Groundbreaking FINCA Microfinance Holding Company LLC Makes Good Globally on Double Bottom Line – Receives Second Round of Investment.
Washington, D.C., November 21, 2013 – Celebrating almost two full years of successful operations as the world’s first-of-its-kind socially responsible global microfinance investment holding company, FINCA Microfinance Holding Company LLC (FMH) recently completed a second-round capital raise of $48 million. The capital increase was funded by four of FMH’s original investors – the International Finance Corporation (IFC), KfW Development Bank (KfW), Netherlands Development Finance Company (FMO), and responsAbility Global Microfinance Fund – along with Triodos Microfinance Fund and Triodos Fair Share Fund, funds managed by Triodos Investment Management BV, a new partner to FMH and a long-standing FINCA supporter. FMH was launched in 2011 with a capital investment of $74 million by IFC, KfW, FMO, responsAbility, and Triple Jump.
Because of this investment, the process of transforming all of FINCA’s Subsidiaries into commercial corporate forms is moving forward, which will provide much-needed expanded financial services to the working poor, such as safe places to save, remittance services, and micro insurance. In 2013, FINCA reached more than a million borrowers, with nearly one third of clients holding savings accounts – a 34% increase in savings accounts over the prior year. By early 2014, FINCA will expand these services into two new markets, made possible by FMH.
Rupert Scofield, President and CEO at FINCA International, stated that “the FMH entity and this new round of capital will make it possible for FINCA to continue to deliver an expanded and pioneering line of financial services and products to our growing client base of more than one million micro-entrepreneurs, who are at the lowest income level in the developing world and are traditionally financially underserved or excluded.”
“The participation by our initial investor group and a new investor signals their strong confidence in FINCA’s mission and FMH’s unique appeal as a large-scale, financially sound, socially responsible investment vehicle,” said Ms. Chikako Kuno, Director of Transformations, Equity, and Mergers & Acquisitions at FINCA International. “This additional capital will help fund the planned growth of our Subsidiaries around the world and enable our existing Subsidiaries in 22 countries to continue to transform into licensed deposit-taking institutions,” Ms. Kuno added.
The unique business model of FINCA – which develops the pioneering products, research, programming, standards, and visionary leadership for its 22-country Subsidiary microfinance operations – together with the investment focus and structure of FMH that make the expansion of subsidiary operations and services possible – are proving to be a winning formula for success with investors. Martin Holtmann, IFC Global Head of Microfinance said, “This investment will help the FINCA Subsidiaries become licensed institutions so that they can offer savings accounts and innovative financial products to more low-income entrepreneurs in Africa, Latin America, Eurasia, the Middle East and South Asia. This is a key part of IFC’s strategy, as financial services for poor people are a powerful instrument for reducing poverty, enabling them to build assets, increase incomes and reduce their vulnerability to economic stress and FINCA is a critical partner in delivering these services. ”
Doris Köhn, Member of the Management Committee of KfW Development Bank, remarked: “Speaking on behalf of the investors, our second round of investment validates our confidence in FMH and confirms that FINCA’s innovative model in socially responsible investing can work on a global scale of this size, responsibly delivering financial services to improve the lives of more than a million of the low income entrepreneurs while delivering a positive financial return to the socially conscious investor.”
“FMH is a perfect investment vehicle for FMO as it matches FMO’s mandate to provide long-term capital for growth in remote areas of developing countries where few MFIs are willing to go, yet where FINCA has proven for more than 25 years that it can succeed financially and strategically on a sustained basis,” added Mrs. Linda Broekhuizen, Director Financial Institutions of Netherlands Development Finance Company (FMO).
New investor Triodos Investment Management also commented: “Triodos Investment Management has partnered with FINCA affiliates across the global for over a decade. Our investment in FMH is an exciting next step in intensifying our partnership with FINCA. We look forward to working together to promote a shared vision for the microfinance sector and to make a broad range of financial services available in those regions that are now underserved. FINCA, as a global leader in microfinance, has shown tremendous results in this respect,” said Frank Streppel, Deputy Director Emerging Markets at Triodos Investment Management.
Attorneys at international law firm Freshfields Bruckhaus Deringer acted as pro bono legal counsel on the deal. The Freshfields team was led by Matthew Herman, head of Freshfields’ corporate practice in the United States.
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FINCA is a leading international microfinance organization that provides financial services to the world’s lowest-income entrepreneurs so they can create jobs, build assets and improve their standard of living. For nearly three decades, FINCA has been committed to breaking the cycle of poverty by providing community-based credit and savings opportunities. FINCA currently reaches more than one million clients through its worldwide network of 22 subsidiaries in Africa, Eurasia, Latin America, and the Middle East and South Asia. FINCA’s outreach is among the broadest and most comprehensive of today’s microfinance networks. FINCA manages its subsidiaries through FINCA Microfinance Holding Company, LLC which is supported with socially responsible investor partners.
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in more than 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and promote shared prosperity. In FY13, our investments climbed to an all-time high of nearly $25 billion, leveraging the power of the private sector to create jobs and tackle the world’s most pressing development challenges. For more information, visit www.ifc.org.
Established in 1948 as a public law institution, KfWBankengruppe is today owned 80% by the Federal Republic of Germany and 20% by the federal states (“Länder”). With a balance sheet total of more than EUR 440 billion, KfW is one of the world´s leading and most experienced promotional banks. As a bank with no branch network or customer deposits, it refinances its lending business almost exclusively in the international capital markets. KfWEntwicklungsbank is part of KfWBankengruppe and a competent and strategic advisor on current development issues. Reducing poverty, securing peace, protecting natural resources and helping to shape globalization are the main priorities of KfWEntwicklungsbank. On behalf of the German Federal Government it finances reforms, infrastructure and financial systems for socially and ecologically compatible economic growth in more than 110 countries. It is a worldwide financing partner, and it also employs funds of its own for development projects. For more information, please visit https://www.kfw.de/kfw.de-2.html
FMO (the Netherlands Development Finance Company) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food & water. With an investment portfolio of EUR 6.3 billion, FMO is one of the largest European bilateral private sector development banks. For more information, please visit www.fmo.nl
Founded in 2003, responsAbility Investments AG is one of the world’s leading private asset managers for social investments. It specializes in sectors such as microfinance, SME financing, fair trade and independent media. With its products, including the responsAbility Global Microfinance Fund, responsAbility enables people in developing countries and emerging markets to access markets, information and other services crucial for their development. Private and institutional investors can thus professionally contribute to positive social development while at the same time achieving a financial return. At present emerging market assets under management amount to USD 1.8 billion. For more information, please visit http://www.responsability.com/
Triple Jump’s mission is to contribute to the sustainable development of emerging market economies by facilitating investment in micro and small enterprises. Triple Jump seeks to support the expansion of viable microfinance institutions in all three stages of their development (emerging, expanding and mature) by providing capital and advisory services. Our objective is to work towards effective social impact in emerging markets by harnessing entrepreneurial spirit. We focus on MFIs which are committed to: reducing poverty in their society; reaching low-income and vulnerable groups, particularly women; respecting society and the environment; and, achieving maximum efficiency, financial sustainability and outreach. For more information, please visit http://www.triplejump.eu/
Triodos Investment Management is a 100% subsidiary of Triodos Bank, one of the world’s leading sustainable banks. Triodos Investment Management is a globally recognised leader in impact investing, managing direct investments ranging from sustainable energy infrastructure to microfinance institutions. Since 1994, its assets under management in inclusive finance have increased to over EUR 500 million, making it one of the leading investors in the industry. Through specialised funds it currently provides finance – both debt and equity – to 104 upcoming and well-established financial institutions in 44 countries. They hold equity stakes in 21 financial institutions; senior staff of Triodos Bank joins the Board of Directors and actively contributes to the governance of these institutions. For more information, please visit http://www.triodos.com/en/investment-management/