MICROCAPITAL STORY: Finethic Microfinance S.C.A. of Luxembourg Lends $1m to Microfinance Institution (MFI) FINCA Armenia and $1m to MFI FINCA Kyrgyzstan

The Microfinance Capital Markets Newsletter of the Consultative Group to Assist the Poor (CGAP) reports that Finethic Microfinance S.C.A., a Luxembourg-based microfinance investment company, has issued loans of USD 1 million to microfinance institution (MFI) FINCA Armenia and USD 1 million to MFI FINCA Kyrgyzstan.

Finethic Microfinance is a SICAR, a French abbreviation for an investment company for risk capital, that raises funds from institutional investors for lending to MFIs worldwide. Established in July 2006, it is managed by Swiss institutional fund managed Fundo SA and advised by Symbiotics SA, a consulting firm for microfinance investment. By November 2006, it had raised nearly USD 10 million in capital. Finethic does not maintain any financial information on its Web site and does not report to the MIX Market, the microfinance information clearinghouse.

FINCA (Foundation for International Community Assistance) is an international non-profit founded in 1984 and based in Washington, DC. It pioneered the “village banking” concept that extends microcredit loans to poor entrepreneurs, and it has a network of affiliated institutions in 21 countries around the world.

MicroCapital has recently published a profile of and interview with FINCA founder John Hatch, as well as a profile on the organization itself. Other major recent transactions have included a USD 3 million loan to FINCA Kyrgyzstan from the responsAbility Global Microfinance Fund in March, a USD 4.7 million loan to FINCA Kosovo from the European Fund for Southeast Europe last August, and USD 3 million in lending from Microfinance Loan Obligations S.A. to FINCA Azerbaijan in April 2007. Also, FINCA was the beneficiary of a special album that was sold on Apple Inc.’s online iTunes Music Store late last year.

FINCA Armenia was established in 1999. As of year-end 2007, it had total assets of USD 21.6 million, with a gross loan portfolio of USD 21.6 million. Its return on assets was -0.93 percent and it had a debt-equity ratio of 174.37 percent. Active borrowers numbered more than 18,000. FINCA Armenia does not report a third-party evaluation of operations to the MIX Market.

FINCA Kyrgyzstan was founded in 1995. It has USD 35.1 million of loans outstanding and more than 67,000 clients. It does not report a third-party evaluation of operations to the MIX Market.

By Stephen Son

Additional Resources:

CGAP: List of Recent Transactions, Mar-Apr 2008

Finethic: News

Fundo: Factsheet

MicroCapital.org article, March 6, 2008: “WHO’S WHO IN MICROFINANCE: John Hatch, Foundation for International Community Assistance (FINCA)”

MicroCapital.org article, May 12, 2008: “PIONEERS IN MICROFINANCE: Village Banking Innovator Dr. John Hatch of FINCA (Foundation for International Community Assistance)”

MicroCapital.org article, March 26, 2008: “WHO’S WHO IN MICROFINANCE: The Foundation for International Community Assistance (FINCA)”

MicroCapital.org article, March 18, 2008: “Luxembourg-based responsAbility Global Microfinance Fund Loans $3m to FINCA Kyrgyzstan”

MicroCapital.org article, August 22, 2007: “European Fund for Southeast Europe (EFSE) Provides USD 4.7 Million Loan to FINCA Kosovo”

MicroCapital.org article, April 23, 2007: “Switzerland-based Symbiotics Intermediates a USD 3 mn Loan from Microfinance Loan Obligations to Foundation for International Community Assistance (FINCA) Azerbaijan”

MicroCapital.org article, November 5, 2007: “iTunes, Independent Online Distribution Alliance (IODA) and Natalie Portman Team Up for ‘Big Change: Songs for FINCA’ Compilation, Proceeds to Benefit International Microfinance Organization FINCA”