The Gray Ghost Microfinance Fund LLC, founded in November 2003 by Robert Pattillo, manages a for-profit investment fund comprised solely of investments in microfinance funds. Headquartered in Atlanta, Georgia, Gray Ghost, a limited liability company, manages USD 75 million in total assets. Essentially, Gray Ghost’s fund is a fund of funds. It invests in microfinance funds that supply start-up and expansion capital to microfinance institutions (MFIs) worldwide. Some of Gray Ghost’s investments include USD 4.9 million in Antares Equity Participation Fund (a fund conceived by Robert Pattillo), USD 4 million in Deutsche Bank’s Global Commercial Microfinance Consortium, USD 2 million in Catalyst Microfinance Investors, and USD 2.6 million in Bellwether Microfinance Fund.
Search Results for: MicroVest
Omidyar Network, MicroPlace, Dignity Fund, & Gray Ghost Microfinance Fund Sponsor Silicon Valley MicroFinance Network Presentation by Gray Ghost Founder, Bob Patillo
Bob Patillo, founder of the Gray Ghost Microfinance Fund, will speak to the Silicon Valley Microfinance Network on Monday, May 1st at 6:00 PM. Mr. Patillo will share his thoughts on the role of private investment in the growing microfinance industry.
Microfinance institutions are increasingly finding themselves able to take on private investment capital as the transition to profit generating businesses. Mr. Patillo will speak to this evolution in the industry through his experience as a founding partner of the Gray Ghost Microfinance Fund and as a successful entrepreneur. Prior to his work at Gray Ghost, Mr. Patillo managed an industrial real estate development firm and founded the Rockdale Foundation, a family foundation with a commitment to service, social enterprise, and education. In addition, he sits on the Board of Directors for ACCIÌãN Investments, MicroVest, the Deutsche Bank Microcredit Development Fund, and Catalyst Microfinance Investors.
Microfinance Investment Funds Ranked by Size and Microcredit Allocation
|
FUND NAME Ranked by $ Size of Fund |
SIZE OF FUND $USD |
FUNDS ALLOCATED TO MICROFINANCE $USD |
ROI |
|
1. Oikocredit World Partnership Investments |
304,662,000 |
80,764,000 |
2% |
|
2. ProCredit Holding Aktiengesellschaft |
110,918,700 |
89,181,767 |
5-6.5% |
|
3. Calvert Community Investment Notes |
80,000,000 |
20,000,000 |
3% |
|
4. Dexia Microcredit Fund |
51,669,512 |
46,334,570 |
5.5-7.5% |
|
5. Blue Orchard Microfinance Securities |
40,069,833 |
38,000,000 |
4.55-8.8% |
|
6. ASN-Novib Fonds |
28,421,190 |
9,473,730 |
1.20% |
|
7. AXA World Funds |
23,073,410 |
1,481,556 |
5.10% |
|
8. MicroVest I, LP: Equity |
not available |
not available |
7-9% |
|
9. MicrovestI, LP: Subordinated Debt |
not available |
not available |
4.5-6% |
|
10. mPower Investment Program |
not available |
not available |
0-3% |
|
11. Impulse Microfinance Investment Fund |
15,413,875 |
15,413,875 |
4% |
|
12 Triodos Fair Share Fund |
14,583,596 |
6,983,086 |
2-4% |
|
13. Accion Investments in Microfinance |
12,969,985 |
12,512,329 |
8-10% |
|
14. responsAbility Global Microfinance Fund |
11,449,977 |
11,449,977 |
3.56% |
|
15. ALTERFIN |
11,084,244 |
3,628,790 |
6% |
|
16. Partners for the Common Good |
7,095,500 |
300,000 |
3% |
|
17. Latin American Bridge Fund |
5,340,505 |
1,450,000 |
0-2.875% |
|
18. CRESUD |
2,483,480 |
1,490,088 |
2.75% |
|
19. Global Bridge Fund |
1,691,000 |
not available |
0-2.875% |
Microfinance Investment Funds Ranked by Microcredit Allocation
|
FUND NAME |
SIZE OF FUND $USD |
FUNDS ALLOCATED TO MICROFINANCE $USD |
ROI |
|
1. ProCredit Holding Aktiengesellschaft |
110,918,700 |
89,181,767 |
5-6.5% |
|
2. Oikocredit World Partnership Investments |
304,662,000 |
80,764,000 |
2% |
|
3. Dexia Microcredit Fund |
51,669,512 |
46,334,570 |
5.5-7.5% |
|
4. Blue Orchard Microfinance Securities |
40,069,833 |
38,000,000 |
4.55-8.8% |
|
5. Calvert Community Investment Notes |
80,000,000 |
20,000,000 |
3% |
|
6. Impulse Microfinance Investment Fund |
15,413,875 |
15,413,875 |
4% |
|
7. Accion Investments in Microfinance |
12,969,985 |
12,512,329 |
8-10% |
|
8. responsAbility Global Microfinance Fund |
11,449,977 |
11,449,977 |
3.56% |
|
9. ASN-Novib Fonds |
28,421,190 |
9,473,730 |
1.20% |
|
10. Triodos Fair Share Fund |
14,583,596 |
6,983,086 |
2-4% |
|
11. ALTERFIN |
11,084,244 |
3,628,790 |
6% |
|
12. CRESUD |
2,483,480 |
1,490,088 |
2.75% |
|
13. AXA World Funds |
23,073,410 |
1,481,556 |
5.10% |
|
5,340,505 |
1,450,000 |
0-2.875% |
|
|
15. Partners for the Common Good |
7,095,500 |
300,000 |
3% |
|
16. Global Bridge Fund |
1,691,000 |
not available |
0-2.875% |
|
17. MicroVest I, LP: Equity |
not available |
not available |
7-9% |
|
18. Microvest I, LP: Subordinated Debt |
not available |
not available |
4.5-6% |
|
19. mPower Investment Program |
not available |
not available |
0-3% |
Wall Street Journal Features Microfinance Investment as “A New Way to Do Well by Doing Good”
Microfinance investment as a stand-alone category made headlines in today’s Wall Street Journal. While this article probably represents the culmination of a break-out year for microfinance investment, we still have a lot of work to do. The Journal describes the investment options as “small change”.
Quoting from the WSJ
Small Change
Here is a sampling of microfinance investment vehicles. Several Web sites, such as www.mixmarket.org and www.microcapital.org, also list a number of investments.
|
INVESTMENT |
MINIMUM |
COMMENT |
|
Calvert Foundation Community Investment Notes www.calvertfoundation.org |
$1,000 |
Investors can earmark the notes to be invested in microfinance initiatives. Notes can earn up to 3%, depending on the note term. |
|
Oikocredit USA Global Community Note www.oikocredit.org |
$1,000 |
The capital raised from the notes is used to help finance various microlenders. Investors can choose returns of up to 2%. |
|
MicroVest I Fund www.microvestfund.com |
$100,000. Only available to accredited investors. |
Fund makes both debt and equity investments in microlenders. Equity partners can expect to earn 7% to 9% annualized returns, while debt investors might earn 4.5% to 6%. |
|
Accion Investments www.accion.org |
$250,000. Only available to accredited investors. |
Makes equity investments in microlenders and expects to generate about 8% to 10% annual returns. |
|
Grameen Foundation USA Growth Guarantees www.gfusa.org |
$1 million minimum letter of credit. |
Guarantors do not contribute any money or get an upfront charitable deduction. Instead, they provide letters of credit which help guarantee loans by the lenders in developing countries. |
Why Are So Few Micro-banks Profitable?
There are about 300 commercially viable microfinance institutions (MFIs) worldwide. The total investment portfolio for these institutions is estimated to be $3.5 billion and is growing at a rate of 20-30% per year. Those MFIs, however, are rarities among the 10,000 MFIs operating today. So what separates the few commercially viable MFIs from the huge host of laggards?
MFIs are hindered by internal and externally constraints. Internally, microfinance institutions must overcome:
Lack of professional capacity: MFIs are located in developing countries, and recruiting experienced management staff and loan officers can be challenging.
Lack of expertise: While the World Bank’s microfinance research organization has developed best practices standards for MFIs, the vast majority of MFIs lack the wherewithal to access and implement these standards.
Inherent challenges of serving the poor: There is a large demand for financial services in rural markets, which are difficult to serve because of transportation costs and a lack of infrastructure. Rural residents rely heavily on agriculture for income, which can be unpredictable and make lending risky.
Lack of portfolio diversity: When MFIs focus on providing one type of service—for example, a focus on loans for agricultural development to the rural poor—they are more exposed to risk. To protect themselves from risk, MFIs must provide a wide variety of services.
Externally, MFIs are constrained by the following factors:
Abundant donor capital: MFIs have little incentive to become profitable if donations sustain them. Donations eliminate the incentive to abide by best practices standards and become more efficient. When MFIs receive funding from outside donors, their focus shifts to catering to what the donors want, not what the customers want.
Government Regulations: Interest rate regulations prevent MFIs from recouping their costs and force opaque reporting.
Unfair Competition: Donor-subsidized MFIs and government programs often charge below market rates and undercut those striving for profitability.
Corruption: When local and national governments suffer from corruption and bureaucratic incompetence, it hinders the ability of all businesses—including MFIs—to run efficient operations.
Inherent challenges of emerging markets: An absence of ‘soft infrastructure’ in the developing world such as credit bureaus, human resources agencies, and market research firms severely complicates doing business.
Additional Resources
1) “Commercial Microfinance: The Right Choice for Everyone?”
2) "The Impact of Interest Rate Ceilings on Microfinance." CGAP. May 2004
3) “Expanding Commercial Microfinance in Rural Areas: Constraints and Opportunities.”
4) “Microcredit Interest Rates.”
5) Subscription only: "Strategies That Fit Emerging Markets." Harvard Business Review: June 20056) “The Influence of Donors on Microcredit Sustainability: A Case Study of the Three Microcredit Programs in Vietnam.”