MICROCAPITAL STORY: European Fund for Southeast Europe (EFSE) Loans $15m to Bosnian-Herzegovinian MFI Partner Microcredit Foundation

The European Fund for Southeast Europe (EFSE), an investment firm that seeks returns from a portfolio of social enterprises, has made a USD 15 million loan to Bosnian-Herzegovinian nonprofit microlender Partner Microcredit Foundation. The loan will be used by Partner to expand its on-lending activities to small and micro enterprises. The loan’s term and rate were not disclosed.

EFSE’s loan reflects its long-standing relationship with Partner, which has consisted of several previous arrangements of financing and technical assistance. In announcing its latest loan, EFSE also revealed a plan to assist nonprofit Partner with an eventual transformation into a commercial microlender.

As reported by MicroCapital, other recent EFSE investments include a EUR 10 million (USD 15 million) loan to commercial MFI ProCredit Bank Romania in May, and a USD 4.7 million loan to FINCA Kosovo last August.

EFSE supplements its investment activity with technical support to Southeastern Europe’s microfinance sector. In April, MicroCapital reported that the fund hosted its 2^nd annual conference on responsible finance and sustainable development, an event attended by over 200 participants representing development finance institutions, international organizations, microfinance institutions, commercial banks and policymakers.

Founded in 2005, EFSE is a Luxembourg-incorporated, multi-lateral investment company that seeks to foster economic development through debt-capital investments in social enterprises. Institutions comprising its portfolio include banks, non-bank financial institutions, rural banks, credit unions, and nonprofit institutions active in Southeast Europe.

EFSE is managed by Oppenheim Pramerica Asset Management. Equity ownership is limited to institutional investors, and consists primarily of development banks and agencies of various European countries, as well as World Bank unit International Finance Corporation. For a complete list of EFSE’s investors, please click here.

As of December 2007, the fund held USD 557.2 million in total assets, having allocated USD 308 million toward 50 microfinance investments. Over the next twelve months, EFSE intends to allocate USD 127 million in additional funds toward new microfinance investments. Management says they expect total fund assets to reach EUR 630 million (USD 992 million) by the end of 2008.

Founded in 1997 by nonprofit aid organization Mercy Corps, Partner Microcredit Foundation is a nonprofit, non-bank financial institution that provides financial services to individuals lacking access to commercial funding. As of March 2008, Partner held USD 154 million in total assets, managed a USD 143 million loan portfolio, and reported a debt-equity ratio of 406.54 percent. At December 2007, Partner reported return on assets of 4.84 percent. Data were provided courtesy of MIX Market, the microfinance information clearinghouse.

By Ryan Benson, Research Assistant

Additional Resources:

MicroCapital Story: Austrian Development Bank Oesterreichische Entwicklungsbank Makes $56m Equity Investment in Microfinance Investor European Fund for Southeast Europe, by Ryan Benson

MicroCapital Story: European Fund for Southeast Europe (EFSE) Annual Meeting 2008 Conference on Responsible Finance, by Melissa Duscha, April 10, 2008.

MicroCapital Story: European Fund for Southeast Europe (EFSE) Provides USD 4.7 Million Loan to FINCA Kosovo, by Quentin Ruiz-Esparza, August 22, 2007.

Partner Microcredit Foundation: European Fund for Southeast Europe Provides EUR 10 Million Loan to Bosnian and Herzegovinian Microcredit Foundation Partner (Courtesy Microfinance Gateway)

Press Release: EFSE Provides €10 mil in Local Currency to ProCredit Bank Romania for Very Small and Small Business Financing, May 7, 2008.

EFSE: MIX Profile

EFSE: Home

Partner: MIX Profile

ProCredit Romania: Home

EFSE: Institutional Investor