MICROCAPITAL STORY: Global Partnerships Launches its Third Fund, the $20m Microfinance Fund 2008 (MFF 2008)

Global Partnerships (GP), a Seattle-based non-profit organization that funds microfinance institutions (MFIs) in Latin America, recently announced the creation of its Microfinance Fund 2008 (MFF 2008), a USD 20 million microfinance investment fund intended to aid the rural poor.  Seeking a return of four to five percent on a six-year note, MFF 2008 will fund investments in several MFIs and other partner organizations in Bolivia, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, and Peru.  The fund is closed to additional investors.

The fund’s composition is split between philanthropic equity and private capital, with the former amounting to USD 1.5 million and the latter amounting to USD 18 million. Contributions from several organizations and foundations, including the Western Union, West and the Gilhousen Family foundations, comprise the equity layer of the fund.  Over 42 investors provided private capital investments ranging from USD 100,000 to USD 6 million. These investors include: Overseas Private Investment Corporation, Multilateral Investment Fund of the Inter-American Development Bank, Seattle International Foundation, Linked Foundation, Maryknoll Fathers & Brothers, John F. and Mary A. Geisse Foundation, Mercy Investment Program, Perls Foundation, Gilhousen Family Foundation, Sisters of Charity of Cincinnati, and Adrian Dominican Sisters.

MFF 2008 will be the third such fund established by GP.  The Global Partnerships Microfinance Fund 2005 (MFF 2005) is a USD 2 million fund comprised of USD 200,000 in equity and USD 1.8 million in private capital.  It is invested in eight partners in four Latin American countries.  The Global Partnerships Microfinance Fund 2006 (MFF 2006) is an USD 8.5 million fund comprised of USD 255,000 in equity and USD 8.2 million in debt capital.  It is invested in 14 partners in six countries. Click here to read a Microcapital story written on the launch of MFF 2006.  In combination with its previous funds, claims a GP press release, MFF 2008 will expand the organization’s reach to more than 30 partners across eight countries.  With MFF 2008, GP hopes to address what it identifies as some of the challenges faced by MFIs today, especially the lack of “patient” capital—funding for longer terms and at rates more competitive than those offered by capital markets.

Established in 1994,  Global Partnerships (GP) is a non-governmental organization (NGO) that  supports the expansion of microfinance by investing capital and management expertise in MFIs.  The organization manages its operations through its offices in Seattle, Washington, and Managua, Nicaragua.  According to its 2007 annual report (p. 5), GP claims to have reached 465,000 borrowers by providing USD 28 million in total to 19 MFI partners.   The organization ended fiscal year 2007 with a net asset balance of USD 928,000 (p. 9).  The GP microfinance funds, which consist of MFF 2005, MFF 2006, and fund management, saw a combined negative net asset balance of USD 7.3 million (p. 9).

Additional Resources:

Global Partnerships (GP)

GP: 2007 Annual Report

GP:  Funding Sources

GP: “Press Release: Global Partnerships Closes $20 Million Microfinance Fund

Philanthropy News Digest: “Global Partnerships Launches $20 Million Microfinance Fund

Microcapital Story: “Global Partnerships Launches an $8.5 million Microfinance Fund

The MIX Market: Global Partnerships 

The Seattle Times: “Global Partnerships closes $20 million fund aimed at microcredit in Latin America

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