MICROCAPITAL STORY: SEEDFINANCE Corporation of the Philippines receives $1m Microfinance Investment Loan from MicroVest I during May 2009

SEEDFINANCE Corporation, a microfinance lender headquartered in Manila, the Philippines, received a USD 1 million loan from MicroVest I (MVI) in May 2009. SEEDFINANCE provides wholesale financing to Filipino microfinance institutions (MFIs) and loans to small enterprises. MicroVest is an investment firm which raises funds to invest in MFIs in emerging markets. This is its first loan to SEEDFINANCE and in the Philippines. This deal was reported to the Consultative Group to Assist the Poor (CGAP) Microfinance Dealbook, a monthly report on microfinance capital market transactions.

SEEDFINANCE was registered as a company in April 2007 by the Securities and Exchange Commission of the Philippines. It continues the microfinance work of its two founding organizations CARE Philippines and Sustainable Economic Activity Development (SEAD) Incorporated. In 1994 CARE Philippines launched its first microfinance program in the Philippines, the Microenterprise Assistance Program (MAP). MAP provided wholesale microfinance, training and technical assistance to partner MFIs. In 2002 MAP was incorporated into a new organization, SEAD, and several members from CARE sat on its board. In January 2008, following the creation of SEEDFINANCE, CARE owned 60 percent and SEAD owned 15 percent; the two largest investors. As at the 31 December 2007 SEEDFINANCE had 310,000 clients and was working with 60 partner organizations across the Philippines. SEEDFINANCE does not report to the MIX Market, the microfinance information clearinghouse and no additional financial information was available.

CARE International is a humanitarian agency founded in the USA in 1945. CARE has offices in over 70 developing countries around the world. At the end of 2008 CARE USA had Total Assets of USD 739 million. SEAD currently works with 108 credit and savings partners across the Philippines, including Non Government Organizations (NGOs), cooperative banks and cooperatives. SEAD has not reported to the MIX Market, although it has a brief profile, and therefore no financial information is available.

The Microfinance Insights Magazine recently interviewed the SEEDFINANCE Corporate Planning and Marketing Head, Marlowe Baring, about how the global financial crisis was affecting its clients. Mr. Baring stated that microentrepreneurs are being directly affected by the crisis as prices of basic commodities have increased due to inflation. He said that it was not clear at this point whether loan defaults had increased, however towards the end of 2008 there had been an increase in demand for loans. He reported that SEEDFINANCE had recently been offered increased credit lines by its funding partners and is continuing with its expansion plans made during 2008, despite the global crisis.

MicroVest was founded by three non-profit organizations CARE, MEDA and Seed Capital Development Fund. In 2004 its first fund, MicroVest I, was launched. MVI makes debt and equity investments in existing MFIs around the world. From inception to February 2009 MVI had placed more than USD 80 million in debt and equity investments with 37 MFIs in 16 countries. Fund Assets totaled USD 37.5 million as at 31 December 2008 and 84 percent of Fund Assets were allocated to microfinance investments (USD 35.4 million).

By Sally Levy, Research Assistant

Additional Resources:

SEEDFINANCE Corporation: Home

MicroVest: Home

CGAP Microfinance Dealbook: Link

MIX Market: MicroVest I

Microfinance Insights: Vol. 11, Mar/Apr 2009, Global Viewpoints: Perspectives from Mexico, the Philippines, Nigeria and More