FINCA and Partners Activate Final Funding for New Socially Responsible Investment Subsidiary.
WASHINGTON, DC [12 January 2012] – FINCA International (FINCA), one of the world’s largest microfinance organizations with more than 25 years of proven success, confirmed that final funding is in place for its new subsidiary FINCA Microfinance Holding Company LLC (FMH).
The historic transaction, which was signed in June, closed on December 6, with FINCA and its partners providing more than $200 million in equity investments which includes the contribution of FINCA’s 21 subsidiaries, and creates a platform for future capital as the network grows and expands. FMH, a first-of-its-kind, socially-responsible investment partnership for microfinance, strikes the right balance between attracting capital needed for expansion and protecting the integrity of FINCA’s charitable mission.
“This infusion of capital will be a key component in developing the potential of our existing subsidiaries, expanding our products and services into new countries, and continuing to attract loan funding for our clients,” said FINCA International President and CEO Rupert Scofield. “It will also be instrumental in creating efficiencies that will drive down our cost of doing business, and allow us to provide services to our clients at lower pricing.”
Mr. Scofield added that the proceeds will also allow FINCA to build the infrastructure to develop new financial and life enhancement services, like savings accounts and insurance products,that will enable clients to build safer, more secure livelihoods.
FINCA’s new partners in FMH include The International Finance Corporation (IFC), a member of the World Bank Group; KfW Entwicklungsbank, the German development bank; FMO, the Netherlands development bank; responsAbility Global Microfinance Fund, an investment fund advised by the Zurich-based asset manager responsAbility Social Investments AG; and the ASN-Novib Microcredit Fund advised by Triple Jump, a Netherlands-based microfinance investment manager. All of these partners are committed to the microfinance sector and have long-standing relationships with FINCA.
FINCA International, Inc. will hold a 66 percent majority stake in FMH which, along with its new socially-responsible investor partners, will ensure the holding company’s continued focus on the FINCA mission.
No employee or Board member of FINCA will invest in, or benefit financially from the shares of, FMH, ensuring that FINCA’s management and staff remain aligned with the needs of its clients. In addition, a new Social Performance Audit Committee of the Board has been established to identify and track social performance indicators on an ongoing basis to ensure that FINCA remains focused on client welfare and protection, increases transparency, and ensures that new products and services are tailored to enhance client well-being.
FINCA’s organizational structure has changed as a result of the creation of FMH, with the original 501(c)(3) organization, FINCA International, Inc., serving as the majority shareholder. A new board of directors has been created to oversee FMH, and is comprised of representatives nominated by FINCA International and its new partners. FINCA will ensure that FMH does not deviate from the parent organization’s poverty alleviation mission.
FINCA International will continue to raise funds to expand even deeper into un-served rural areas; and drive research and development to enhance and create new products and services for clients.
International law firm Freshfields Bruckhaus Deringer advised FINCA, on a very generous pro bono basis, throughout the structuring, drafting and negotiating of the transaction. Covington & Burling, advisor to FINCA for many years, also advised in matters regarding taxes. Deutsche Bank, through its Investment Bank and its Community Development Finance Group, gave valuable support, providing insight on how external parties might view FMH and its subsidiaries.
For more detailed information on the creation and structure of FMH, please click here.
FINCA is a leading international micro-finance organization that provides financial services to the world’s lowest-income entrepreneurs, helping them to create jobs, build assets and improve their standard of living. For 25 years, FINCA has been committed to breaking the cycle of poverty by providing community-based credit and savings opportunities. Currently, FINCA operates with a distinctive, integrated business model that accepts donations and investment dollars, an approach that leverages available capital and promotes greater transparency, sustainability and higher standards of business practices. This has allowed FINCA to achieve balanced financial and social performance unmatched in its industry while opening the path to socio-economic development for the lowest-income citizens of the world. Based in Washington DC, with local operations across 21 countries serving more than 900,000 FINCA’s outreach is among the broadest and most comprehensive of today’s microfinance networks. For more information, please visit www.FINCA.org
FINCA Microfinance Holding Company, LLC (FMH)
FMH is a subsidiary of FINCA International, Inc. that leverages the funding of socially-responsible partners who share FINCA’s mission of providing services to low-income people so they can increase their employment, incomes, and standard of living. FINCA’s country-based subsidiaries are held by FMH, creating a global network of shared expertise.