.”
2) “Leading Institutional Investors and Development Agencies Launch the Global Commercial Microfinance Consortium.”
3) “Global Commercial Microfinance Consortium.”
4) U.S. Agency for International Development (USAID) Press Release: “USAID, Private-Sector Partners Create Global Fund for Small Entrepreneurs and Low-Income Families: Agency Provides $15 Million Credit Guarantee to Fund Aimed at Alleviating Poverty."

[MicroCapital Society]

Friday, November 4, 2005 from MicroCapital.org
Watershed Moment? Ebay Founder Pierre Omidyar Invests $100m in Microfinance

In July, we took Mr. Omidyar to task for not walking his talk, so we are now absolutely thrilled to report that he may well have triggered a watershed in microfinance investment.

His $100m donation to Tufts University will be managed as a for-profit fund dedicated to microfinance. This constitutes the largest single for-profit microfinance fund in existence. More importantly, it is done right.

First, the for-profit approach enforces market discipline on the microfinance institutions (MFIs) that receive the investment. Second, Tufts will benefit from the returns on the microfinance fund. Third, Mr. Omidyar gets his tax write-off. Lastly, this represents a break through into endowments, the holy grail of investment capital.

Sir, we thank you for your inspired leadership

[MicroCapital Society]

Friday, November 4, 2005
U.S. Overseas Private Investment Corporation and Citigroup Making $30 Million Microfinance Investment into ProCredit Holding

The U.S. Overseas Private Investment Corporation (OPIC) and Citigroup recently provided $30 million in financing to German headquartered international development holding company ProCredit Holding AG. ProCredit Holding will consequently disburse the money to its 19 subsidiaries in Latin America, Eastern Europe, and Africa. For more information about the company, please visit the MicroCapital.org story dated October 25, 2005.

OPIC is a U.S. based international development agency established in 1971, which by the end of 2004 had over $5.9 billion in total assets. Citigroup had over $1.5 trillion in assets at 2004’s year end, during which time Citigroup established Global Microfinance, a business group focused on providing financial resources to microfinance institutions (MFIs).

Additional Resources

1) Main article discussed in entry, USINFO: “U.S. Agency to Provide $30 Million for Loans in 19 Countries.”
2) “ProCredit Holding: ProCredit Institutions.”
3) MicroCapital Blog: “German ProCredit Holding Makes $8 Million Microfinance Investment into ProCredit Ukraine.”
4) Overseas Private Investment Corporation (OPIC): “Expanding Horizons: Annual Report 2004.”
5) “About Citigroup.”
6) “2004 Annual Report.”

[MicroCapital Society]

Thursday, November 3, 2005 from MicroCapital.org
Fremont Bank Makes $500,000 Microfinance Investment in Opportunity International Loan Guarantee Fund

California based Fremont Bank recently loaned Opportunity International $500,000 for a Loan Guarantee Fund. Fremont Bank was founded in 1964 as a full financial services commercial bank, and as of August 2005, had assets exceeding $1.6 billion.

Opportunity International, a transnational microfinance wholesale network with headquarters in Chicago, began providing loans to microfinance institutions (MFIs) in 1992. Fremont Bank’s loan to Opportunity’s Loan Guarantee Fund backs loans to MFIs within Opportunity’s wholesale network across 27 countries throughout the world, but primarily in the Philippines and Eastern Europe. At the end of 2004, Opportunity had a $120 million loan portfolio held among its 48 partner NGOs that have a total of 675,500 clients.

[MicroCapital Society]

Monday, October 31, 2005 from MicroCapital.org
ABN AMRO Bank Makes $4.5 Million Microfinance Investment into Indian Microfinance Institution SKS

Dutch ABN AMRO Bank recently loaned Indian SKS Microfinance Private, Ltd., a microfinance institution (MFI), $4.5 million. With over å¥855 billion in total assets as of June 2005, ABN AMRO ranks as the 20th largest commercial bank in the world, measured by tier 1 capital (equity capital and disclosed reserves).

Established in 1997 as a “non-profit society”, SKS India began operations in microfinance services, then incorporated SKS Microfinance PrivateLtd (SKSML) in 2003 as a “for-profit spin-off” that took over the microfinance operations specializing in savings, loans, and insurance. As of June 2005, the organization had total assets just over $458 million and total loans close to $400 million for about 87,000 clients.

Additional Resources

1) Consultative Group to Assist the Poor (CGAP): “Microfinance Capital Markets Update” is the best source for monthly updates on debt and equity deals in microfinance.
2) “ABN AMRO: Profile.”
3) “SKS: Product and Services.”
4) “SKS Milestones.”

[MicroCapital Society]

Monday, October 24, 2005 from MicroCapital.org
Google Foundation Makes $5 Million Microfinance Investment into Acumen Fund

The Google Foundation’s $5 million gift to the Acumen Fund goes to show that "making a philanthropic investment" in international small/sustainable business development is fashionable. Google would never do anything out of fashion. The Google Foundation is the “philanthropic arm of google.”

The Rockefeller Foundation, Cisco Systems Foundation, and individual philanthropists established the Acumen Fund in 2001. The Acumen Fund is an international non-profit venture fund that provides loans, equity investments, grants and “intellectual capital” to enterprises that support progress in health, housing, and water. At the end of 2004, the Acumen Fund had total disbursed loans of $2.964 million. The Fund aims to achieve approximately a negative -20% return on investment.