MICROCAPITAL BRIEF: FINCA Microfinance Holding Raises $48m from International Finance Corporation (IFC), Kreditanstalt fur Wiederaufbau (KfW), Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV (FMO), responsAbility Global Microfinance Fund, Triodos

The Foundation for International Community Assistance (FINCA) Microfinance Holding (FMH), a for-profit investment vehicle controlled by US-based NGO FINCA International, has announced that it has raised USD 48 million in a second round of investments [1]. New investors Triodos Microfinance Fund and Triodos Fair Share Fund, which are managed by Triodos Investment Management, a subsidiary of Dutch Triodos Bank, joined the four existing investors that also participated in the second funding round: the World Bank Group member International Finance Corporation (IFC), German development bank Kreditanstalt fur Wiederaufbau (KfW); Dutch development bank Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV (FMO) and Swiss microfinance investment vehicle responsAbility Global Microfinance Fund (rAGMF). The sizes of the commitments from each investor have not been specified. The new investments are expected to support the ongoing process of transforming all FINCA subsidiaries to commercial forms that will be licensed to accept deposits as well as expanding the availability of “innovative” financial products to more low-income entrepreneurs in Africa, Eurasia and Latin America.

FMH was created in 2011 with a capital investment of USD 74 million. As of 2013, FINCA reports having 1 million clients and 22 subsidiaries. As of 2012, it reported total assets of USD 841 million.

By Nisha Koul, Research Associate

About FINCA Microfinance Holding (FMH): FINCA Microfinance Holding (FMH), a for-profit subsidiary of nonprofit FINCA International, was founded in 2011. It leverages funding from socially responsible partners with the aim of providing services to low-income people so they can increase their employment, incomes and standards of living. As of 2013, FMH has raised USD 122 million in two rounds of investments.

About FINCA International: Founded in 1984 by Dr John Hatch, a pioneer of the village banking model, the Foundation for International Community Assistance (FINCA) International is a microfinance network based in Washington, DC, that provides financial services to poor families through a network of locally managed institutions. FINCA targets its services to poor women living in the Americas, sub-Saharan Africa and Eurasia. As of 2013, FINCA International serves approximately 1 million clients through its subsidiaries in 22 countries. As of 2012, it had total assets of USD 841 million. In 2011, FINCA launched a subsidiary, FINCA Microfinance Holding LLC (FMH), with funding from the International Finance Corporation (IFC), KfW Bankengruppe, Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV (FMO), responsAbility, and Triple Jump.

About International Finance Corporation (IFC): A member of the US-based World Bank Group, the International Finance Corporation (IFC) offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. At fiscal year-end 2012, IFC reported 184 member countries and total assets of USD 76 billion.

About Kreditanstalt fur Wiederaufbau (KfW): Kreditanstalt fur Wiederaufbau (KfW), formerly known as the KfW Bankengruppe, is a German development bank with the objective of supporting economic, social and ecological development worldwide. Owned by the Federal Republic and the Länder (federal states), it offers financial support in the areas of small and medium-sized enterprise, entrepreneurship, environmental protection, housing, infrastructure, education, finance and development cooperation. As of 2012, KfW reported total assets EUR 511 billion (USD 698 billion).

About Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV (FMO): The Netherlands Development Finance Company (FMO) is a public-private development bank that supports financial institutions and governments through “loans, guarantees and other investment promotion activities including local-currency investments.” The bank was founded in 1970 by the Dutch government, private sector employers and employee organizations. As of December 2012, FMO reports total assets of EUR 5.6 billion (USD 7.3 billion).

About responsAbility Global Microfinance Fund (rAGMF): The responsAbility Global Microfinance Fund (rAGMF) is a microfinance investment vehicle (MIV) managed by responsAbility Social Investments that invests in microfinance institutions (MFIs) and other MIVs, mostly through short- to medium-term debt securities. rAGMF also invests up to 10 percent of its assets in the equity of MFIs. As of 2012, the fund holds a label from the Luxembourg Fund Labeling Agency (LuxFLAG), an organization that investigates whether investment vehicles actually support the microfinance sector. rAGMF reported a fund volume of USD 609 million in 2012.

About Triodos Investment Management: Triodos Investment Management manages funds that invest in financial sector development in developing countries, renewable energy and venture capital. Among these are four microfinance investment funds: the Hivos-Triodos Fund, the Triodos-Doen Foundation, the Triodos Fair Share Fund and Triodos Microfinance Fund. As of December 31, 2012, these four funds had total assets of USD 442 million. The four funds collectively provide finance to 99 microfinance institutions in 45 countries.

Sources and Additional Resources:

[1] FINCA Press Release, “Groundbreaking FINCA Microfinance Holding Company LLC Makes Good Globally on Double Bottom Line – Receives Second Round of Investment,” http://www.finca.org/atf/cf/%7BFD809671-5979-4D43-BFB8-3301E4FC97EB%7D/FMH%20Receives%202nd%20Round%20of%20Investment.pdf

MicroCapital Story, September 18, 2012, “ResponsAbility Invests $5m in Chase Bank Kenya, $1.25m in KWFT of Kenya, $1.2m in FINCA Microfinance Holding of USA,” https://www.microcapital.org/microcapital-brief-responsability-invests-5m-in-chase-bank-kenya-1-25m-in-kwft-of-kenya-1-2m-in-finca-microfinance-holdings-of-usa/

MicroCapital Story, January 18, 2012, “FINCA International Launches For-Profit Subsidiary: FINCA Microfinance Holding LLC,” https://www.microcapital.org/microcapital-brief-finca-international-launches-for-profit-subsidiary-finca-microfinance-holdings-llc/

MicroCapital Universe Profile, FINCA Microfinance Holding (FMH), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=FINCA+Microfinance+Holding+%28FMH%29

MicroCapital Universe Profile, FINCA International, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=FINCA+International

MicroCapital Universe Profile, International Finance Corporation (IFC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29

MicroCapital Universe Profile, Kreditanstalt fur Wiederaufbau (KfW), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=KfWBankengruppe+%28KfW+Bank+Group%29

MicroCapital Universe Profile, Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV (FMO), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Nederlandse+Financierings-Maatschappijvoor+Ontwikkelingslanden+N.V.+%28Netherlands+Development+Finance+Company%2C+FMO%29

MicroCapital Universe Profile, responsAbility Global Microfinance Fund (rAGMF), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=responsAbility+Global+Microfinance+Fund+%28rAGMF%29

MicroCapital Universe Profile, Triodos Investment Management, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Triodos+Investment+Management

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