Financiera Independencia, a microfinance institution (MFI) traded on Mexican Stock Exchange, has appointed the Mexican division of Credit Suisse, a prominent international financial services firm, to serve as a market maker for the MFI’s securities. Market makers facilitate the entry and exit of investors by connecting buyers and sellers and temporarily buying or selling securities to facilitate the investors’ transactions.
The goal of market maker’s is to produce liquidity, the ease of buying or selling, for a given security. Increased liquidity in Financiera Independencia’s securities will improve the firm’s attractiveness to investors who become confident that they will not have to pay premiums to trade the companies stock. Market makers also keep records of their transactions, creating improved transparency for the company’s stock. These functions will help the MFIs stock become more comparable to other publicly traded companies.
Founded in 1993, Financiera Independencia had total assets of almost USD 345m, a debt to equity ratio of 72 percent and a return of equity of 29 percent at the end of 2007. It also had a gross loan portfolio of USD 307m, which included 833,902 active borrowers as of the same date. All financial data was taken from MIX Market, the microfinance information exchange. To learn about the MFI’s recent management change, please read this previous MicroCapital story. The success of for-profit MFIs such as Financiera Independencia could be greatly affected by the formation of Grameen Carso, an MFI run by the Grameen Trust, which aims to undercut the interest set by commercial institutions.
By Greg Casey, Research Assistant
Additional Resources:
Market Watch: Financiera Independencia Appoints Market Maker
MIX Market: Financiera Independencia
Financiera Independencia: Home
Credit Suisse: Mexico
MicroCapital Story, September 22, 2008: Financiera Independencia’s (FINDEP) Managerial Change brings Investment Experience to its Microfinance Lending Services
MicroCapital Story, October 10, 2008: Mexican Billionaire Carlos Slim Donates $5m and Guarantees $40m for a New Mexican Microfinance Institution, Grameen Carso, Run by the Grameen Trust of Bangladesh
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