MICROCAPITAL STORY: Micro Finance Bank of Azerbaijan Receives First Private Investor Loan in Manat Currency (AZN)

The Micro Finance Bank of Azerbaijan (MFBA), a central Asian and eastern European microfinance institution (MFI) in Azerbaijan, received a loan of AZN 4.2 million (USD 4.95 million) from the SNS Institutional Microfinance Fund, a Dutch investment fund. It is the first loan from an international private-sector financial institution denominated in Azerbaijan’s local currency, the Manat. The loan will be used to lend to small businesses in Azerbaijan.

As reported in a previous MicroCapital story on MFBA, according to the Microfinance Information eXchange (MIX), MFBA was founded in 2002 by six shareholders: the European Bank of Reconstruction and Development (EBRD), the International Finance Corporation (IFC), the Black Sea Trade and Development Bank (BSTDB), KfW Development Bank, LFS Financial Systems GmbH, and AccessHolding. It is the leading provider of financial services to micro and small enterprises in Azerbaijan, controlling approximately 30 percent of Azerbaijan’s microfinance market. According to its 2006 annual report, it has a debt to equity ratio of 710.4 percent, and return on assets of negative .93 percent. In 2007, MFBA reported a 100 percent increase in total assets to USD 120 million as of October 1, 2007. Since its inception, the bank has served over 40,000 clients and dispersed over 80,000 loans worth USD 225 million.

The SNS Institutional Microfinance Fund was created in January 2007 to invest in microfinance institutions (MFIs) in Latin America, Southeast Asia, Eastern Europe, and Africa. According to MIX, the Fund has total assets of USD 220 million with 26 active MFI investments worth USD 55 million. The Fund is managed by SNS Asset Management, which is a member of SNS REAAL, the fifth largest financial group in the Netherlands. SNS Asset Management, a pioneer in sustainable asset management for Dutch institutional investors, has total assets of EUR 16.4 billion (USD 24 billion). For more information of the launching of SNS Institutional Microfinance Fund, please see MicroCapital’s February 2007 article.

By Mary Fu

Additional Resources:

Trend Capital: “International Private Fund Provides First Credit in AZN”

SNS Asset Management: “SNS Institutional Microfinance Fund”

Bloomberg: Currency Converter

MIX Market: SNS Institutional Microfinance Fund Profile

SNS Asset Management: Home

MicroCapital article, 2/16/2007: “SNS Asset Management launches a micro-credit fund: SNS Institutional Microfinance Fund in partnership with Developing World Markets and Triple Jump”

MicroCapital article, 9/4/2007: “Micro Finance Bank of Azerbaijan (MFBA) Issues Bonds Worth USD 11.4m Through Developing World Market’s (DWM) Management to Finance Microfinance Operations”

MIX Market: Micro Finance Bank of Azerbaijan (MFBA) Profile

Azerbaijan Business Center: “Aberbaijan’s Micro Finance Bank assets reached $120 million”

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