MICROCAPITAL BRIEF: Myanmar Investments International Announces Joint Venture with Microfinance Institution (MFI) Myanmar Finance

Myanmar Investments Limited (MIL), a subsidiary of British Virgin Islands-based investment company Myanmar Investments International Limited (MIIL), recently entered into a conditional joint venture agreement with Myanmar Finance Company Limited (MFC), a Myanmar-based microfinance institution (MFI), to create Myanmar Finance International Limited (MFIL), which will be based in Myanmar and provide microfinance services in the country. As part of the transaction, MFC will transfer its existing microfinance portfolio to MFIL. It is anticipated that MFIL will offer a product line similar to what MFC offers, including microenterprise loans for working capital and purchases of equipment and inventory.

In a statement, Mr Aung Htun, the managing director of MIIL, said that “we are delighted to partner with MFC and be part of an exciting expansion plan to provide an important source of capital for small-scale businesses. A well-run microfinance business in a well-regulated environment represents a socially responsible investment as well as an attractive commercial opportunity […]”[2]. U Htet Nyi, founder and managing director of MFC, added that “through the new joint venture, we will be able to offer more loans and quickly add to the estimated 10,000 clients we serve in the Yangon and Bago regions. We plan to widen our product offering, as well as add to the three branches we currently operate […]”[2].

The joint venture agreement is conditional upon MFIL receiving a microfinance license for lending and deposit-taking services from the government of Myanmar. After the license is acquired, MIL and MFC would jointly contribute total capital of USD 4.8 million in a phased manner. Initially, MIL will contribute USD 1.1 million and MFC will provide USD 900,000 in cash in return for equity stakes in MFIL. Following the valuation of MFC’s existing portfolio, both companies will make further, unspecified cash contributions. It is expected that upon the completion of the transaction MIL will own a 55-percent stake and MFC will own a 45-percent stake in MFIL.

As of September 30, 2013, the unaudited, consolidated total assets of MIIL amounted to USD 5.27 million. The upper threshold of microloans offered by MFC is USD 500 and the duration of the loans is normally 10 to 12 months. The maximum interest rate MFC charges on microloans is 30 percent per annum as per government regulations in Myanmar. Financial information on MFC is not publicly available.

By Alíz Crowley and Hope Gitangu, Research Associates

About Myanmar Investments International Limited (MIIL)

Myanmar Investments International Limited (MIIL) is a Myanmar-focused investment company that is registered in the British Virgin Islands and has offices in Singapore and Myanmar. The company’s shares are traded on the Alternative Investment Market in London, United Kingdom. As of 2013, the company owned two principal subsidiaries, Singapore-based Myanmar Investments Limited (MIL) and Singapore-based MIL Management Private Limited. As of 2014, MIIL entered into a conditional joint venture agreement with Myanmar Finance Company Limited (MFC), a Myanmar-based microfinance institution (MFI), to create a microfinance institution called Myanmar Finance International Limited. As of September 30, 2013, the unaudited, consolidated total assets of MIIL amounted to USD 5.27 million.

About Myanmar Finance Company Limited (MFC)

Myanmar Finance Company Limited (MFC) is a microfinance institution (MFI) in Myanmar. MFC operates in rural and urban areas in and around Yangon and Bago. MFC offers microcredit for small-scale enterprises for the purchase of equipment and inventory and for the financing of working capital. As of 2014, MFC has a client base of 10,000 individuals and small enterprises, and the company has three branches. The upper threshold of microloans offered by MFC is USD 500 and the duration of the loans is normally 10 to 12 months. The maximum interest rate MFC charges on microloans is 30 percent per annum as per government regulations in Myanmar. Financial information on MFC is not publicly available. As of 2014, as part of a joint venture agreement with Myanmar Investments Limited, MFC plans to transfer its existing microfinance portfolio to Myanmar Finance International Limited.

Sources and Additional Resources

[1] StockMarketWire.com, Myanmar Investments in microfinance JV agreement

[2] London Stock Exchange, Myanmar Investments International Limited Signing of microfinance joint venture agreement

[3] Myanmar Investments International Limited, Financial Reports

MicroCapital, August 25, 2014, “Myanmar: Demand, Supply, Policy and Regulation;” by Doubell Chamberlain et al; published by the Centre for Financial Regulation & Inclusion (CENFRI)

MicroCapital, August 18, 2014, South Korean Hana Bank Establishes Microfinance Institution (MFI) in Myanmar

MicroCapital, June 21, 2014, United Nations Development Program (UNDP) Transfers Microfinance Portfolio in Myanmar to Pact Global Microfinance Fund

MicroCapital Universe Profile: Myanmar Investments International Limited (MIIL)

MicroCapital Universe Profile: Myanmar Finance Company Limited (MFC)

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