Source: European Fund for Southeast Europe (EFSE).
Original press release available here.
FRANKFURT and VIENNA, June 25 – Oesterreichische Entwicklungsbank AG (OeEB), the official Development Bank of the Republic of Austria, and the European Fund for Southeast Europe (EFSE), one of the largest microfinance investment funds worldwide, announced today that OeEB committed EUR 33 million (USD 51 million) to EFSE. OeEB commits the funds to A-Shares (senior capital), B-Shares (mezzanine capital) and C-Shares (first-loss tranche). The Bank is the first shareholder to invest in all three risk tranches offered by the Fund.
Explaining the reason for this investment, Andrea Hagmann and Michael Wancata, Members of OeEB’s Board of Executive Directors, said: “Pushing the committed funding base of EFSE beyond EUR 600 million (USD 930 million), OeEB’s investment increases EFSE’s available funds for refinancing qualified partner lending institutions and enables the Fund to refinance additional 16,000 loans to micro and small enterprises (MSEs) and low-income households in Southeast Europe over the next five years.”
Ms. Wisniwski, Chief Operating Officer of EFSE, elaborated that “at the Fund’s inception in 2005, EFSE was targeting capitalization of EUR 500 million (USD 780 million) by 2010, but this was already achieved end of 2007. Now we expect to reach a capitalization level of more than EUR 630 million (USD 980 million) by the end of year 2008 meaning that the Fund is well-endowed with funding to support its envisaged growth in investments during the coming years.” This is particularly noteworthy in view of the current liquidity crunch in international capital markets. In the presence of liquidity shortages and high demand for refinancing facilities for microfinance operations, the Fund is proving to be a reliable funding source. This, by ensuring continuous access to investments for its partner lending institutions, and hence, financial services to its ultimate target group of MSEs and low-income private households.
Since inception, EFSE has refinanced 97,000 loans to MSEs and low-income households. As of the end of March 2008, EFSE held an outstanding investment portfolio worth EUR 414 million (USD 640 million). These investments targeted 52 financial institutions in Southeast Europe.
In addition to the EUR 33 million investment, OeEB is making a EUR 200,000 (USD 310,000) donation to the EFSE Development Facility, a trust fund complementing EFSE’s financial investments with technical assistance, consulting and training. OeEB is also leveraging the existing EFSE C-Shares of the Austrian Development Cooperation (EZA).
In March 2008 Austria launched its development bank, Oesterreichische Entwicklungsbank AG (OeEB). It is a 100% subsidiary of Oesterreichische Kontrollbank AG (OeKB), the Austrian export credit agency, and has an official mandate from the Government of Austria to act as official development bank. OeEB, the Development Bank of Austria is specialized in the implementation of private sector projects which need long-term finance and which create sustainable development.
OeEB provides tailor-made financing solutions for a diverse set of long-term investments that would otherwise find it difficult to raise funding or borrow money in international capital markets. The bank is mandated to assume higher risks on individual transactions (loan volume, tenors, high-risk countries), compared to commercial banks, closing the gap between services of the Austrian Development Cooperation and financing solutions offered by commercial banks. Moreover, OeEB supports financial institutions, including microfinance institutions with the provision of refinancing lines linked to private sector development.
Additionally OeEB provides Technical Assistance, so-called Assistant Services which can be used to enhance the developmental impact of projects.
EFSE is one of the largest microfinance investment funds worldwide. Aimed at fostering economic development and prosperity in Southeast Europe, the Fund offers long-term funding instruments to local financial institutions in the region for on-lending to micro and small enterprises as well as to low-income private households for housing purposes. Complementing the Fund’s financial assistance, the EFSE Development Facility organises and co-finances technical assistance and training for capacity building of partner lending institutions. The Fund is a public-private partnership. Its capital base is jointly constituted by donors, development finance institutions and private institutional investors. KfW is the Initiator and Promoter of the Fund. The Fund Manager is Oppenheim Asset Management Services. Frankfurt School of Finance & Management acts as advisor and supports the fund management. The Fund operates in Bosnia and Herzegovina, Romania, Serbia, Kosovo, Montenegro, Moldova, FYR Macedonia, Albania and Bulgaria, and is expected to start operations in Ukraine shortly.
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