MICROCAPITAL STORY: Calvert Foundation Lends $500,000 to Mongolian Microfinance Institution XacBank

In another deal coming to us courtesy of Microfinance Capital Markets Newsletter of the Consultative Group to Assist the Poor (CGAP) and the MIX, the microfinance information clearinghouse, Calvert Foundation, a nonprofit community investment vehicle, recently invested USD 500,000 in loans in XacBank, a leading microfinance institution (MFI) in Mongolia.

Calvert Foundation was launched in 1995 in cooperation with the Ford, MacArthur and Mott Foundations to mobilize individual and institutional capital for investment in nonprofit organizations (NGOs). The Foundation primarily targets institutions in the United States and various developing countries that have at least three years of experience and USD 2 million in assets. Its flagship investment product is the Community Investment Notes, which allows investors to invest in a diversified portfolio of NGOs and social enterprises at fixed interest rates of the investor’s choice. MIX reports that as of December 2006, Calvert Foundation had total assets of over USD 106 million, with USD 27.2 million allocated to 50 active investments. In November 2007, MicroCapital reported that Calvert Foundation was the first provider of securities for eBay’s microfinance web-brokerage service MicroPlace.

XacBank was created in 2001 from a merger of the two largest non-bank financial institutions in Mongolia, Goviin Ekhlel LLC and X.A.C LLC. It is currently the second largest MFI and the leading provider of development finance in the country. Operating with a network of 67 branches, XacBank offers a full range of financial products and services, including savings and loans, to target various market segments in both urban and rural regions. In November 2007, Moody’s gave XacBank a rating of Ba2 with a stable outlook. XacBank is currently led by Chairman and CEO Mr. Ganbold Chuluun and President Mr. Bold Magvan.

According to MIX, XacBank reported a gross loan portfolio of USD 50.3 million and total assets of USD 76.3 million, as of year-end 2006. It also had a debt-to-equity ratio of 718.1 percent, return on assets (ROA) of 2.5 percent and return on equity (ROE) of 17.8 percent. Its major shareholders include: Triodos (15.06%), ShoreCap International (12.22%), Microvest (14.69%), and Mercy Corps (18.44%).

By Mary Fu

Additional Resources:

Consultative Group to Assist the Poor (CGAP): List of Recent Transactions – January 2008

Calvert Foundation: About Us

MIX Market: Profile for Calvert Foundation

MicroCapital article, November 19, 2007: “MicroCapital Talks to Shari Berenbach, Executive Director of the Calvert Foundation About the Foundation’s Relationship with MicroPlace and How It Became the First Issuer to Sell Investments on the Site”

MIX Market: Profile for XacBank

XacBank: Home

Moody’s Investors Service: Credit Opinion: XacBank LLC

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