MICROCAPITAL STORY: Dexia Micro-Credit Fund of Luxembourg Lends $1m to Microfinance Institution CCA, $1m to Microfinance Institution Credo, $5m to BancoSol Bank, $5m to Microfinance Institution FINDESA, $5m to MFBA Bank, $3m to ProCredit Holding, $5m to ProCredit Bank, $1.5m to Microfinance Institution LOKmicro, and $500k to Microfinance Institution AMK

The Microfinance Capital Markets Newsletter of the Consultative Group to Assist the Poor (CGAP) reported that Dexia Micro-Credit Fund, a Luxembourg-based fund, issued loans of USD 1 million to microfinance institution (MFI) CCA of Cameroon, USD 1 million to MFI Credo of Georgia, USD 5 million to Bolivian bank BancoSol, USD 5 million to MFI FINDESA of Nicaragua, USD 5 million to Azerbaijani bank MFBA, USD 3 million to ProCredit Holding, USD 5 million to ProCredit Bank, USD 1.5 million to MFI LOKmicro of Bosnia, and USD 500,000 to MFI AMK of Cambodia.

The Dexia Micro-Credit Fund is a commercial investment fund, begun in 1998, that refinances “microfinance institutions specialized in financial services to small companies in emerging markets.” As of March 2008, the fund had total assets of USD 298.5 million, of which USD 284.9 million was allocated to 163 active microfinance investments. It currently finances approximately 60 MFIs in 25 emerging economies worldwide. The fund is managed by BlueOrchard Finance, a Swiss microfinance investment advisor.

Crédit Communautaire d’Afrique (CCA) is a rural bank established in Cameroon in 1997, primarily serving rural microenterprises. As of December 31, 2006, it reported total assets of USD 23.2 million, with a gross loan portfolio of USD 13.2 million. Its return on assets was 0.60 percent, its debt/equity ratio was 1,273.97 percent, and active borrowers numbered 35,420. As for ratings, CCA does not report a third party performance evaluation of operations to the MIX Market, the microfinance information clearinghouse.

The VF Credo Foundation is a non-bank financial institution established in 1997 as World Vision International’s Georgian Entrepreneurs Fund. Focused on rural and agricultural lending, it came into its present incarnation in 2005. It has ten branches, located in Tbilisi and southern and western Georgia, and there are plans to open four more. As of year-end 2007, Credo reported assets of USD 14.8 million, with a gross loan portfolio of USD 14.0 million. Its return on assets was 2.78 percent and its debt/equity ratio was 651.86 percent. Active borrowers numbered 12,177. Credo’s latest rating, issued by Microfinanza Rating in June 2007, was a BBB, up from its previous rating of BB+.

BancoSol, or Banco Solidario S.A., is a commercial bank focused on microenterprises that was established in Bolivia in 1992. It has a presence in seven major cities, with 49 branches open. As of year-end 2007, the bank’s total assets amounted to USD 269.9 million, with a gross loan portfolio of US 208.9 million. Calculated from financial statements, return on assets was 2.84 percent and its debt/equity ratio was 927.88 percent. BancoSol had 121,207 active borrowers and was last rated A+ in December 2006 by Fitch Ratings.

FINDESA, formally Financiera Nicaraguense de Desarrollo S.A., began as a non-governmental organization (NGO) and became a non-bank financial institution serving microentrepreneurs in 2002. It is based in Managua, Nicaragua. FINDESA had total assets of USD 162.6 million, USD 125.4 million of which constituted its gross loan portfolio, as of year-end 2007. Return on assets could not be calculated from available data for 2007; however, the 2006 figure was 3.63 percent, and the 2007 debt/equity ratio was 994.50 percent. FINDESA also had 54,698 active borrowers. Fitch Ratings is responsible for evaluating the organization’s credit, but its latest rating is unclear.

Micro Finance Bank of Azerbaijan (MFBA) was established in 2002 to serve micro and small enterprises in Azerbaijan. As of December 31, 2007, it held total assets of USD 133.3 million, including a gross loan portfolio of USD 114.5 million. Its debt/equity ratio was 713.89 percent. Its 2006 return on assets was -0.93 percent (2007 figures were not available). The bank had 49,596 active borrowers, a sizeable increase from 16,675 in 2006. With respect to credit ratings, MFBA does not report a third party performance evaluation of operations to the MIX Market, the microfinance information clearinghouse.

ProCredit Holding is the German holding company for a group of banks based in 22 developing countries in the Americas, Africa, Eastern Europe, and the Caucusus. Founded in 1998, ProCredit Holding provides strategic and managerial guidance and commercial standards to each of the ProCredit Banks, which offer microfinance products to their customers. It is not clear to which of the banks the aforementioned Dexia loan was made. As of year-end 2007, the total value of all ProCredit institutions’ outstanding loans was EUR 2.8 billion (USD 4.2 billion). The number of outstanding loans was 929,984. Based on the latest available figures from 2006, return on assets was 1.16 percent and the debt/equity ratio was 814.85 percent.

LOKmicro is a Bosnian non-bank financial institution founded in 1997. With total assets of USD 73.3 million as of year-end 2007, its gross loan portfolio amounted to USD 66.0 million. Its return on assets was 6.33 percent and its debt/equity ratio was 788.92 percent. Active borrowers numbered 27,007. As of March 2007, its credit rating, from the Planet Rating agency, was an A-.

Angkor Mikroheranhvatho Kampuchea Co. Ltd. (AMK), established in 2003 and licensed by the Cambodian central bank in 2004, provides primarily rural microfinance services. Of USD 12.3 million in total assets as of December 31, 2007, USD 10.3 million was vested in its gross loan portfolio. Return on assets was 8.64 percent and the debt/equity ratio was 235.27 percent. AMK also had 120,111 active borrowers at year end. Per Micro-Credit Ratings International Limited (M-CRIL), AMK’s latest rating, from December 2006, was ? (alpha).

By Stephen Son

Additional Resources:

CGAP: “List of Recent Transactions”

MIX Market: Profile for Dexia Micro-Credit Fund; Profile for CCA; Profile for Credo; Profile for BancoSol; Profile for FINDESA; Profile for MFBA; Profile for LOKmicro; Profile for AMK