MICROCAPITAL STORY: Dual Return Loans $1m to FINCA Armenia

In its list of recent transactions, CGAP (Consultative Group to Assist the Poor) reported that Austrian investment firm Dual Return loaned USD 1,000,000 through its Vision Microfinance Fund to nonprofit microlender FINCA Armenia.

Founded in 2006, Dual Return is a Vienna-based investment firm that operates Vision Microfinance Fund, through which it invests debt-capital directly in microfinance institutions, and into other institutions that invest directly in MFIs. Dual Return markets its services to both institutional and individual investors, though its latest annual report did not disclose any information on its current investors.

When lending directly to MFIs, Vision’s average loan amount was USD 500,000, according to Dual Return’s 2006 annual report (p.13), courtesy of MIX Market. As of October 2007, Vision held total assets of USD 50.6 million. The fund had invested in 55 microfinance institutions in 18 eighteen countries across 6 continents, and had allocated USD 15 million toward new investments during its 2008 fiscal year.

Based in Washington, D.C., FINCA (Foundation for International Community Assistance) is a network of affiliated nonprofit organizations operating in 21 countries. Founded in 1984, FINCA pioneered the “village banking” concept that extends microcredit loans to poor entrepreneurs. According to its financial statements, FINCA held total assets of USD 251.6 million (p. 18) at December 2006. MicroCapital recently interviewed and published a profile on FINCA founder John Hatch.

FINCA has welcomed several recent investments in its network, including a USD 3 million loan to FINCA Kyrgyzstan from responsAbility Global Microfinance in March 2008, a USD 4.7 million loan to FINCA Kosovo from the European Fund for Southeast Europe in August 2007, and a USD 3 million loan from Microfinance Loan Obligations S.A. to FINCA Azerbaijan in April 2007.

FINCA Armenia was established in 1999. At December 2007, it held total assets of USD 21.6 million, with a gross loan portfolio of USD 16.2 million that served over 18,000 borrowers. It reported return on assets of -0.93 percent and a debt-equity ratio of 174.37 percent.

None of FINCA’s country units, including Armenia, provide results from microcredit rating agencies that evaluate lending practices. FINCA did receive four out of four stars by Charity Navigator, an organization that evaluates the performance of nonprofit organizations based on criteria including “organizational efficiency” and “organizational capacity“. However, while this rating may speak to FINCA’s operational efficiency, it does not specifically evaluate the organization’s microlending practices.

By Ryan Benson, Research Assistant

Additional Resources:

CGAP: Home

CGAP: Recent List of Transactions

Dual Return: Home

FINCA Armenia: Home

MIX Market: Vision Microfinance

FINCA: Home

MICROCAPITAL INTERVIEW: Village Banking Innovator Dr. John Hatch of FINCA (Foundation for International Community Assistance), May 12, 2008.

MICROCAPITAL PROFILE: WHO’S WHO IN MICROFINANCE: John Hatch, Foundation for International Community Assistance (FINCA), by Melissa Duscha, March 6, 2008.

MICROCAPITAL STORY: Luxembourg-based responsAbility Global Microfinance Fund Loans $3m to FINCA Kyrgyzstan, by Melissa Duscha, March 18, 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.