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].
Category: Deals
MICROCAPITAL.ORG STORY: Philippines-Based MFI CARD Raises $10.4 Million In A 5-Year Privately Placed Bond Issue Supported By Grameen Growth Guarantee Program And ‘A(-)’ Rating By Planet Rating To Expand Its Microfinance Business
Philippines-based MFI, CARD Bank, Inc. (CARD) [1], or Center for Agriculture and Rural Development, was reported to have raised Peso 500 million (approximately USD 10.4 million) last month by issuing fixed-rate corporate notes with a five-year maturity. According to a report in Philippines online news portal, Business World [2], the funds raised would be used to expand CARD’s microlending business. SB Capital Investment Corp. [3], the investment banking arm of Security Bank Corp. [4], acted as issue manager and lead arranger. The privately placed debt issuance was reported to be the first of its kind by an MFI and was hailed in a report on Market Wire [5] as ‘an important milestone in opening up broader capital markets to MFIs in the Philippines’. The transaction was supported by a USD 5 million guarantee from Grameen Foundation’s Growth Guarantee Program [6] and related advisory support. MFI rating agency, Planet Rating [7], was reported to have given CARD a rating of ‘A(-)’, which meant ‘excellent’ on its scale. Planet Rating noted the absence of risks in the short- and mid-term in terms of CARD’s operations as well as the credit enhancement provided by Grameen’s guarantee. The notes were reported to have been purchased by the following institutions: Allied Bank Corp. [8], Rizal Commercial Banking Corp. (RCBC) [9], Security Bank Corp. [4], and Banco de Oro Unibank, Inc. [10] and its subsidiaries BDO Private Bank, Inc. [11] and BDO Leasing and Finance, Inc. [12].
PRESS RELEASE: Microfinance Institution CARD of the Philippines Raises $10.4m from Local Institutional Investors with $5m Guarantee from Grameen Foundation
Source: Grameen Foundation.
MICROCAPITAL.ORG STORY: Is The Microfinance Sector Losing Its Appeal To Investors As A Result Of High Valuations?
In a report by the Hindu Business Line entitled ‘Microfinance sector losing sheen due to high valuations’ [1], reporter Mr Sagar Bhadra observes that the microfinance sector, which he stated accounted for 40 percent of all private equity transactions in India in the last 18 months, ‘seems to have lost its charm’. Valuations in the sector have ‘skyrocketed’ with the consequence that ‘investors now fear a bubble and are approaching the sector cautiously’. Some market participants feel that investments in the sector is likely to decrease as investors become more selective, particularly when funding start-up MFI, according to Mr Anurag Agrawal, Senior Vice-President of Intellecap [2], a social investment advisory firm. Mr Agrawal added that the secondary market for MFI investments will start to pick up as existing investors start looking for exits.
MICROCAPITAL.ORG STORY: The International Finance Corporation (IFC) Invests $4m in Equity in Sogebank, a Haitian Bank, to Finance Micro, Small, and Medium Enterprises
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The International Finance Corporation (IFC), a member of the World Bank, is investing USD 4 million in equity in Sogebank S.A. of Haiti to finance micro, small, and medium enterprises (MSMEs) [1]. According to the IFC’s Summary of Proposed Investment, Sogebank is the largest commercial bank in Haiti with total assets of approximately USD 750 million [2]. It has a branch network of 42 branches [1]. Its activities comprise of retail and corporate banking, microfinance, remittance distribution, and factoring, which operate as independent businesses through subsidiaries [2]. Information on the percentage of its business delegated to microfinance at Sogebank is not publicly available.
MICROFINANCE STORY: Small Business Development Finance Trust (SBDFT) of Guyana Provides Over 540 Microfinance Loans Equivalent to $711,046
According to the Starbroek News, the Small Business Development Finance Trust (SBDFT) of Guyana reported that it had funded over 540 micro and small loans to the value GYD 147.2 million (equivalent to USD 711,046) in 2008. SBDFT was created in 2002 with the objective to provide financial and advisory services to low income households in Guyana. Starbroek News reported that in the Trust’s Annual Report, it stated an accumulated surplus equivalent to USD 179,638 as of December 2008 compared with USD 146,801 at the end of 2007.
MICROFINANCE STORY: The European Bank for Reconstruction and Development (EBRD) Lends $10M from Its Microfinance Program to Minsk Transit Bank (MTB) of Belarus
The European Bank for Reconstruction and Development (EBRD), a multilateral development institution that fosters private sector investment in 30 countries in Central Europe and Central Asia, is lending USD 10 million to Minsk Transit Bank (MTB), a commercial bank established in 1994 and based in Minks, Belarus. According to Moody’s, MTB reported total assets of USD 150 million in 2007. MTB is one of six EBRD partner banks in Belarus. The five-year loan to MTB will be used to lend to privately-owned micro, small, and medium-sized businesses (MSMEs). As stated by the EBRD, the funding is to help small businesses in the country weather the crisis.
MICROCAPITAL STORY: M.J. Murdock Charitable Trust Awards Global Partnerships in the United States with a $180,000 Capacity-Building Grant to Expand Its Microfinance Investment Funds
Global Partnerships (GP), a Seattle non-profit organization founded in 1994 that funds microfinance institutions (MFIs) in Latin America, has received a USD 180,000 grant to help manage its loan funds. The three-year grant comes from the M.J. Murdock Charitable Trust, a private grantmaking foundation for the Pacific Northwest based in Vancouver, Washington and established in 1975. As of 2007, GP has fund assets worth USD 10.5 million whereas the Murdock Trust had USD 892 million in assets. As stated in GP’s press release, elements of the grant-supported project will include building GP’s staff capacity to manage the growth of its funds, broadening GP’s base of investors, and creating a knowledge management system to manage and analyze fund data. This project is part of GP’s greater objective to augment management of its three investment funds and improve its management and tracking of fund data. Moreover, GP plans to expand into Mexico this summer, its eighth country. As stated on the Murdock Trust’s website, the grant will primarily be used to hire a new director of investment operations to manage GP’s microfinance investment programs.
MICROCAPITAL STORY: New Microfinance Institution AccessBank Tajikistan Established with Investments Totaling USD 11 million from Access Microfinance Holding, the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC), and Kreditanstalt fuer Wiederaufbau (KfW)
Several international finance organizations have invested in a new microfinance institution, AccessBank Tajikistan. Access Microfinance Holding AG (AccessHolding) will hold a majority stake in the new bank, and international investors including the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), and Kreditanstalt fuer Wiederaufbau (KfW) will invest a total of USD 11 million for equity stakes. AccessBank Tajikistan will launch operations in late 2009 in the Tajik capital, Dushanbe.
MICROCAPITAL STORY: The European Bank for Reconstruction and Development (EBRD) Approves a $13m Credit Line for Azerdemiryolbank of Azerbaijan for Micro and Small Businesses under Its Microfinance Program
The European Bank for Reconstruction and Development (EBRD), a multilateral development institution that fosters private sector investment in 30 countries in Central Europe and Central Asia, will allocate a USD 13 million credit line to Azerbaijan’s Azerdemiryolbank, a private banking institution established in 1989. Azerdemiryolbank lends to other banks and small businesses. As stated in the bank’s press release, its assets totaled AZN 208.48 million (estimated USD 259.3 million) as of June 2009. In 2005, the EBRD gained a 25%+1 share of Azerdemiryolbank via an equity investment through an acquisition of newly issued shares of Azerdemiryolbank. The Board of Directors for the EBRD covered and approved the credit line for Azerdemiryolbank to facilitate credits to the country’s micro, small, and medium-sized business sectors. It stated that of the total, USD 3 million will be provided for SME lending and USD 10 million for lending to the micro sector. The credit agreement signing is still pending. Further details on how the credit plan will be implemented have yet to be disclosed.
MICROCAPITAL STORY: Grama Vidiyal Micro Finance Limited (GVMFL) Raises USD 4.25 million from MicroVest, Unitus Equity Fund, and Amar Foundation
In its second round of fundraising, Grama Vidiyal Micro Finance Limited, a microfinance institution (MFI) based in Tamil Nadu, India, raised USD 4.25 million from MicroVest, Unitus Equity Fund, and the Amar Foundation.
MICROCAPITAL STORY: International Finance Corporation (IFC) Invests USD 75 million in MTN Dubai subsidiary MTN Afghanistan to Expand Mobile Communications Access in Afghanistan
The International Finance Corporation (IFC), a unit of the World Bank Group, is providing a USD 65 million loan and USD 10 million in equity capital to MTN Afghanistan, a subsidiary of MTN Dubai and part of the South Africa-based MTN Group Ltd. The investment is meant to support the expansion of MTN’s mobile telephone network to meet growing mobile phone service demand in Afghanistan. The expansion is focused on low-income populations. Details of the loan and equity investment were not available for this story, however James Ramadan, MTN Group’s Regional Vice President for Middle East and North Africa stated that the IFC was providing “long-term funding.” The IFC hopes its investment will encourage other investors into the sector in Afghanistan.
MICROCAPITAL STORY: Fund-raising Continues In India – Kerala’s ESAF Microfinance And Investments Raises $2.5 Million Through Sale Of Minority Stake To Opportunity International Australia’s Subsidiary, Dia Vikas Capital
It was recently reported by Ruchika Sharma in VC Circle, a specialist South Asian journal on venture capital, that a South India based MFI, ESAF Microfinance and Investments (EMFIL) has raised Rupees 12 crore (approximately USD 2.5 million). According to the MIX Market portal, a database which provides financial and other information on MFIs across the globe, EMFIL was established in 1992 and is a regulated non-bank financial institution which is modeled along the lines of Grameen Bank. It is stated in EMFIL’s profile on the MIX Market that the MFI’s total assets as at 31 March 2008 is USD 21, 838,532 and it has active 145,712 borrowers. EMFIL’s total equity is reported to be USD 1,169,903 and it has a profit margin of 3.03%. Its return on assets is said to be 0.71 percent and return on equity is 16.74 percent. The services offered by EMFIL include microcredit, microinsurance, funds transfers and micro-energy loans. Kerala-based EMFIL raised the amount by selling 20 percent of its stake to Dia Vikas Capital Private Limited, a 100% subsidiary of Opportunity International Australia. No further information about the transaction is currently available in the public domain.
MICROCAPITAL STORY: Working Capital for Community Needs (WCCN) Invests USD 530,000 in Nicaraguan Microfinance Institutions
Working Capital for Community Needs (WCCN), a U.S.-based non-profit, has offered loans totaling USD 530,000 through their Nicaraguan Credit Alternatives Fund (NICA Fund) to Cooperativa de Servicios Multiples 20 de Abril R.L. and Cooperative San Antonio, as reported to the CGAP Microfinance Dealbook.
MICROCAPITAL STORY: Spandana Sphoorty Financial Ltd. Issues INR 800 million (USD 17 million) One-year 10 Percent Bonds in Deal Arranged by Standard Chartered Bank
Spandana Sphoorty Financial, an Indian microfinance institution (MFI), has raised INR 800 million (USD 17 million) in one-year 10 percent bonds that have been listed on the Bombay Stock Exchange (BSE). Standard Chartered was the sole book runner and arranger. Mrs. Padmaja Reddy, Managing Director of Spandana, indicated the funds would help the MFI to expand to seven new states this year, and that listing on the BSE would help improve Spandana’s corporate governance.
MICROCAPITAL STORY: Microfinance Investors Back The Leapfrog Financial Inclusion Fund To Raise USD 44 Million For Microinsurance
The LeapFrog Financial Inclusion Fund recently announced that it has raised USD 44 million. This was reported on several news portals including Bloomberg, the Corporate Social Responsibility Newswire, the Press Portal website and CNBC. The fund has been billed as the world’s first investment fund that is focused on microinsurance. The fund aims to invest in or partner with businesses that offer insurance products and financial services to low-income communities throughout Africa and Asia, including India, Pakistan, South Africa and Uganda.
MICROCAPITAL STORY: SKS Microfinance Plans to Raise USD 104 Million in Rated Debt
SKS Microfinance, a Hyderbad-based microfinance institution (MFI), announced it plans to raise Rs. 500 Crore (USD 104 million) in rated debt products in order to satisfy customer loan demands. According to Dili Raj, Chief Financial Officer, the new debt will include bonds, commercial paper (CP), and securitization of receivables. Included in the total amount is the recent one-year, 10 percent USD 16 million bond issue reported in a recent MicroCapital story. Those bonds were listed on the Bombay Stock Exchange and fully subscribed by Standard Chartered Bank. In fiscal year 2009, SKS raised a total of Rs. 3,700 Crore (USD 767 million) in debt, of which Rs. 150 Crore (USD 31 million) was in bonds, CP, or securitizations. This fiscal year SKS plans to issue an incremental Rs. 5,000 Crore (USD 1 billion) in debt.
CGAP Microfinance Dealbook: May 2009 Transactions
The CGAP Microfinance Dealbook publicizes microfinance capital market transactions in an effort to bring greater transparency to the industry. This information is made freely available as a public service. Parties to microfinance transactions are encouraged to submit their deals to this effort. The following deals were collected for May 2009: