MICROCAPITAL BRIEF: German Federal Ministry for Economic Cooperation and Development (BMZ) to Invest $17m in Equity in European Fund for Southeast Europe (EFSE) to Support MSME Financing in Ukraine

The German government’s Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ) has agreed to invest equity in the amount of EUR 15 million (USD 17 million) in the European Fund for Southeast Europe (EFSE), a Luxembourg-based microfinance investment vehicle (MIV). This new investment, which is in the highest risk “first-loss” tranche of EFSE, raises BMZ’s total commitment to the fund to approximately EUR 175 million (USD 200 million). The infusion will be used to provide local-currency financing to micro-, small and medium-sized enterprises (MSMEs) in Ukraine.

Monika Beck, the Chairperson of the Board of EFSE, said “This investment provides a good opportunity for the EFSE to foster its development objectives in the Ukraine where local-currency financing is in high demand, in particular in the agriculture sector.”

As of December 2014, BMZ reported total assets of EUR 6.44 billion (USD 7.37 billion). As of September 2014, EFSE has an investment portfolio of EUR 854 million (USD 977 million).

By Julia Marín, Research Associate

About German Federal Ministry of Economic Cooperation and Development (BMZ):

Founded in 1961, the German government’s Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ) focuses on economic development in Germany and approximately 60 other countries. As of December 2014, it reported total assets of EUR 6.44 billion (USD 7.37 billion).

About European Fund for Southeast Europe (EFSE):

The European Fund for Southeast Europe (EFSE) was established in 2005 by Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW), a German development bank, with financial support from the German Federal Ministry for Economic Cooperation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung) and the European Commission of the EU. EFSE seeks to aid economic development in southeastern Europe and parts of central Asia by supporting the provision of financial services to low-income households and micro- and small enterprises via local financial institutions. EFSE is privately managed, with Oppenheim Asset Management Services of Luxembourg acting as fund manager and Finance in Motion GmbH of Germany acting as fund advisor. As of September 2014, EFSE has an investment portfolio of EUR 854 million (USD 977 million). As of 2014, EFSE holds a microfinance label from Luxembourg Fund Labeling Agency (LuxFLAG), an NGO that certifies that social investment vehicles actually invest as advertised.

Sources and Additional Resources

[1] EFSE Press Release, BMZ invests additional EUR 15 million in EFSE dedicated for Ukraine 

[2] Direct communication with Finance in Motion

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MicroCapital, January 20, 2015, European Fund for Southeast Europe (EFSE) Loans $34.6m to Garanti Leasing for On-lending to Micro-, Small Enterprises in Turkey; Banca Intesa Beograd (BIB) for Agriculture in Serbia 

MicroCapital, January 7, 2015, European Fund for Southeast Europe (EFSE) Loans $8.3m in Local Currency to Patria Credit of Romania 

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MicroCapital, January 5, 2015, European Fund for Southeast Europe (EFSE) Loans $600k to Macedonian Microfinance Institution (MFI) Horizonti to On-Lend to Small-Scale Farmers, Rural Microentrepreneurs 

MicroCapital, January 4, 2015, European Fund for Southeast Europe (EFSE) Loans $30m to Finansbank of Turkey to Support Micro-, Small, Medium-sized Enterprises (MSMEs) 

MicroCapital Universe Profile: European Fund for Southeast Europe (EFSE)

MicroCapital Universe Profile: German Federal Ministry of Economic Cooperation and Development

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