MICROCAPITAL BRIEF: Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO) Syndicates $30m Loan to Microfinance Institution FINCA Azerbaijan Including $15m From Oesterreichische Entwicklungsbank (OeEB)

FINCA Azerbaijan, the Azerbaijan-based subsidiary of the US-based nonprofit microfinance network Foundation for International Community Assistance (FINCA) recently received a multi-currency, syndicated loan worth USD 30 million from the Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO), a Dutch public-private partnership that aims to promote growth in developing economies, with the participation of Oesterreichische Entwicklungsbank AG (OeEB), the development bank of the Austrian government. Each institution will invest the equivalent of USD 15 million, and additional commitments totalling USD 10 million are expected from various international commercial investors and asset managers. The loan facility has a term of five years and the equivalent of USD 15 million of the principal is denominated in local currency [1]. 

Tim Tarrant, the Chief Executive Officer of FINCA Azerbaijan, explained that “This is the first funding we have received directly from FMO and OeEB, and the first syndication for a FINCA subsidiary. This key transaction will allow us to expand the financing of small business, especially in the agricultural sector and across the regions of Azerbaijan” [1].

Linda Broekhuizen, FMO’s Chief Investment Officer, said “We are therefore very pleased to finance FINCA Azerbaijan, an institution reaching out to remote areas and serving more than 150,000 micro-clients.” She added that “by supporting the non-oil related businesses in Azerbaijan the economy will grow, bringing wealth to a larger part of the population” [1].

As of 2013, FINCA International has total assets of USD 1.1 billion and serves 1.7 million clients through subsidiaries in 22 countries. As of June 2014, FMO reports total assets of EUR 6.4 billion (7.8 billion). In 2013, OeEB reported total assets of EUR 437.7 million (USD 533.2 million). The organization’s annual net profit for that year amounted to EUR 2 million (USD 2.4 million).

By Julia Marín, Research Associate

About the Foundation for International Community Assistance (FINCA) International

The Foundation for International Community Assistance (FINCA) International, a nonprofit microfinance network based in Washington, DC, provides financial services to poor families through a network of locally managed institutions. FINCA was founded in 1984 by Dr John Hatch, who is known for helping develop “village banks” in which each member guarantees the loans of other members. FINCA targets its services to poor women living in the Americas, sub-Saharan Africa and Eurasia. As of 2013, FINCA International has total assets of USD 1.1 billion and serves 1.7 million clients through subsidiaries in 22 countries. In December of 2011, FINCA launched a subsidiary, FINCA Microfinance Holding LLC, with funding from the International Finance Corporation (IFC), KfW Bankengruppe, Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV (FMO), responsAbility, and Triple Jump.

About the Foundation for International Community Assistance (FINCA) Azerbaijan

The Foundation for International Community Assistance (FINCA) Azerbaijan is a microfinance institution (MFI) that was established in 1998 and is a subsidiary of US-based, nonprofit microfinance network FINCA International. FINCA Azerbaijan provides financial services to low-income entrepreneurs with the intent of helping them create jobs, build assets and improve their standards of living. As of December 31, 2012, FINCA Azerbaijan operates 66 offices in approximately 60 districts in the country. For the same date, the MFI reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 167 million, a gross loan portfolio of USD 153 million, return on assets of 8.02 percent, return on equity of 38.1 percent and 137,000 active borrowers. FINCA Azerbaijan does not accept deposits.

About The Netherlands Development Finance Company (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 June 2014, FMO reports total assets of EUR 6.4 billion (7.8 billion).

About Oesterreichische Entwicklungsbank AG (OeEB)

Oesterreichische Entwicklungsbank AG (OeEB) has been operating as the official development bank of Austria since March 2008. OeEB provides long-term financing for the implementation of private sector projects in developing countries in an effort to promote sustainable development. OeEB also provides technical assistance in an effort to enhance the development impact of projects. In 2013, OeEB reported total assets of EUR 437.7 million (USD 533.2 million). The organization’s annual net profit for that year amounted to EUR 2 million (USD 2.4 million).

Sources and Additional Resources

[1] FINCA Press Release, http://www.finca.org/press-release/fmo-arranges-usd-30m-loan-syndication-finca-azerbaijan/

MicroCapital, April 23, 2014, EBRD, EFSE to Loan $16m to FINCA Azerbaijan to Support Micro-, Small, Medium-sized Enterprises (MSMEs), Agricultural Lending

MicroCapital, July 18, 2013, Pasha Bank Underwrites Inaugural Bond Issue of $12.7m to FINCA Azerbaijan to Support Micro and Small Businesses, Entrepreneurs

Microcapital, April 1, 2011, Sacombank of Vietnam Issues 10-Year $150m Subordinated Syndicated Loan Arranged By the Netherlands Development Finance Company (FMO) to Support Banking, Small and Medium-Sized Enterprises (SMEs)

MicroCapital, June 12, 2012, Austrian Development Bank Oesterreichische Entwicklungsbank AG (OeEB) to Invest $18.75m in European Fund for Southeast Europe (EFSE)

MicroCapital Universe Profile: Foundation for International Community Assistance (FINCA) Azerbaijan

MicroCapital Universe Profile: The Netherlands Development Finance Company (FMO)

MicroCapital Universe Profile: Oesterreichische Entwicklungsbank AG (OeEB)

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