The International Finance Corporation (IFC), a member of the World Bank Group, and BP, a British-based multinational oil supplier have agreed to provide additional funding to the Micro Finance Bank of Azerbaijan (MFBA), so it can improve access to finance for micro and small enterprises in western Azerbaijan by expanding its branch network to the towns of Mingechevir and Gazakh and enhancing services in the Ganja branch. The funding will consist of a USD 1 million grant from BP and USD 2.3 million of the IFC and the MFBA’s own investments. BP’s contribution will be used to support international credit experts and develop local loan officers and branch managers.
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MICROCAPITAL STORY: Micro Finance Bank of Azerbaijan Receives First Private Investor Loan in Manat Currency (AZN)
The Micro Finance Bank of Azerbaijan (MFBA), a central Asian and eastern European microfinance institution (MFI) in Azerbaijan, received a loan of AZN 4.2 million (USD 4.95 million) from the SNS Institutional Microfinance Fund, a Dutch investment fund. It is the first loan from an international private-sector financial institution denominated in Azerbaijan’s local currency, the Manat. The loan will be used to lend to small businesses in Azerbaijan.
MICROCAPITAL STORY: Micro Finance Bank of Azerbaijan (MFBA) Plans to Expand Reach from Microfinance to Mortgage Credit Market
The Micro Finance Bank of Azerbaijan (MFBA), a commercial bank that was established in 2002 to provide financial services to privately-owned micro and small enterprises (MSEs) in Azerbaijan, plans to appear in the domestic mortgage lending market. The bank does not currently participate in the state mortgage lending program, but is taking steps to launch its own mortgage program. AMFB board member Anar Hasanov said that the bank has met all the preconditions for financing mortgage operations as an independent commercial entity. The issue is currently under consideration by MFBA shareholders. No program conditions have yet been outlined.
MICROCAPITAL STORY: Swiss responsAbility Microfinanz-Fonds Loans over $1.3m to Eastern Europe Microfinance Institution MIKROFIN
The Microfinance Capital Markets Newsletter of the Consultative Group to Assist the Poor (CGAP) and the MIX, the microfinance information clearinghouse, reported responsAbility Microfinanz-Fonds, a Luxembourg-based fund, has issued a loan of USD 1.36 million to MIKROFIN, an Eastern Europe microfinance institution (MFI).
MICROCAPITAL STORY: Micro Finance Bank of Azerbaijan (MFBA) Issues Bonds Worth USD 11.4m Through Developing World Market’s (DWM) Management to Finance Microfinance Operations
Micro Finance Bank of Azerbaijan (MFBA), a central Asian and eastern European microfinance institution (MFI), has issued USD 11.4 million in bonds to international capital investors. Developing World Markets (DWM), a US-based asset management firm, sponsored and arranged the investment deal, which took place in Luxembourg, through a specially created investment vehicle titled MFBA Bond I. The debt accrued by MFBA through the bond issuance has been categorized as senior debt, with a five-year term for repayment. MFBA will use the loaned capital to finance micro loans for Azeri small businesses.
President of European Bank for Reconstruction and Development Declares Continued Investment in Georgian Microfinance Sector
In an interview with Azerbaijani news-agency TREND, the President of the European Bank for Reconstruction and Development (EBRD), Jean Lemierre, highlighted his institution’s plans for improving Georgia’s microfinance and small and medium enterprise banking sectors. According to Mr. Lemierre, the EBRD will continue to make equity investments in local banks and microfinance institutions (MFIs). Additionally, it hopes to help them with “issues of transparency, corporate governance, and capacity building.” Beyond typical microcredit operations, the EBRD will help the sector with expanding leasing, insurance, and pension operations. The investment will especially focus on small and micro-enterprises in the rural areas of the country, particularly those within the agriculture sector.
British Petroleum and the European Bank for Reconstruction and Development Provide $6 Million in Loans to Azeri Microfinance Providers Rabitabank and FINCA Azerbaijan
British Petroleum (BP), the international petroleum corporation, on behalf of its Azeri subsidiaries, and the European Bank for Reconstruction and Development (ERBD) recently signed an agreement to support “private sector development” in Azerbaijan. BP will contribute USD 5.25 million to a three-year program while the EBRD will co-finance operations with an amount at least matching BP’s contribution. The money will come in the form of low interest loans and will support two local microfinance institutions (MFIs), Rabitabank and FINCA Azerbaijan. Each institution will initially receive a loan of USD 3 million which it will on-lend to local micro-enterprises. The program will be implemented through the EBRD’s Azerbaijan Micro-Small and Medium Enterprise Facility, and BP’s Regional Development Initiative (RDI, page 42), which has the goal of creating effective access to commercial finance in the countries in which it operates.
Global Commercial Microfinance Consortium Delivers Loan to Mongolian Microfinance Institution XacBank
Several deals involving the XacBank, a Mongolian microfinance institution (MFI), were reported in the latest addition of the CGAP-MIX MCM Newsletter. Two of the transactions, one in which shares in the MFI were sold to the Triodos-Doen Foundation and the Triodos Fair Share Fund and another involving a loan from the European Bank for Reconstruction and Development (EBRD), have already been covered by MicroCapital (see additional resources below). The third deal was a 4-year USD4 million loan from the Global Commercial Microfinance Consortium (GCMC).
The European Bank for Reconstruction and Development Lends $10.2 Million to Expand MIKROFIN’s Microcredit Activities
MIKROFIN received a $10.2 million convertible loan from the European Bank for Reconstruction and Development (EBRD). The funds are being used to expand MIKROFIN’s lending activities, and to help structure it into a shareholding company. The EBRD has the right to an equity stake in MIKROFIN if it exercises the loan convertibility feature in the future.
The European Bank for Reconstruction & Development Supports Microfinance in Moldova with 2.4 million euro Credit Line Extension to Mobiasbanca
Mobiasbanca, the fifth largest private bank in Moldova, was extended a credit line of 2.4 million euros (USD $3.07 million) by the European Bank for Reconstruction & Development (EBRD) as part of its Moldovan Microfinance Framework (MMF). MMF is a $25 million facility providing funds for local banks to lend to micro and small enterprises.
Microfinance Bank of Azerbaijan Partners with Blue Orchard Microfinance in US$120 Million Bond Issue
The Microfinance Bank of Azerbaijan (MFBA) is a full scale commercial bank and the leading microfinance provider in Azerbaijan. The bank has disbursed over 16,000 loans totaling over US$52 million. Its major shareholders include the European Bank for Reconstruction & Development, The International Finance Corporation, KfW Development Bank, LFS Financial Systems GmbH, and the Black Sea Trade and Development Bank. The Microfinance Bank of Azerbaijan does not report to the Microfinance Information Exchange (MIX) and no further information on its performance is publicly available.
In its latest deal, MFBA received a US$4 million loan from Swiss group, Blue Orchard Microfinance SA. The loan was financed by Blue Orchard’s latest bond issue of US$120 million, funded by private commercial investors worldwide. In addition to MFBA, 21 other microfinance institutions will benefit from funding financed by the bond issue. This marks the first time that these institutions have had formal access to the European capital markets.
Additional Resources
1) Microfinance Bank of Azerbaijan
2) Blue Orchard Microfinance SA
3) The MIXMarket
German Commercial Bank Commerzbank AG Continues Microfinance Investment In ProCredit Bank
Headquartered in Frankfurt, Commerzbank AG is
Since 2000, Commerzbank has held 15-20% equity stakes (p.58) in the ProCredit Banks of
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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.
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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”
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.
Impulse Microfinance Investment Fund Made $1,250,000 Debt Investment in Azerbaijan Micro Finance Bank (AMFB)
Established in 2002 by the European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC), Black Sea Trade and Development Bank, and German LFS Financial Systems GmbH, AMFB provides financial services to micro and small business within the country. The bank’s typical microloans are between $400 and $10,000 for a maximum of 9 months. In June 2005, the Azerbaijan Microfinance Association reported that AMFB had a total loan portfolio of more than $11.4 million. It is the only one of the 45 commercial banks in Azerbaijan that focuses on microfinance services. AMFB does not report to the MIX Market, the World Bank’s microfinance information clearinghouse. Further information about their performance is not publicly available.
Established in 1992, Incofin invests in MFIs in 14 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”. At the end of 2004, Incofin, along with KBC, Boerenbond, VDK Spaarbank, Volksvermogen (Belgian institutional investors) set up the Impulse Microfinance Investment Fund, which had initial capital of å¥5 million. By mid-2005, the fund’s assets were worth $15,413,875. The fund invests between $300,000 and $1.5 million in MFIs, and offers the same terms as Incofin.
$4.5 Million Microfinance Investment into Azerbaijan Micro Finance Bank Helps Establish Credit Line
The Azerbaijan Micro Finance Bank (AMFB) recently received a $3 million loan from the Black Sea Trade and Development Bank and a $1.5 million loan from the Triodos-Doen Foundation to be used as credit lines for small businesses. Established in 2002 by the European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC), Black Sea Trade and Development Bank, and German LFS Financial Systems GmbH, AMFB provides financial services to micro and small business within the country. The bank’s typical microloans are between $400 and $10,000 for a maximum of 9 months. In June 2005, the Azerbaijan Microfinance Association reported that AMFB had a total loan portfolio of more than $11.4 million. It is the only one of the 45 commercial banks in Azerbaijan that focuses on microfinance services.
AMFB’s investor, the Black Sea Trade and Development Bank, is an “international financial institution” created in 1998 by the governments of
Another AMFB investor, The Triodos-Doen Foundation, founded by Dutch Triodos Bank and the Doen Foundation in 1994, provides loans ranging from $200,000 to $1 million for a maximum of five years to microfinance institutions (MFIs). The terms offered to MFIs are “Libor plus full cost plus full risk” and the “interest rate must be sufficient to cover potential devaluation against the Euro plus to cover costs of 8%.” The fund’s total assets stand at $34.822 million; $30.643 million of which has been allocated to microfinance investment.
Additional Resources
1) Consultative Group to Assist the Poor (CGAP): “Microfinance Capital Markets Update” is the best source for monthly updates on debt and equity deals in microfinance.
2) “Social and Economic Background of Azerbaijan.”
3) “Micro Finance Bank of Azerbaijan: Overview.”
4) “Micro Finance Bank of Azerbaijan: Mission.”
5) “Qualisteam: Black Sea Trade and Development Bank.”
6) Black Sea Trade and Development Bank (BSTDB) Press Release: “Black Sea Trade and Development Bank.”
7) MIX Market: “Triodos-Doen Foundation: Fund Instruments.”
8) MIX Market: “Triodos-Doen Foundation: Fund Description.”
9) “Black Sea Trade and Development Bank: A New Financial Player in the Balkans.”
10) “Microfinance in Azerbaijan.”
European Bank for Reconstruction and Development Makes $2 Million Investment in Kyrgyzstani Microfinance Institution Bai Tushum
Bai Tushum, a Kyrgyzstan microfinance institution (MFI), was recently provided with a $2 million loan from the European Bank for Reconstruction and Development (EBRD)—the “largest single investor in the region” between central Europe and central Asia. Member countries, the European Community, and the European Investment Bank own the EBRD, which has “subscribed capital totaling å¥20 billion.” The bank finances its loans by borrowing funds in international capital markets, and subsequently providing loans to public and private enterprises including banks, industries, and businesses. In 2004, the EBRD had invested over $1.37 billion in financial institutions supporting local enterprises.
In 2003, loan recipient Bai Tushum received an “A” rating for financial and economic performance standards designed by the World Bank’s microfinance unit (CGAP). The Microfinance Centre for Central and Eastern Europe and the
Additional Resources
1) Consultative Group to Assist the Poor (CGAP): “Microfinance Capital Markets Update” is the best source for monthly updates on debt and equity deals in microfinance.
2) “About the EBRD.”
3) “About the EBRD: Ownership and Funding.”
4) “USAID Success Stories Archive: USAID Supported Microfinance Insitution First in Kyrgyzstan to Receive ‘A’ Rating.”
5) MIX Market: “Bai Tushum: Financial Information.”
6) MIX Market: “Bai Tushum: General Information.”
7) “EBRD: Annual Report 2004.”
8) “MFC Spotlight 12: Overview of the Microfinance Industry in the ECA Region in 2003.”