In April, Bank Danamon, Indonesia’s fifth largest lender, completed a USD 362 million stock offering, the largest ever bank stock offering in Indonesia. Citigroup Global Markets Singapore and Morgan Stanley Asia were joint standby purchasers on the deal. Danamon has a very active microfinance division called Danamon Simpan Pinjam (DSP). Although Danamon experienced 30.2 percent drop in year over year first-quarter net profit in 2009, its Capital Adequacy Rating (CAR) increased to 22 percent from 15.4 percent due to the stock offering. In an interview with The Asian Banker, Danamon’s President Director and former Citigroup executive, Sebastian Paredes, stated, “After this capitalisation, Bank Danamon is probably going to be one of the highest capitalised banks in the world.”
Category: Deals
MICROCAPITAL STORY: International Finance Corporation (IFC) Microfinance Investment Deals from January to April 2009 in Latin American and the Caribbean
The International Finance Corporation (IFC), a member of the World Bank, is one of the top five investors in Latin America and the Caribbean. The IFC contributed 11 percent of total LAC funding according to a 2008 survey. Development Finance Investors (DFIs) such as the IFC are government owned bilateral or multilateral development agencies with investments in microfinance. The IFC makes direct and indirect investments and also has an advisory arm. Direct investments may establish microfinance institutions (MFIs) and indirect investments are in microfinance investment vehicles such as private investment funds. In their advisory role the IFC provides training and technical support, partners with organizations such as the World Bank and the Consultative Group to the Poor (CGAP) and supports innovative technology.
MICROCAPITAL STORY: The Multilateral Investment Fund (MIF) invests USD 10.1m, including USD 1.6m in Microfinance, in Latin America and the Caribbean during March and April 2009
The Multilateral Investment Fund (MIF), administered by the Inter-American Development Bank (IDB) is one of the largest public sector Development Finance Institutions (DFI) in the Americas. DFIs are government owned bilateral or multilateral development agencies whose investments include microfinance deals. DFIs make either direct or indirect investments. Direct investments are in microfinance institutions (MFIs) and indirect investments are in microfinance investment vehicles such as private investment funds. The majority of investments are direct and in hard currency (USD).
MICROCAPITAL STORY: Bhartiya Samruddhi Finance Ltd, a Unit of BASIX Group, Raises USD 9.87m in Capital
A recent press release from Intellectual Capital Advisory Services (Intellecap) reports that Bhartiya Samruddhi Finance Ltd (BSFL), a microfinance institution (MFI) based in Hyderabad, India, has received USD 9.87 million in Series-B funding from several investors including Lok Capital LLC, Aavishkaar Goodwell India Microfinance Development Company and Small Industries Development Bank of India (SIDBI). Intellecap, a finance consultancy firm, was BSFL’s advisor on the deal. BSFL’s old investors, including IFC, Shorecap International Ltd, and ICICI Bank, commenced their exit by making a secondary sale of USD 4 million to the new investors. According to Aavishkaar Goodwell, USD 500 million in private equity over the next five years is necessary to facilitate the growth of MFIs in India. BSFL was set up in 1997 by Bhartiya Samruddhi Investments and Consulting Services (BASICS), the holding company of the BASIX group. BASICS currently owns 49.5 percent of BSFL, with investors holding the remaining amount. According to Mr. Vijay Mahajan, the Chairman and CEO of BSFL, “This is a big milestone for us as investors have reposed faith in the BASIX integrated livelihood promotion model over cookie-cutter micro-credit. We are all set to now address our goal of reaching 10 million poor households by 2014.” Donald Peck, the co-founder of Lok Capital, remarked, “We are delighted to be able to support the further growth of BSFL as it embarks on the next stage of roll-out of its unique agriculture and skills focused business models.”
MICROCAPITAL STORY: MicroPlace Offers Online Microfinance Investment in Nicaraguan Credit Alternatives Fund issued by Working Capital for Community Needs with Interest Rates up to 6 percent
MicroPlace, a microfinance website, eBay Inc. company, and SEC registered broker/dealer, has launched a microfinance product available to retail investors with up to a six percent return, according to its website and a report on the Corporate Social Responsibility Newswire (CSR). The opportunity comes just as Americans are considering what to do with their tax refunds. According to a poll on taxsoftware.com, 58 percent of Americans planned to either save or invest their refunds and 27 percent planned to donate a portion to charity. The investment offering targets loans to the poor in Nicaragua and is part of the unsecured, USD 20 million Nicaraguan Credit Alternatives (NICA) Fund offering, issued by Working Capital for Community Needs (WCCN). Interest rates range between zero and six percent, terms vary by Note. The Notes can be purchased directly from WCCN (traditional modality, minimum investment size USD 1000) or online through the MicroPlace website (online modality, minimum investment size USD 20). Traditional Notes are not senior to Online Notes. The Notes are not registered with the Securities and Exchange Commission in reliance upon the exemption in Section 3(a)(4) for charitable organizations. To read a prospectus on the offering, click here. For more information contact Annie Lescroart at MicroPlace.com, (anlescroart@ebay.com) (408)-376-7458.
MICROCAPITAL STORY: Indian Microfinance Institutions Madura Microfinance and Grama Vidiyal Report Good Credit Growth in Fiscal Year 2009
Despite the credit crunch Indian MFIs Grama Vidiyal, and Madura Microfinance reported strong credit growth as Indian banks eased credit in order to meet their priority sector targets. Grama Vidiyal’s disbursements grew 81.2 percent to USD 74.6 million from USD 41.2 million in the prior year. Madura’s disbursements grew 33 percent to USD 25.3 million from USD 18.9 million in the previous year.
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).
MICROCAPITAL STORY: Indian Microfinance Institution Bandhan Sells Agricultural Loans Worth USD 35.4 Million to Punjab National Bank and Other Commercial Banks
Bandhan, an Indian microfinance institution, has sold Rs 180 crore (USD 35.4 million) worth of farm loans to several Indian commercial banks including Punjab National Bank (PNB), IndusInd Bank, Development Credit Bank (DCB), and Kotak Mahindra Bank, according to a report in the Economic Times.
MICROCAPITAL STORY: Equitas Micro Finance Gets Transaction Securitized and Rated by CRISIL, Structured and Arranged by the Institute for Financial Management and Research
Equitas Micro Finance India announced it has completed a microloan backed rated securitization worth USD 3.0m. According to a press release in the Economic Times, the pass-through certificates are rated by CRISIL and backed by microloan receivables originated by Equitas. CRISIL is an Indian rating company and a division of Standard and Poor’s. The Series A1 certificates are rated AA(so) and the Series A2 certificates are rated BBB(so). IFMR, the Institute for Financial Management and Research in India, structured and arranged the transaction. The COO of Equitas, S. Baskar, commented “traditionally MFIs in India have had to access only banks for debt raising, placing limitations. This transaction would open a new window to the industry to raise debt from those banks which do not generally participating (sic) in funding to MFIs”.
MICROCAPITAL STORY: Indian SKS Microfinance Issues Bonds and Commercial Notes, and Announces a $963.6m Borrowing Plan to Finance Rapid Growth
Hyderabad-based SKS Microfinance announced that it aims to raise one-tenth of its USD 963.6 million borrowing plan for the next fiscal year through USD 96.4 million worth of securitization deals with financial institutions. The announcement was made shortly after SKS sold USD 4.8 million non-convertible debentures (NCD) with YES Bank and generated another USD 4.8 million through the issuance of commercial paper (CP). Last month, SKS solidified a USD 38.5 million securitization deal with India’s second largest bank, the Industrial Credit and Investment Corporation of India (ICICI). These deals come as SKS strives to finance a loan portfolio that is growing at one of the fastest rates among microfinance institutions (MFIs) in the world.
MICROCAPITAL STORY: Huge Global Pensions Back Break-Out Private Equity Fund: TIAA-CREF, APG, DWM and SNS REAAL Contribute $82 million to Developing World Markets Microfinance Equity Fund I
Developing World Markets (DWM) has closed its DWM Microfinance Equity Fund I with a commitment of USD 82 million from four large institutional investors. The fund provides equity capital to microfinance institutions (MFIs) around the world. The Fund Manager, DWM Asset Management Limited Liability Company (LLC), now controls a total of USD 200 million in microfinance-related assets: a pool, which it states, is the largest in the world dedicated solely to MFI equity investment. Acting as Advisor to the Fund Manager is major microfinance investor SNS Asset Management. After the closing, Theo Brouwers, Director of SNS Asset Management said, “The success of the fundraising at a time of global economic turmoil demonstrates the confidence of international investors in microfinance as a stable asset class and that institutional investors continue to search for good investment opportunities that contribute to social development.” MicroCapital has previously quoted Theo Brouwers in his argument that despite the controversy over for-profit microfinance, the key to microfinance succeeding in poverty alleviation is to funnel institutional capital to developing countries lacking funds. DWM’s new USD 82 million fund is a step in that direction.
MICROCAPITAL STORY: The European Bank for Reconstruction and Development (EBRD) Provides $3.8m Loan to Inicjatywa Mikro with Technical Assistance Funded by the European Commission (EC) to Support the Development of Micro and Small Enterprises in Poland
The European Bank for Reconstruction and Development (EBRD) is providing the microfinance institution Inicjatywa Mikro with a 3.8 million USD loan to aid the development of micro and small enterprises in Poland. The loan is supported by technical assistance funded by the European Commission, the executive branch of the European Union. The financing comes under the EU/EBRD Preparatory Action Framework, which supports micro and small enterprises in the new EU member states, and aims to generally provide medium and long-term financing from the EBRD combined with technical assistance funded by the European Commission.
MICROCAPITAL STORY: European Fund for Southeast Europe (EFSE) Provides EUR 5m Loan to Macedonian Commercial Bank, TTK Banka A.D. Skopje (TTK); Fund will be Used to Provide Microloans to Micro and Small Enterprises (MSEs) in Macedonia
The European Fund for Southeast Europe (EFSE), a Luxembourg based microfinance fund has agreed to lend EUR 5 million to TTK Banka A.D. Skopje (TTK), a commercial bank based in Skopje, Macedonia as part of a loan agreement to help TTK further expand its outreach to micro and small entrepreneurs in the Republic of Macedonia. In a news release found on the Frankfurt School of Finance and Management website, Nikolche Petkoski, a member of the Board of Directors at TTK said that the loan, which would help TTK to support and increase access to finance for micro and small businesses in Macedonia, was particularly important during the present ‘times of economic uncertainty’.
MICROCAPITAL STORY: IDBI Fortis Life Insurance Launches Group Microinsurance Plan; Samhita Community Development Services (SCDS) Become the First Policyholders
IDBI Fortis Life Insurance Co. Ltd., a relatively new Indian private life insurance company, has launched a new Group Microinsurance Plan. The plan provides affordable life insurance coverage to groups such as microfinance institutions (MFIs), self help groups (SHGs), and non-governmental organizations (NGOs). The plan insures the lives of the group members as well as provides protection from loan liabilities in the case of death of the primary earner of the family.
MICROCAPITAL STORY: Rural Impulse Fund of Belgium’s Incofin Invests in Asomi, an Indian MFI
Incofin, a Belgian private social investment company that invests in MFIs, has signed an agreement with Asomi, an MFI operating in Assam, India. Incofin’s Rural Impulse Fund, which makes debt and equity investments in rural MFIs, acquired 25% of the capital of Asomi for an undisclosed amount. The investment represents Incofin’s first entry into India.
MICROCAPITAL STORY: Small Industries Development Bank of India (SIDBI) to Give $61.7m to MFIs
The Small Industries Development Bank of India (SIDBI) intends to lend Rs 300 crore, USD 61.7 million, to microfinance institutions in Orissa, India, by the end of 2010. To date, SIDBI has disbursed Rs 250 crore, or USD 51.4 million to MFIs in Orissa. The terms of the financing were not disclosed. Currently Rs 100 crore is outstanding to 20 Orissa MFIs. The bank plans to increase this number by 50 new MFIs over the next two years.
WHO’S WHO IN MICROFINANCE: Neptune Software Plc
Founded in 1999, Neptune Software Plc is a banking software provider. The UK-based company has over 170 employees and offices in the UK, South Africa, Nigeria, Kenya, Uganda, and India. Neptune partners with technology leaders such as BEA, Oracle, Sybase, IBM, and Business Objects. While Neptune also provides financial services software to the broader financial services industry, the company has created a niche with microfinance institutions. In Nigeria, Neptune has partnered with over 45 successful microfinance institutions. In 2005, CGAP awarded the company the highest rating, 4 stars, for its operational excellence.
MICROCAPITAL STORY: The MasterCard Foundation and Mennonite Economic Development Associates (MEDA) to Provide Microfinance Services for Poor Youth in Egypt and Morocco
The MasterCard Foundation and Mennonite Economic Development Associates (MEDA), a Canadian Christian organization, have announced a USD 5 million five-year program that will provide financial services to youth between the ages of 15 and 24 in Morocco and Egypt. Microfinance services for the youth market have traditionally been scarce due to the perception that youth borrowers are higher risk because they lack collateral or work experience. The program, titled Youth Invest, will enable microfinance institutions to develop and test innovative products designed specifically for the youth maket.