A new player to microfinance investment, Austria’s recently established development bank OeEB (Oesterreichische Entwicklungsbank) announced it will invest EUR 33 million (USD 56 million) of equity capital in Luxembourg-based EFSE (European Fund for Southeast Europe). EFSE reports that the Austrian bank will invest in all three levels of risk offered by the fund, including A-Shares (senior capital), B-Shares (mezzanine capital) and C-Shares (first-loss). OeEB is the first EFSE investor with funds allocated to all of its risk levels.
OeEB commenced operations in March 2008, following an October 2007 government mandate (p. 37) instructing the Austrian Export Credit Agency to establish a development bank. OeEB operates as a government-sponsored private enterprise that supports private sector projects in developing countries. Projects must contribute to poverty reduction, sustainable economic growth, or employment. The firm’s investment vehicles include equity capital as well as subordinated and performance-based debt. In some cases, OeEB’s investments are accompanied by technical assistance. OeEB has yet to disclose financial statements.
Founded in 2005, EFSE seeks to foster economic development by providing financial support to banks, non-bank financial institutions, rural banks, credit unions, and nonprofit institutions active in Southeast Europe. Part of its economic development strategy includes investments in microfinance institutions (MFIs). EFSE’s microfinance portfolio includes FINCA Kosovo, ProCredit Bank, and Opportunity Bank in Montenegro.
Recent sizable EFSE investments in MFIs include a EUR 10 million (USD 15.8 million) loan to Romanian ProCredit in May 2008 and a USD 4.7 million loan to FINCA Kosovo in August 2007 (MicroCapital story). In April 2008, EFSE made headlines on MicroCapital when it hosted its 2nd annual conference on responsible finance and sustainable development, an event attended by over 200 participants representing development finance institutions, donor agencies, international organizations, microfinance institutions, commercial banks, and policymakers.
As of December 2007, the EFSE held USD 557.2 million in total assets, having allocated USD 308 million toward 50 microfinance investments. Over the next twelve months, EFSE intends to allocate USD 127 million additional funds toward new microfinance investments. Management says they expect total fund assets to reach EUR 630 million (USD 992 million) by the end of 2008.
By Ryan Benson, Research Assistant
Additional Resources:
EFSE: MIX Profile
Press Release: Oesterreichische Entwicklungsbank investsEUR 33 million in the microfinance fund EFSE, June 25 2008.
EFSE: Why setting up the European Fund for Southeast Europe
OeEB: About
Oekb: 2007 Annual Report
MICROCAPITAL STORY: European Fund for Southeast Europe (EFSE) Annual Meeting 2008 Conference on Responsible Finance, by Melissa Duscha, April 10, 2008.
MICROCAPITAL STORY: European Fund for Southeast Europe (EFSE) Provides USD 4.7 Million Loan to FINCA Kosovo, by Quentin Ruiz-Esparza, August 22, 2007.
Press Release: EFSE Provides €10 mil in Local Currency to ProCredit Bank Romania for Very Small and Small Business Financing, May 7, 2008.
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