IFC to make Rs 150-cr equity investment in Equitas & Ujjivan MFIs

By T E Narasimhan, Business Standard

International Finance Corporation (IFC) is to make an equity investment of around Rs 150 crore in Chennai-based microfinance company Equitas Holdings Pvt Ltd and Bangalore-based Ujjivan Financial Services. These would help both microfinance institutions (MFIs) to support their geographical and business expansion and meet capital adequacy requirements for the next three to five years.

Of the total, Rs 100 crore is to go in Equitas, founded by P N Vasudevan, who was involved in consumer financing for a little over 20 years in Cholamandalam Finance, where he was a vice-president. His last commercial assignment before starting Equitas was as head of consumer banking at Development Credit Bank.

Apart from Vasudevan, other shareholders include the Small Industries Development Bank of India (Sidbi), Sequoia Capital, Bellwether, Aavishkaar Goodwell, IFIF, Microventures, CLSA, Canaan, Aquarius and Helion.

According to IFC’s project disclosure, the proposal envisages an equity investment in Equitas Holdings, the holding company of Singhivi Investment and Finance Pvt Ltd. Singhivi operates Equitas Microfinance, amongst the top 10 MFIs in India. Equitas Microfinance has a borrower base of 1.2 million across five states, including the low income ones of Rajasthan and Madhya Pradesh.

Equitas has also recently started begun businesses in the area of affordable housing through Equitas Housing Finance Pvt Ltd and used commercial vehicle financing through Equitas Finance Pvt Ltd to cater to the relatively unbanked population in these financial services segments.

IFC’s investment will also help the company diversify sources of funding by providing comfort to potential lenders and investors. This investment is expected to help the company broadbase its profile of investors with long-term perspectives, said the Corporation.

Similarly, IFC proposes to invest equity of up to Rs 50 crore for a stake in Ujjivan, founded by Samit Ghosh, an international banker for a little over 30 years and part of the pioneering team which launched consumer banking in India at Citibank in 1985. The other shareholders include foreign individual investors, Bellwether, AW Holdings, the Michael and Susan Dell Foundation, India Financial Inclusion Fund, Unitus, Elevar, Sequoia Capital, Lok Capital Group, FMO and Wolfensohn Capital Partners.

Ujjivan has about 1.1 million members and a loan portfolio of about $140 million equivalent. The proposed project intends to help Ujjivan fund its expansion and carry out changes to cope with the changed regulatory and business environment, meeting its regulatory capital adequacy requirements for the next three to five years.

Sri Lanka: IFC, SANASA Insurance pilot Insurance

From Daily News

IFC, a member of the World Bank Group, is working with micro-insurance company SANASA Insurance to develop flexible, affordable, weather-based agricultural insurance products in Sri Lanka to minimize the impact of crop losses due to floods or droughts.

IFC is helping SANASA Insurance expand access to insurance for up to 15,000 small farmers by offering protection against weather-related risks and natural disasters for their food crops. The project will also raise awareness among 50,000 farmers on the availability and benefits of these index-based insurance products.

“IFC is an invaluable partner in our commitment to empower the Sri Lankan farmer through flexible and affordable insurance to help mitigate weather-related risks,” said Dr P. A. Kiriwandeniya, founder of the SANASA movement.”

Index-based insurance products pay out benefits calculated using a pre-assigned value for losses arising from weather or catastrophic events. Such products eliminate the need for insurance companies to individually verify claims, reducing transaction costs and making it easier and faster for products and payouts to be offered to rural communities.

“These insurance products, designed in collaboration with SANASA, will improve the livelihoods of small farmers in Sri Lanka by reducing the impact of adverse weather conditions,” said Adam Sack, IFC Country Manager for Sri Lanka and Maldives.

IFC established its Global Index Insurance Facility in 2009 to assist the development of index-based insurance for natural disasters and weather risks in developing countries, particularly in agricultural communities where insurance is rarely available. The GIIF Global Trust Fund is also supported by Japan’s Ministry of Finance, with an initial grant of $2 million, and by the Dutch Ministry of Foreign Affairs, which provided $500,000 to establish the facility.

Sri Lanka is a priority country for IFC. IFC’s committed portfolio of $200 million in Sri Lanka covers projects across a range of sectors.

Philippines: IFC launches $100-M microfinance fund

From The Philippine Star

MANILA, Philippines – The International Finance Corp. (IFC), a private sector investment member of the World Bank Group, along with two other investors is setting up a $100-million debt fund called Microfinance Initiative for Asia (MIFA), to tackle the funding need of microfinance institutions in developing and underdeveloped economy. The MIFA Fund will be funded from three classes, firstly by investors like IFC, KfW (Reconstruction Credit Institute, German Bank) and then by German Federal Ministry for Economic Cooperation and Development.?The fund is targeted to a size of $100 million, with up to $25 million in donors’ concessional funding. With this fund, IFC intends to bring a change in Asian growing market for microfinance institutions (MFIs). Since most of the MFIs are unable to tackle the problem, funds are provided for longer terms in the form of funds and subordinated debt products.

IFC To Start $100M Microfinance Debt Fund

From VCCircle

International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, along with two other investors, will set up a $100 million debt fund called Micro Finance Initiative for Asia (MIFA), to address the funding needs of microfinance institutions in developing and underdeveloped economies. Final decision will be taken at the fund’s next board meeting to be held on April 9.

According to IFC, the MIFA Fund will be funded through 3 classes of shares. “Initially, the investors are expected to be IFC, KfW, and Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (German Federal Ministry for Economic Cooperation and Development,” an IFC release stated.

The fund has a target size of $100 million, including up to $25 million in donor-funded concessional funding. IFC’s investment in the fund is proposed to be up to $20 million in mezzanine shares.

The Luxembourg-based fund will set up special purpose vehicles in Mauritius and India. The fund will make its debt investments across Asia, including East, South and Central Asia.

“The project is in line with the IFC microfinance strategy for increased outreach in South, East and Central Asia, especially in large countries like India and China, home to 40 per cent of the world’s population. Microfinance penetration rates in this region remain among the lowest, globally,” the release said.

By supporting the expansion and sustainability of well-performing MFIs, the project will improve access to finance for thousands of micro and small borrowers. This, in turn, will stimulate growth, employment generation and poverty alleviation in the region.

IFC claims that the fund will facilitate access of Asian emerging market MFIs to commercial funding that is better tailored to their needs. It will reduce the volatility of MFI loan portfolios, as currently most MFIs are unable to properly address the currency mismatch risk. The fund also aims to provide longer-tenor funding and subordinated debt products, a clear need for MFIs at present.

In India, the Rs 23,000 crore microfinance industry has been under stress after the Andhra Pradesh government banned the exorbitant interest rates the institutions charge to small borrowers. The MFIs normally charge higher interest rates due to the higher cost of capital and higher risks involved with repayments of smaller loans.

According to the latest RBI data, bank lending to micro-credit through self-help groups or through NBFCs was less than 1 per cent of the total bank credit, amounting to around Rs 21,000 crore.


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CDC announces $40m investment in African banks and microfinance

From AltAssets

The UK’s development finance institution CDC has announced $40m of investment into African banks and microfinance.

Three-quarters of the funds will be committed to making commercial banks across the continent more competitive and better governed through the Africa Capitalization Fund(ACF).

The remaining $10m will be used to back institutions offering small loans to entrepreneurs in Kenya, Tanzania, Rwanda, Zambia and Uganda.

It is the first investment CDC has made in a specialist African microfinance fund, and is designed to help up to half a million people in East Africa by addressing the shortage of small scale finance.

CDC’s investment in the ACF follows earlier commitments from the African Development Bank, the International Finance Corporation and the Abu Dhabi Development Fund.

Hywel Rees-Jones, MD of one of CDC’s investment teams said, “Africa’s economic success depends upon its people and businesses having access to decent financial services.

“While very different from each other, both the investments we’re announcing today will play a part in plugging the gap that exists in Africa’s financial infrastructure.

“A well-funded and supported private sector can make a huge difference to development in Africa.

“With over 80% of adults in sub-Saharan Africa lacking access to formal financial services, we’re confident that our investment can have both a substantial development impact and demonstrate to others investors that the sector has good commercial potential.”

CDC is a cornerstone investor in African private equity firm 8 Miles, which completed the first close of its inaugural fund earlier this month with commitments of $200m.

The African firm includes Sir Bob Geldof as non-executive chairman alongside senior advisers including industrialists, industry and governance experts.

Nigeria: IFC Partners with Advans S.A. to Set Up Microfinance Bank in Oyo State

African Press Organization (APO)/ — IFC, a member of the World Bank Group, is investing $1.1 million (174.5 million Nigerian naira) alongside Advans S.A., German development bank KfW, and Dutch development bank FMO to establish La Fayette Microfinance Bank in Oyo State, Nigeria.

La Fayette, which is expected to start operations during the fourth quarter of 2012, will serve small and medium enterprises that have limited or no access to formal banking services. Financial surveys indicate that only one in five Nigerian adults owns a bank account, and over half of the country’s adult population is excluded from access to financial services.

“With the objective of becoming the leading microfinance bank in Oyo State, La Fayette will address a critical gap by providing quality financial services to help small businesses grow and create jobs,” said Claude Falgon, Director of Advans S.A.

Advans S.A. will be La Fayette’s lead shareholder with an equity investment of $3.1 million (501.0 million naira). IFC and KfW are each investing $1.1 million (174.5 million naira), while FMO is investing $940,000 (150.0 million naira).

Within five years, La Fayette expects to establish 11 branches, broadening access to finance and stimulating economic growth across Oyo State.

“Microfinance is a vital tool in the fight against poverty and forms a core part of IFC’s efforts to support small-scale entrepreneurs in Africa,” said Solomon Adegbie-Quaynor, IFC’s Country Manager for Nigeria. “In Nigeria, IFC aims to increase the number of commercially viable microfinance institutions, especially in under-served areas like Oyo State, so that a vibrant private sector can give rise to economic growth.”

IFC has a long-standing partnership with Advans S.A., which is building a network of microfinance institutions in developing countries across Africa and Asia. IFC is also a shareholder of Advans network banks in Cameroon, the Democratic Republic of the Congo, Cote d’Ivoire, and Ghana. The Nigeria investment reaffirms IFC’s partnership with Advans SA. to support entrepreneurs in Africa.

About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion.

For more information, visit www.ifc.org.

India: IFC Works with Intellecash to Support New Microfinance Institutions in India’s Low-Income States

From PRLog

IFC, a member of the World Bank Group, is partnering with IntelleCash to help start-up microfinance institutions in low-income states of India respond better to the needs of their customers, promoting responsible microfinance while providing better client protection.

IntelleCash is the first initiative in India to apply the principles of business franchising to the microfinance sector. Through the IntelleCash Network Program, it helps microfinance institutions get started and expand. IFC is working with IntelleCash to help microfinance institutions in India’s northeastern states, the low-income states of Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh, West Bengal, and in the western regions of Rajasthan and Gujarat, and the Vidharbha and Marathwada regions of Maharashtra.

“We will work intensively in Bihar, Madhya Pradesh, Orissa and the north-eastern states, which are the high-priority states for the government of India,” said Manoj Nambiar, CEO of Intellecash. “With IFC’s support, we expect to expand significantly into rural and semi-urban areas where the need for microcredit is highest.”

The partnership comes at an opportune time, given the challenges of the microfinance sector in India. The reach of microfinance institutions in India remains low—most of India’s population has limited access to financial services. IFC’s support to IntelleCash will help new microfinance institutions emerge in underserved areas. It will also help build IntelleCash’s capacity for balanced, client-focused growth. Once established, the effort could be replicated in Africa.

IFC to Invest $1 million in ACCION Microfinance China To Promote Financial Inclusion in Inner Mongolia

From PRNewswire

ACCION® International, a pioneer and leader in global microfinance, has signed an agreement with IFC, a member of the World Bank Group focused exclusively on the private sector, in which IFC will invest approximately $1 million in ACCION’s Chinese affiliate, ACCION Microfinance China (AMC).

The investment will enable ACCION to strengthen the operations of AMC, which it launched in December 2009 in Chifeng Prefecture, Inner Mongolia, to deliver financial services to the region’s working poor.

IFC’s investment of Chinese RMB 7 million represents an 18.9% equity interest in AMC.  In connection with its investment, IFC previously signed a cooperation agreement with ACCION to provide up to $1 million to finance a three-year technical assistance program for AMC.

“IFC has been a valuable ACCION partner in many of our projects around the world,” said Michael Schlein, president and CEO of ACCION.  ”We’re pleased and honored to have its engagement and support as we continue to help create a microfinance industry in China, where ACCION is one of only a handful of foreign-owned organizations involved in the field.”

“We are committed to working with ACCION to help AMC expand access to finance for small businesses in Inner Mongolia and support the sustainable development of one of the least developed regions in China,” said Hyun-Chan Cho, IFC country manager for China and Mongolia. “With our financing and advice, AMC is well positioned to become a leading microfinance institution in Inner Mongolia, benefiting thousands of small entrepreneurs.”

ACCION established AMC to provide previously underserved communities of Chifeng, Inner Mongolia, with access to quality financial services.  It offers financial solutions to its clients in a timely and responsible manner, adapting as needed ACCION’s expertise in various lending methodologies.

In Inner Mongolia, 40 percent of the population remains below the poverty line. While the Chinese economy has seen unprecedented growth in recent years, income inequality between the country’s coastal regions and interior provinces is escalating.

AMC’s goal is to provide working-capital and fixed-asset loans for thousands of urban and rural, small and medium-sized enterprises in Chifeng.  Loan amounts start at RMB 1,000 ($150).

About ACCION
ACCION is a private, nonprofit organization with the mission of building a financially inclusive world by giving people the financial tools they need to improve their lives.  A world pioneer in microfinance, ACCION was founded as a community development organization in 1961 and issued its first microloan in 1973 in Brazil.  Over time, ACCION has helped to build 62 microfinance institutions in 31 countries on four continents.  Those institutions are currently reaching millions of clients.  In the United States, the U.S. ACCION Network is the largest microfinance lending network in the country and has served tens of thousands of clients, with over $300 million in loans.  For more information, visit www.accion.org.

About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector.  We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets.  In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion.  For more information, visit www.ifc.org.

ACCION is a registered trademark of ACCION International.

SOURCE ACCION International

IFC Supports Ananya Finance to Expand Microcredit in Underserved States of India

From India Company News

IFC, a member of the World Bank Group, is offering advisory services to Ananya Finance For Inclusive Growth Private Limited, to help the company expand its services to underserved and low income states of India. IFC’s support is crucial at this time when the microfinance sector in India has been undergoing a challenging environment.

Ananya Finance is an Indian non-banking finance company that provides financing to small and medium sized microfinance institutions. Penetration of microfinance in India has been low and is geographically skewed, focusing largely on India’s southern states. IFC will help the company design new products through Ananya’s partner microfinance institutions and support outreach to underserved communities in India.

“We will work intensively in the Indian states of Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh, Jharkhand, Orissa and the north-eastern states, high priority states for India’s poverty eradication efforts,” said Vijaylakshmi Das, Managing Director, of Ananya Finance. “With IFC’s support, we expect to expand significantly into rural and semi-urban areas where the need for microcredit is highest.”

IFC will also provide training to Ananya’s staff in risk management, responsible finance management systems, and related areas to help the company strengthen business planning and operations. Similar training facilities will also be extended to selected partner institutions of Ananya to strengthen strategic business planning, operational risk management, financial analysis, capital funding and equity valuation capabilities.

“IFC’s support to Ananya will help make microfinance accessible in rural, semi-urban, and underserved areas,” said Jennifer Isern, who leads IFC’s Access to Finance work in South Asia. “IFC will work with Ananya to develop flexible and responsible financial products needed by clients and their families. In the past year, IFC has been working with its partners in the sector towards building good practices on responsible finance and responding to client demands.”

Ananya Finance works in microfinance, livelihood promotion and other sustainable solutions for underserved communities in India through partner microfinance institutions, most of whose clients are women borrowers. Ananya provides a window through which donors, commercial lenders and other parties can channel funds towards the microfinance sector. Ananya also provides capacity-building services to its client institutions. For more information, visit http://www.ananyafinance.com/

About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities – all while driving our investments to an all-time high of nearly $19 billion. For more information, visit www.ifc.org

IFC Mobilizes $40 Million for Mibanco to Support Rural Populations, Women in Peru

From Web Wire

Lima, Peru – IFC, a member of the World Bank Group, today signed an agreement with Mibanco – Banco de la Microempresa S.A, to increase access to financial services for micro, small, and medium enterprises, low-income and rural populations, and women in Peru.

IFC will mobilize $40 million in long-term financing, 75 percent of which will be in local currency, allowing Mibanco to expand its MSME portfolio in the country. Mibanco, part of Grupo ACP Holding, is one of the benchmark institutions in the Latin American microfinance sector, which is at the forefront of promoting access to credit, savings, and insurance in Peru. With more than 630,000 clients, Mibanco is one of the fastest-growing players in the Peruvian microfinance market.

“IFC’s renewed support will allow us to increase banking penetration, reducing gaps in formal financing for local microenterprises, many of which are managed by women,” said Jose Castillo, Mibanco’s CEO. “We appreciate IFC’s support and long-term partnership.”

Dolika Banda, IFC’s Director for Financial Markets in Latin America and Africa, said: “This new financing shows IFC’s continuing work to improve access to finance to the lower-income segments of the population in Peru. Our long-term partnership with Mibanco and its sponsors aims to expand services that will support individual entrepreneurship initiatives in the country and more equitable growth.”

The financing is consistent with IFC and World Bank strategy in Peru to increase economic growth and competitiveness, reduce poverty and inequality, and expand growth to a wider client base by providing access to finance for MSMEs and low- and middle- income households. As of September 2011, IFC’s committed investment portfolio in Peru totaled $840 million.

About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion. For more information, visit www.ifc.org.

About Mibanco
Mibanco was incorporated in 1998 as a private commercial bank specialized in microfinance. The Bank has grown to become Peru’s fifth largest bank, holding an 18 percent market share among new banked clients. Mibanco has a network of 117 branches located in 20 of Peru’s 24 departments. The Bank provides micro loans of an average size of approximately $2,400. The Bank is internationally rated BB+, one notch below investment grade, and was awarded a prize for the best microfinance institution in Latin America by IDB in 2009. For more information, please visit www.mibanco.com.

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