NEWS WIRE: Bangladesh: Microfinance Institution ASA Affiliate Raises $150m to Lend Outside Bangladesh

Source: The Daily Star (Bangladesh).

Original article available here.

DHAKA, May 27 – ASA International Holdings, a company managed and partially owned by ASA, one of Bangladesh’s largest NGOs, has raised USD 150 million (around Tk 1,000 crore) as equity from foreign private investors to fund commercial micro-credit lending outside Bangladesh.

“This will be fully commercial lending. Investors will get profits directly as in other business entities, but only after eight years,” Shafiqul Haque Choudhury, president of ASA told The Daily Star.

“We have set a target to bring some 50-60 lakh poor people in some 12 countries under the commercial micro financing net,” Choudhury said. “Our plan is to disburse Tk 8,000 crore to Tk 9,000 crore in 8 years.”

ASA is not the only Bangladeshi micro lender working abroad. However in most cases they are not lending on a commercial basis.

Choudhury said there are an estimated 1 billion potential micro-finance clients around the world, of them only 120 million are being served now.

Catalyst Micro-finance Investment Company (CMIC), a limited liability company incorporated under the laws of Mauritius, has been appointed as the fund manager of the new venture. ASA, K-REP GROUP and Sequoia own CMIC.

ASA will act as the management partner of the ASA International Holdings and own a 15 percent stake. Equity partners ABP, a Dutch pension fund, and TIAA-CREF, a US financial services organisation, own the rest. Bill Gates Foundation also poured USD 25 million into the venture.

Recently micro finance is experiencing an investment boom as more and more private investors get involved, according to a new report from Consultative Group to Assist the Poor (CGAP), a micro-finance industry body.

Between 2004 and 2007, foreign investment in micro-finance institutions that provide loans and savings for the poor in developing countries more than quadrupled to reach USD 5.7 billion. So far, the vast bulk of this private investment in micro-finance is socially motivated, says the report on Foreign Capital Investment in Micro-finance: Balancing Social and Financial Returns.

There are now 93 investment funds specialising in micro-finance. Of these, fifty-three were established since 2005, according to the report.

ASA International Holdings has already started operations in some countries like Cambodia, Ghana, India, Nigeria, Pakistan, the Philippines and Sri Lanka. The organisation is expected to begin operations in China and Indonesia this year.

Maximum ceiling of loan has been fixed at USD 250 in China and lowest USD 100 in Afghanistan. Interest rates will vary. The rate is 12.5 percent in India, 20 percent in Pakistan and most of other countries, but the highest rate will be 25 percent in the Philippines and Nigeria.

“In next 5 years ASA International Holdings will be listed on the London Stock Exchange,” Choudhury claimed.

Why the move is not taken in Bangladesh, the ASA president said: “Micro-finance for profit is not allowed in Bangladesh.” He asked the government to replicate the commercial idea of micro-finance in Bangladesh.

He said foreign private investors are keen to invest their money for profit-oriented micro financing.

JP Morgan, West Bank and Morgan Stanley have also sought business plans from us,” the ASA president said.

He hopes the poverty alleviation initiative may become sustainable with the commercial move of micro-credit.

“Local private sector investors will come up with their investment for the poor if the government allows it in the country,” he said.

Similar Posts: