by Jennifer Lee -

PAPER WRAP-UP: Morgan Stanley’s Approach to Assessing Credit Risks in the Microfinance Industry

This 13-page study thoroughly details Morgan Stanley’s internal rating methodology and approach to assessing credit risks. Morgan Stanley provides investment banking, securities, and investment management services. Developed by the firm’s microfinance-oriented business unit, the Microfinance Institutions Group (MFIG), the paper was written by Miguel Arvelo, Ju-Lie Bell, Christian Novak, Juliette Rose, and Shally Venugopal. One can find the article in the subscription-only International Corporate Governance issue of Morgan Stanley’s Journal of Corporate Finance or free of charge at the Microfinance Gateway.

by Jennifer Lee -

MICROCAPITAL STORY: ING Review of Morgan Stanley, the First Investment Bank Microfinance-Oriented Group, and Prior Deals with Blue Orchard Finance

The Dutch Bank ING published its updated 2008 study on commercial bank microfinance activity, called “A Billion to Gain? The Next Phase”. A MicroCapital summary of the paper can be read here. MicroCapital is reviewing the microfinance activities of several of large international banks covered in the study, such as Morgan Stanley.

by Kenny Kline -

KNOW A MICROFINANCE FUND: Fonds International de Garantie (FIG) (International Guarantee Fund (IGF)), Investisseur et Partenaire pour le Développement (I&P), Gray Ghost Fund, Incofin Impulse Microfinance Fund

The following microfinance investment funds are profiled in this brief:

Fonds International de Garantie (FIG) (International Guarantee Fund (IGF))

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Fonds+International+de+Garantie+%28FIG%29+%28International+Guarantee+Fund+%28IGF%29%29

Investisseur et Partenaire pour le Développement (I&P)

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Investisseur+et+Partenaire+pour+le+Développement+%28I

Gray Ghost Fund

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Gray+Ghost+Fund

Incofin Impulse Microfinance Fund

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Incofin+Impulse+Microfinance+Fund

by Zoran Stanisljevic -

MEET THE BOSS: Discussions on Successful Due Diligence When Evaluating Microfinance Investment Vehicles’ (MIV’s) Financial Viability: Interview with Christina Leijonhufvud, Managing Director, Social Sector Finance Group (SSF)/Investment Bank (IB) at JP Morgan (Part II of a Three Part Series)

Ms. Leijonhufvud is Managing Director of the Global Social Sector Finance Group at JPMorgan. The SSF unit leverages JP Morgan’s products and skills to help bring financial services to microfinance and social enterprises around the world.  The scope includes capital markets, structured products and principal investments.  The unit seeks to achieve a double bottom line of social benefit and financial returns. According to JP Morgan, potential demand for sustainable financial services is immense, at an estimated USD 300 billion. JPMorgan utilizes its global IB platform to raise capital to support poverty alleviation initiatives in developing economies.

Ms. Leijonhufvud has led J.P. Morgan’s Social Sector Finance unit since its inception in late 2007. A double bottom line initiative that brings financial services and financing to microfinance institutions and other enterprises serving the base of the economic pyramid, Social Sector Finance also focuses on engaging the firm’s employees in these sectors. Outside J.P. Morgan, Ms. Leijonhufvud serves on the Advisory Board for the Center for Financial Inclusion, has been a consultant to Ashoka-Innovators for the Public in their social financial services venture, and has lectured widely on financial globalization and emerging markets risks. Ms. Leijonhufvud has held various risk management positions at J.P. Morgan, including as head of Country Risk Management & Advisory, Credit Portfolio Market Risk Management, Emerging Markets Market Risk Management, and Industry Concentrations. Prior to joining J.P. Morgan in 1996, Ms. Leijonhufvud worked at the World Bank as Country Officer, helping develop reform programs and borrowing strategies for the former Soviet Republics of Central Asia. In 1991, she served on the Economic Reform Committee for the Government of Kazakhstan. Ms. Leijonhufvud earned a M.Sc. degree in Economics from the London School of Economics, a M.A. degree in International Affairs from George Washington University, and a B.A. in Sociology from UCLA.

by Christopher Maggio -

MICROCAPITAL.ORG STORY: BlueOrchard Private Equity Fund Invests Rs 500 million ($10.2 million) in Asmitha Microfin

BlueOrchard [1], a commercial microfinance investment intermediary based in Switzerland, has, through its Private Equity fund, invested Rs 500 million (the equivalent of over USD 10.2 million) in the equity of Asmitha Microfin Limited [2], a Microfinance Institution (MFI) based in Hyderabad, India. This was announced in a press release [3] available on the Asmitha website. Microcapital covered the relationship between these two organizations in October of 2008 when BlueOrchard made an initial equity investment in Asmitha of USD 5.3 million intended to “expand [the MFI’s] capital base and bolster its borrowing capacity” [4]. According to Dr. Vidya Sravanthi, Chairperson and Managing Director of Asmitha, the MFI hopes to use the newest investment to “[expand] its operations deeper into the Indian rural markets and offering its services to many more of the under-served poor in these regions” as well as move toward “growth targets” set by Blue Orchard [3].

by the MicroCapital Team -

MEET THE BOSS: Jean-Pierre Klumpp of BlueOrchard Finance

Jean-Pierre Klumpp has been Chief Executive Officer of BlueOrchard Finance since 2008.

MicroCapital: Would you please tell us about the history of BlueOrchard?

JPK: The Dexia Micro-Credit Fund (DMCF), which we manage, was launched in 1998 by Dexia Asset Management. Jean-Philippe de Schrevel, at the time a financial analyst fully dedicated to this fund, founded BlueOrchard Finance in 2001 with two partners and took over the management of the microfinance portfolio for the DMCF. With just a little more than USD 10 million under management at the beginning, BlueOrchard started an impressive ascent to about USD 1 billion assets and eight microfinance investment vehicles under management today.

by Zoran Stanisljevic -

MICROCAPITAL STORY: enConfianza Microfinanciera Signs a “Technical Assistance Contract” with Accion International to Provide Financial Services to a Broader Audience of Micro-entrepreneurs in Mexico

enConfianza S.A. de C.V. SOFOM ENR (enConfianza Microfinanciera) recently announced that they have signed a “Technical Assistance Contract” with Accion International to provide financial services to a broader audience of micro-entrepreneurs in Mexico.  According to Accion, the microfinance company based in Mexico City (enConfianza Microfinanciera) will receive consultation on best practices in the areas of credit methodology, risk management, project and process management, human resources and organization development.  Mauricio Hubard, president and CEO for enConfianza expects that the partnership will allow the microfinance company to create new products and trends, while developing an advanced business model for the microfinance industry.  No additional information regarding the terms of the contract are provided.

by Zoran Stanisljevic -

MICROCAPITAL STORY: Co-Operative Bank and Deutsche Bank to Launch a USD 50 Million Microfinance Fund to Directly Target Credit Unions and Co-operatives

Co-Operative Bank and Deutsche Bank (DB) have recently announced the launch of a USD 50 million microfinance fund to target credit unions and co-operatives directly.  The “Global Co-operative Development Fund” (GCDF) is expected to launch this month and will be open to investors in the fourth quarter 2009.  The fund aims to provide capital to the poorest communities with a geographical target of Central Europe, Asia, and Latin and Central America.  The GCDF will be managed by Deutsche Bank and sub-managed by Oikocredit.  The Co-operative Bank will be principal sponsor for the GCDF.  No additional information regarding how the fund will function is provided.

by Zoran Stanisljevic -

MICROFINANCE EVENT: Fundamentals and Methodologies of Microfinance Training offered by Social Enterprise Development Partnerships, Inc. (SEDPI)

Fundamentals and Methodologies of Microfinance Training, September 14-16, 2009, at Tacloban City, Philippines, presented by the Social Enterprise Development Partnerships, Inc. (SEDPI) and sponsored by the Social Enterprise Development Partnerships, Inc. (SEDPI) and Ateneo de Manila University.

 September 14-16, 2009, at Tacloban City, Philippines.

 See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events

Costs: Foreign nationals: USD 200 dollars; Filipinos: PhP 3,500 (Approximately USD 75 dollars)

by Zoran Stanisljevic -

MICROCAPITAL STORY: The European Bank for Reconstruction and Development (EBRD) to Lend Up to $10m to Russia’s SKB Bank to Provide Loans for Small and Medium-sized Enterprises (SMEs) in the Urals

According to the European Bank for Reconstruction and Development (EBRD), up to USD 10 million will be provided to Russia’s SKB Bank in order to provide loans for small and medium-sized businesses/enterprises (SMEs) in the Urals. The EBRD’s four-year loan provides additional funding for the Russian banking sector as part of the EBRD’s response to the global credit crisis. Terms of the funding to Russia’s SKB Bank are not provided.

by Zoran Stanisljevic -

MICROCAPITAL STORY: VG Microfinance – Invest Nr. 1 GmbH’s senior CDO notes downgraded by Fitch Ratings from ‘BBB’ to ‘BB+’ (assigned a Negative Outlook) with Deutsche Bank AG in its role as seller and protection buyer

Fitch has confirmed a downgrade of VG Microfinance – Invest Nr. 1 GmbH’s senior CDO notes to ‘BB+’ and assigned a Negative Outlook.  According to Fitch, the downgrade of the senior CDO notes is the result of the rating agency’s concern for the political uncertainty and sharp asset deterioration of the Nicaraguan MFI, Asociación de Consultores para el Desarrollo de la Pequeña, Mediana y Microempresa (ACODEP’s) loan book.  ACODEP currently represents 8.8 percent of the portfolio with default risks that have materially increased.

by Zoran Stanisljevic -

MICROCAPITAL STORY: SKS Microfinance, Share Microfin, and Equitas Microfinance Collaborate with Yes Bank to Securitize a Series of Micro-loans in India that Cumulatively Amount to USD 38.3 Million.

According to S. Dilli Raj, CFO of SKS Microfinance, the first securitized deal by an Indian MFI has received the highest rating (P1+SO; very strong safety) by CRISIL (A Standard & Poor`s company).  CRISIL assigned a very strong safety review based on an analysis of over 1 million loans that were extended by SKS Microfinance Private Limited.  Also, the series of recent transactions concluded allows YES Bank to purchase 14,850 micro loans that have been extended to unbanked and minority families as identified by the Reserve Bank of India (RBI) as “weaker sections”  The transactions covers roughly 400,000 micro loan borrowers (average loan size USD 178 dollars) and spans across three microfinance institutions (MFIs). 

by Zoran Stanisljevic -

MICROFINANCE EVENT: 4th Annual African Microfinance Conference: Affordable Access to Finance for Low-income African Entrepreneurs to be held in Ouagadougou, Burkina Faso, in the Sub-Saharan Africa region from July 7-10th, 2009

Leonce Kone, Committee Chairman for the Fourth Annual African Microfinance Conference in Ouagadougou

July 7-10, 2009, Ouagadougou, Burkina Faso (Sub-Saharan Africa)

by Zoran Stanisljevic -

MICROCAPITAL STORY: India’s microfinance sector softens while Indian MFIs Turn to Securitizing Loans to Raise Funds

As the microfinance sector in India begins to unwind, more microfinance institutions in the country are increasingly looking at securitization as a method for off-balance sheet financing for capital relief.  The intention is to free up capital and reduce borrowing costs.  According to Dilli Raj, Chief Financial Officer of SKS Microfinance, “securitization is a win-win for both MFIs and banks/investors.”