Written by Arthur D. Little and based on the firm’s previous industry research, released on November 13, 2008 as a “Financial Services INSIGHT,” 4 pages, available on November 26, 2008 at: http://www.adl.com/reports.html?view=329.

Arthur D. Little (ADL), an international management consulting firm, released on November 13 a report entitled “Microfinance on the Rise,” which analyzes the current factors broadly affecting the demand and supply of microfinance and outlines the core operational components of a good microfinance practice. The report is an interesting analysis of the industry’s state of affairs and a strong prediction that microfinance is poised to become a new asset class for traditional investors.

Established in 1886, ADL was founded in Cambridge, Massachussetts, by two MIT chemists and has since grown to become largely a management consulting firm that currently holds the 33rd spot on Vault’s list of the most prestigious management consulting firms. Today, the company employs about 1,000 people in 20 countries, and in fiscal year 2006 the company brought in USD 239 million in revenues. Although ADL does not claim any unique contributions to microfinance, the organization holds at least partial responsibility for developing a number of modern innovations, including operations research, word processing, synthetic penicillin, LexisNexis, and NASDAQ.

What follows is a summary of the report: Continue Reading »

Cygma, the new microfinance foreign exchange (FX) risk management group, believes that the current financial situation is driving people in the microfinance industry to use foreign currency hedging facilities. The organisation will be launching its FX hedging products for illiquid and difficult-to-hedge emerging markets currencies in the first quarter of next year. These will be executed directly by the firm without reliance on third parties, supported by its USD 50 million capital reserve fund. Continue Reading »

The Islamic Business and Finance Network (IBF Net), a global network of students, researchers, and finance professionals, and its Institute of Microfinance and Development together with Islamic Relief Worldwide, an international development and relief organization, held an international training program and workshop to discuss the nuances of Islamic microfinance was recently held in New Delhi.    The program was attended by over sixty participants from the corporate sector, NGOs, and academics from India, Bangladesh, Sri Lanka and Afghanistan. Continue Reading »

Forprofit microfinance rating company MicroRate has announced the completion of the following public microfinance institution ratings between January 2008 and September 2008: Continue Reading »

Written by Nimrah Karim, Michael Tarazi and Xavier Reille and based primarily on secondary research by the Consultative Group to Assist the Poor (CGAP), released in August 2008 as Number 49 of Focus Note, a publication of CGAP, 16 pages, available on October 27, 2008 at: http://www2.cgap.org/gm/document-1.9.5029/FocusNote_49.pdf. Continue Reading »

SOURCE: The Daily Star

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On September 30, BlueOrchard Private Equity, the private equity arm of BlueOrchard Microfinance Investment Managers, invested INR 250 million (USD 5.3 million) and purchased a minority stake in Asmitha Microfin Limited, the fourth largest non-banking financial company in India.  This will be BlueOrchard’s first equity investment deal with an Indian microfinance institution (MFI).  With the new investment, Asmitha intends to expand its capital base and to bolster its borrowing capacity in order to shore up its microfinance lending operations.   The new partnership is a strategic development for BlueOrchard, which hopes to consolidate its presence in India in the coming years. Continue Reading »

Financiera Independencia, a microfinance institution (MFI) traded on Mexican Stock Exchange, has appointed the Mexican division of Credit Suisse, a prominent international financial services firm, to serve as a market maker for the MFI’s securities. Market makers facilitate the entry and exit of investors by connecting buyers and sellers and temporarily buying or selling securities to facilitate the investors’ transactions. Continue Reading »

After a long delay, the results of the oversold initial public offering (IPO) of Tanzanian National Microfinance Bank (NMB) have been released. In the IPO, the government sold 21 percent of its 51 percent stake in NMB. A recent worker’s strike at the microfinance institution (MFI) had delayed the announcement of the IPO results, which began on August 17^th. In total, 27,473 applications were submitted to buy 374.8 million shares valued at TZS 224bn (USD 184m), far more than the actual number of available shares. The microfinance institution (MFI) will be publicly listed on the Dar es Salaam Stock Exchange starting on November 7^th. Continue Reading »

Once relatively insulated from the world’s financial system, the microfinance industry is finding itself more closely tied to the capital markets than ever before. As a result, it is far from being immune to the current financial crisis, and some microfinance institutions (MFIs) are beginning to see their cost of borrowing go up as a consequence of the global credit crunch. Continue Reading »

Merrill Lynch Community Development Company (MLCDC), a for-profit development-focused subsidiary of Merrill Lynch & Company, Inc., has invested USD 10 million in Calvert Community Investment (CCI) notes, which are fixed income products issued by the Calvert Social Investment Foundation, a development non-profit located in Besthesda, MD.  The MLCDC investment will finance about twenty microfinance institutions (MFIs) that are expected to provide micro-credit over 25,000 female entrepreneurs in developing nations.  The initiative was announced at the recent 2008 Clinton Global Initiative (CGI) summit, an annual gathering of global leaders in government, business and civil society for the purpose of discussing pressing development challenges and their solutions. Continue Reading »

Koshi Yomuti, a six year old microfinance project whose name means “banking under a tree” will become Namibia’s first commercial micro finance bank with seed capital of Euro 2.3 million from the German Technical Cooperation (GTZ), a federally owned international cooperation enterprise based outside of Frankfurt, Germany. The grant money will be used to create the first purely micro finance banking institution in Namibia upgrading the Koshi Yomuti/Ohangwena Pilot Project to a commercial microfinance bank. The bank will be owned by foreign investors, including KfW (on behalf of GTZ), FIDES (Switzerland), Swiss Microfinance Holding (Switzerland), Incofin (Belgium), and Investisseur et Partenaire pour le Development (France). Continue Reading »

The credit ratings assigned to corporations affect the cost of borrowing money in international capital markets. Microfinance institutions (MFIs) are no exception. As more and more MFIs look to raise money from capital markets, their credit ratings will become increasingly important in their ability to provide financial services at a low cost. Fitch Ratings is a premier international ratings agency, which has evaluated a number of MFIs around the world. This story will examine how Fitch approaches ratings of microfinance. Continue Reading »

The European Microfinance Platform (e-MFP) has published a “European Dialogue” titled “The Role of Investors in Promoting Social Performance in Microfinance”. The document was prepared by the Social Performance Working Group of e-MFP.

Source: The New Vision (Uganda). Continue Reading »

Source: Peru Business News. Continue Reading »

GLOBAL SUMMIT ON MICROFINANCE AS AN ALTERNATIVE ASSET CLASS FOR INSTITUTIONAL INVESTORS

OCTOBER 29-30, MILLENIUM KNIGHTSBRIDGE HOTEL, LONDON, ENGLAND

The conference will focus on the opportunities and challenges for microfinance investments as the industry becomes larger and converges with mainstream financial institutions. Specific topics will include the current state of the microfinance sector, the risks and rewards for institutional investors involved in microfinance, an evaluation of rating metrics currently employed, lessons and opportunities taken from other asset classes, good governance in microfinance institutions (MFIs), and developing a universal framework for evaluating social returns. A complete agenda can be found of the conference website. Continue Reading »

According to the Responsible Investor, an online magazine, SNS Asset Management is currently fundraising for a EUR 100m successor to the SNS Institutional Microfinance Fund. The new fund, which will be run by Developing World Markets (DWM), was created because of the overwhelming demand among Dutch institutional investors for the first iteration. Continue Reading »