Sun Microsystems (NASDAQ: SUNW) founder and Chief Executive Officer, Vinod Khosla, lead a group of investors today in committing US$2.5 million to SKS Microfinance of India. Founded in 1998, SKS Microfinance reported having a loan portfolio of US$7,604,876 and total assets of US$9,130,885 as of March 31, 2005. Since then, that portfolio has grown to over US$14 million. The bank’s 42 branches and 400+ employees serve women in India’s poorest regions, in particular, the drought plagued Deccan Region. Though it has yet to report a profit, SKS Microfinance has brought its return on equity up from -55.85% in 2000 to only -0.06% in the first quarter of 2005. With annual growth pegged consistently at around 250%, a positive return should be just around the corner.
Category: Deals
American Microfinance Investment Fund Unitus Donates and Lends to Argentinean Micro-lender FIS Empresa Social
Unitus, a non-profit microfinance investment fund with assets of $7,100,000 as of August 2004, announced a partnership with FIS Empresa Social of Buenos Aires, Argentina. Through this agreement Unitus will provide FIS with $100,000 in grants and a $500,000 debt facility, as well as capacity-building consulting services. Unitus provides a variety of services to micro-lenders throughout the world. The firm currently has eight partners serving about 540,000 clients in India, Kenya, Mexico and Argentina.
Founded in 1999 as the microfinance arm of non-governmental organization (NGO) El Ceibal, FIS became an independent microfinance institution in 2005. FIS is now a for-profit institution which receives foreign and domestic equity investments. FIS has a current client base of 3,000 and, with this boost from Unitus, projects expansion of MFI services to more than 55,000 clients by 2009. No additional financial data on FIS is available at this time.
Major Shareholders ProCredit Holdings, Commerzbank, and European Bank for Reconstruction and Development Increase Equity Investment in Microfinance Institution, ProCredit Romania
ProCredit Bank Romania, a development-oriented, full service bank focused on microlending, has announced plans to increase its share capital by å¥4 million by the end of March. The new capital will come from increased investments by parent network ProCredit Holdings, which will increase its stake in the local bank from 26% to 34%; and Commerzbank, which will increase its stake to 21%. Additionally, the European Bank for Reconstruction and Development will provide funding to maintain its current stake in the bank.
Continue reading “Major Shareholders ProCredit Holdings, Commerzbank, and European Bank for Reconstruction and Development Increase Equity Investment in Microfinance Institution, ProCredit Romania”
Colombian Financial Group Banks on Microfinance Investment: Banco de Bogota Wins Auction for Megabanco and its Microcredit Portfolio with $358 Million Bid
Last week, MicroCapital reported that the liquidating Colombian bank, Megabanco was put up for auction. The sale drew attention from major banks such as Spanish bank, Santander, GE Money, and Caribbean development fund, Fundesarollo. In the end, the auction went to Grupo Aval, a Colombian financial group. Grupo Aval made the winning bid of 808 billion pesos (US$358 million) through its subsidiary (and Colombia’s second largest bank), Banco de Bogotá.
Continue reading “Colombian Financial Group Banks on Microfinance Investment: Banco de Bogota Wins Auction for Megabanco and its Microcredit Portfolio with $358 Million Bid”
Support the Standard in Microfinance Investment: Please Report Deals to CGAP Capital Markets Newsletter
The CGAP-MIX capital markets update of the World Bank group is the only newsletter covering the microfinance capital markets.
If you have recently completed microfinance ratings, equity or debt deals, have hired a new microfinance team member or have other news or information that you would like to announce in the April issue, email capmarkets@cgap.org by Wednesday, March 29th.
To build an asset class, please report every month and encourage your colleagues.
Additional Sources
1) CGAP-MIX Capital Markets Update
2) Consultative Group to Assist the Poor (CGAP)
3) The MIXMarket
Strong Microcredit Portfolio Makes Colombian Megabanco a Sought-After Acquisition Target
The microcredit portfolio of Megabanco has made it a hotly contested acquisition target for six large mainstream financial institutions. “Megabanco has a big base of small clients,” said Alexander Cardenas, head analyst at Bogota-based Acciones y Valores brokerage. “This makes it very attractive in the eyes of several banks that don’t cater to small savers and would be interested in capturing this type of client.”
Microfinance Investment Fund, Oikocredit, Spans the Globe with Latest Round of Debt Financings.
Oikocredit, one of the larger microfinance investment funds with assets totaling US$304,662,000 at the end of 2004, recently completed sixteen new debt deals that touched various countries around the world. Based in the Netherlands, Oikocredit is a socially responsible investment fund that leverages a number of regional offices to channel loans to development projects in Latin America, Asia, Africa, and Central and Eastern Europe.
Continue reading “Microfinance Investment Fund, Oikocredit, Spans the Globe with Latest Round of Debt Financings.”
Hivos Triodos Fund (HTF) Makes Microfinance Investment Worth Over $1.5 Million in Bosnian MI-BOSPO, Tanzanian Akiba Commercial Bank (ACB), and Peruvian Edpyme Proempresa
The Hivos Triodos Fund (HTF) åö part of the Triodos Bank family of microfinance funds- lent over $1.5 million in three deals. The Hivos-Triodos Fund (HTF), which was formed out of a joint initiative between the Humanist Institute of Development Cooperation (HIVOS) and Triodos Bank in 1994, had a 2004 year end portfolio totaling $23 million. Total assets were worth $22.5 million at the end of 2004, with $20.5 million allocated to microfinance investment.
Continue reading “Hivos Triodos Fund (HTF) Makes Microfinance Investment Worth Over $1.5 Million in Bosnian MI-BOSPO, Tanzanian Akiba Commercial Bank (ACB), and Peruvian Edpyme Proempresa”
Impulse Microfinance Fund Makes New Loans to Microfinance Bank of Azerbaijan, FAMA Nicaragua, CRECER Bolivia, PADME Benin, and PRASAC Cambodia
Impulse Microfinance Fund, a US$15,413,875 microfinance investment fund managed by Incofin was founded in 2004 by Incofin and four Belgian institutional investors. The fund strives to strengthen financial markets in developing countries and achieve a “double bottom line” of financial and social returns on its investments. The fund recently extended five new loans to microfinance institutions around the world.
Continue reading “Impulse Microfinance Fund Makes New Loans to Microfinance Bank of Azerbaijan, FAMA Nicaragua, CRECER Bolivia, PADME Benin, and PRASAC Cambodia”
American Microfinance Investment Fund Unitus Strikes Deals with Pro Mujer Mexico and the Jamii Bora Trust of Kenya
Unitus, a non-profit microfinance investment fund with assets of US$7,100,000 as of August 2004, completed three new microfinance investment deals. Unitus provides both strategic consulting and funding for microfinance institutions using its “Acceleration Model.”
Continue reading “American Microfinance Investment Fund Unitus Strikes Deals with Pro Mujer Mexico and the Jamii Bora Trust of Kenya”
European Bank for Reconstruction & Development Backs Alter Modus of Montenegro, Kazakhstan Loan Fund, and Moldovan Rural Finance Corporation with New Microcredit Investments
The European Bank for Reconstruction & Development was established in 1991 to enable growth of the private sector in Eastern Europe after the fall of Communism. The Bank uses tools of investment to help build market economies and democracies in twenty-seven countries. The Bank is owned by member / shareholder countries with over å¥20 billion in subscribed capital and maintains a AAA credit rating.
The European Bank for Reconstruction & Development made its first-ever local currency loan to the Kazakhstan Loan Fund. The KZT 267.14 million loan (approximately US$2 million) will develop on-lending across the fund’s product base that includes Business Loan Group solidarity loans, individual loans, and group consumer lending. The Kazakhstan Loan Fund has been a presence in European microfinance for 9 years now. With a gross loan portfolio of US$6,154,594 and total assets of US$7,231,359, the fund created a return on assets of 7.20% over 2004. By January of 2006, that loan portfolio had grown to US$11.6 million.
Continue reading “European Bank for Reconstruction & Development Backs Alter Modus of Montenegro, Kazakhstan Loan Fund, and Moldovan Rural Finance Corporation with New Microcredit Investments”
Microfinance Makes Push for Funding Through Mainstream Capital Markets As BlueOrchard Announces $106 Million Bond
The microfinance industry has just dug deeper into the pockets of mainstream capital markets åö as Geneva-based microfinance consulting firm BlueOrchard Finance s.a. launched a $106m bond backed by loans to 22 microfinance institutions (MFIs), which will be available to investors worldwide through a sale being managed by US investment bank Morgan Stanley.
Small Industries Development Bank of India (SIDBI) Makes over $220,000 Microfinance Equity Investment in SKS Microfinance
On January 31, 2006, SIDBI made their first equity investment in a microfinance institution (MFI) by presenting two SKS Microfinance (SKS) clients with a check in the amount of $113,095. This represents half of SIDBI’s total investment amount of $226,192 corresponding to a 7% stake in SKS Microfinance (SKS). Although SIDBI has supported microfinance through loans and capacity building, this is their first direct equity investment.
Continue reading “Small Industries Development Bank of India (SIDBI) Makes over $220,000 Microfinance Equity Investment in SKS Microfinance”
Dutch Triodos Bank Makes Over $7m in Worldwide Microfinance Investments via Multiple Microcredit Funds
The Triodos-Doen Fund had a very busy year-end. The Dutch microfinance investment fund closed 11 deals totaling just over US$7 million. Opened in 1994 as a joint initiative of the DOEN Foundation, an organization dedicated to sustainable development, and Triodos Bank; the Triodos-Doen Fund had US$34,822,585 in assets under management as of 12/31/04. The fund’s mission is to stimulate sustainable development in a “dynamic, entrepreneurial way.” Investments are focused on microfinance and trade finance for “Fair Trade” or certified organic producers.
Details of all of the latest Triodos-Doen Fund deals are below:
|
MFI |
Region |
Funding |
Vehicle |
|
Latin America |
$ 232,650 |
Equity Shares |
|
|
Alter Modus |
Eastern Europe |
$ 244,800 |
Loan |
|
Latin America |
$ 750,000 |
Loan |
|
|
Fundación José Nieberowski |
Latin America |
$ 1,000,000 |
Syndicated Loan |
|
Latin America |
$ 750,000 |
Loan |
|
|
Latin America |
$ 250,000 |
Convertible Loan |
|
|
Latin America |
$ 600,000 |
Loan |
|
|
Latin America |
å¥ 700,000 |
Syndicated Loan |
|
|
Latin America |
$ 1,000,000 |
Syndicated Loan |
|
|
Africa |
$ 1,390,000 |
Syndicated Loan |
|
|
Asia |
$ 500,000 |
Convertible Loan |
The individual deals were primarily debt financings, including a number of “syndicate loans” funded with partner MFIFs. Among the groups that Triodos-Doen partnered with were two other funds managed by the Dutch development bank: the Hivos-Triodos Fund and the Triodos Fair Share Fund. Though primarily focused in Latin America, Triodos’ microfinance investments had a broad reach, extending to Eastern Europe, Africa, and Asia as well.
Triodos-Doen and Triodos Fair Share Fund also participated in a round of equity financing with Bolivian microfinance institution, FIE S.A.. FIE S.A. is the result of an effort by the Center for the Development of Economic Initiatives. The organization offers both lending and remittance services to support small-scale economic activities of families and people living in poverty. At the end of 2004, FIE S.A. had total assets of US$59,638,363 and generated a return on these assets of 3.02%. Typically, Triodos-Doen attempts to allocate 1/3 of its funds to equity deals such as this and 2/3 to debt financing. Overall, the fund maintains a portfolio of 64 active investments as of 12/31/04, and increased its Net Asset Value by 12% from 2003-2004, according to the fund’s most recent annual report.On the debt side, Triodos-Doen extended a number of loans to Latin American microfinance institutions. FINCA Mexico received a US$750,000 loan. As a member of the Foundation for International Community Assistance network, FINCA Mexico uses the “Village Banking” methodology to provide lending services to entrepreneurial women that often live on less than US$2.00 per day.
Peruvian microfinance institutions Edpyme Proempresa and Edpyme Edyficar both received loans from multiple Triodos Bank funds. Proempresa, with US$12,680,540 in assets as of 12/31/2004, received both a US$600,000 loan from Triodos-Doen, and a loan in Peru’s local currency, the New Sol, from Hivos-Triodos. Proempresa will use these funds to serve its individual clients with competitive advantages in areas such as handicrafts, medicinal plants, and agro-industry. As of year-end 2004, the microfinance institution had generated a 1.95% return on assets. Edyficar, likewise, received a å¥700,000 syndicated loan from Triodos-Doen and the Triodos Fair Share Fund. This money will finance activities for microentrepreneurs in both urban and rural settings. Edyficar had total assets of US$50,361,010 at year-end 2004, and generated a return on assets of 1.90%.
Beyond Latin America, the Triodos-Doen Fund again partnered with Hivos-Triodos to make a US$1,390,000 syndicated loan to K-Rep of Kenya. Originally an intermediary for funding non-governmental organizations, K-Rep became the first commercial bank in Kenya to target low-income clients. With US$35,057,877 in assets, K-Rep generated a return of 3.03% in 2004.
Extending its reach still further, Triodos-Doen also financed a convertible loan for Cambodian Entrepreneur Building Limited (CEB). CEB focuses on entrepreneurial, poor women in both urban and rural areas throughout Cambodia. It had assets of US$4,307,422 in 2004 and generated a return on assets of 2.53%.
AfriCap Microcredit Fund Makes Equity Microfinance Investment Worth Over $600,000 in Micro-lender Socremo in Mozambique
Micro-lender Socremo, Mozambique, has sold shares worth $620,000 to AfriCap Microfinance Fund (AfriCap). Socremo, established in 1998, is one of the largest microfinance providers in Mozambique with a gross loan portfolio of $4.2 million, total assets of $5.4 million, close to 6,000 borrowers, and 420 active savers, as reported in December, 2004. Socremo also reported total equity at $1.9 million, return on assets (ROA) as 1.8%, return on equity (ROE) as 5.0%, a debt to equity ratio of 185%, and a 10% profit margin at the end of 2004.
AfriCap, which was incorporated in Mauritius in 2001, with an operational base in Dakar, Senegal, is a $15 million equity investment fund dedicated to the microfinance industry in Africa. The fund is designed to provide venture capital and active governance to a select number of emerging African microfinance institutions (MFIs) that are committed to commercial viability. As of July 2004, AfriCap reported total fund assets of $13.3 million and funds allocated to microfinance investments of $3.2 million. Additional Resources1) “AfriCap Microfinance Fund”
2) MIX Market: “AfriCap.”
3) Microcapital Blog, Dutch Triodos Family of Funds (Triodos-Doen, Triodos Private Fair Share, Hivos-Triodos) Makes Microfinance Investments Worth Over $6.7 Million in Loans to Seven Microcredit Institutions Worldwide, December 9, 2005
4) MIX Market: “SOCREMO – Banco de Microfinan̤as de Mo̤ambique.”
Belgian Incofin Makes Over $400,000 Microfinance Investment, Buying Shares in Peruvian Edypme Confianza and Lending over $300,000 Investment in Nigerian Lift Above Poverty Organisation (LAPO)
Edypme Confianza, a Peruvian microfinance institution (MFI) created in 1997 to provide microfinance services to entrepreneurs and small producers, sold shares worth $405,280 to Incofin. Initially, Confianza was primarily an agriculture lender, but changed its lending practices in 2002 and expanded its portfolio to include urban and individual loans. This MFI had $17 million in total assets, over 17,000 active borrowers, and a loan portfolio of $13.7 million at the close of 2004. Edypme Confianza also reported total equity at $3 million, return on assets (ROA) as 1.3%, return on equity (ROE) as 7.2%, a debt to equity ratio of 465%, and a 6.7% profit margin at the end of 2004. According to an Inter-American Development Bank (IADB) survey based on number of loans outstanding in Latin America, Edypme Confianza was ranked 53rd overall and 12th within Peru.
Incepted in Belgium in 1992, Incofin invests in MFIs in 16 countries, and in mid-2005 had total assets of $5.6 million. The duration of Incofin’s loans, which are between $120,000 and $600,000, is five years, and the terms offered are “LIBOR plus full cost plus full risk”. Shareholders include both corporations and private individuals and Incofin invests in equity, quasi-equity, debt securities and guarantees. Although Incofin does not provide a return, it has the objective of maintaining the initial value of the shareholders’ investments.
Incofin also provided Nigerian-based Lift Above Poverty Organisation (LAPO) with a $306,000 loan. LAPO is an African NGO established in 1987 with a mission “to promote economic empowerment through financial services on sustainable basis.” In September, 2003 LAPO reported a loan portfolio of $1.2 million and total assets just under $2 million.
German Development Bank KFW makes $5 Million Microfinance Investment in Microfinance Bank of Azerbaijan
Kfw, a German development bank established in 1948 to support small and medium-sized enterprises (SMEs) and start-ups is providing a $5 million loan to the Microfinance Bank of Azerbaijan (MFBA). Kfw, one of the ten largest banks in Germany and a historically strong partner to the microfinance industry, had å¥341 billion in total assets at the close of 2005. Recently, the group participated in a å¥30 million equity financing with the World Bank that established the Southeast Europe Microfinance Fund. See the January 10, 2006 blog for more information on this deal.
MFBA was established in 2002 by four shareholders: European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC), Black Sea Trade and Development Bank (BSTDB) and LFS Financial Systems GmbH (LFS). In December of 2004, KfW became the fifth shareholder. Based upon information released earlier this month, MFBA enjoyed a strong financial performance in 2005. Since inception, the organization has disbursed 18,825 loans, with 9,608 loans disbursed in 2005 alone. Also, MFBA’s credit portfolio nearly tripled in 2005 and reached $17.5 million, 169% greater than portfolio indicators for January 01, 2005. The Bank’s assets grew substantially in 2005, reaching $22.4 million – up from $9.3 million in 2004.
Mexican Microfinance Investment Bank Compartamos Will Sell Shares at $0.42 Each, for a Total of $15.25 Million.
Compartamos was founded in 1990 to provide microfinance services to the Mexican population as employment generated by microenterprises outpaced job growth in the formal economy. It became “fully functional and self-sufficient in 1997,” and is now a Non Banking Financial Institution (Sociedad Financiera de Objeto Limitado). Compartamos is a member of the ACCION International and Microfinance Networks. Investors include the Accion Gateway Fund, the International Finance Corporation, Oikocredit, ProFund International, S.A., the Triodos Fair Share Fund and the Triodos-Doen Foundation. Annual figures last updated December 31st, 2004 on the MIX Market, an information clearinghouse for microfinance recognized as the standard by MicroCapital, stated Total Assets of $125,140,019, and a Gross Loan Portfolio of $101,023,790 distributed among of 309,637 Active Borrowers. Compartamos does not offer savings accounts. For the same 2003-2004 period the company posted a Debt / Equity Ratio of 154.63%, an ROA of 18.2% and Profit Margins of 40.44%. Further details about the deal are not publicly available.