WHO'S WHO IN MICROFINANCE: The Legatum Group

The Legatum Group, founded in 2006 from the de-merger of Sovereign Global, is a collection of investment organizations based in Dubai, United Arab Emirates. The separate companies comprising Legatum include Legatum Capital, a global investment firm; Legatum Global Development, a socially-responsible investment firm that also provides grants and policy advocacy services to promote sustainable development; the Legatum Center for Development and Entrepreneurship at MIT; and the Legatum Institute, which is an independent policy advisory firm.

Legatum was founded by Christopher Chandler, who was the 488^th richest person in the world as of 2007, according to Forbes magazine. Chandler and his brother Richard began their successful investing careers by selling their parent’s department store in New Zealand and investing the USD 10m in the Hong Kong real estate market. Then, in 1986, they co-founded Sovereign Global which split into Legatum and Orient Global in 2006. According to Christopher Chandler, the split was amiable and will now allow each brother to pursue new investment strategies.

Legatum Capital, the main piece of the Legatum Group, is a long-term commercial investment firm working in global capital markets. From its Sovereign Global heritage, the organization has experience investing in oil, steel, refining, banking and other sectors around the world. Financial data for Legatum Capital was not available on the company’s website.

Legatum Global Development is a global investment and policy advisory firm whose “goal is to allocate capital to projects, people and ideas that lead to the long term prosperity of individuals, communities and countries.” The group provides venture capital to projects that will yield high “social returns” and will generate enough capital to become a self-sustaining business and allow Legatum to re-invest their money in other projects. The group also provides grants to “community-based humanitarian projects run by local social entrepreneurs focused on [their] priority sectors of Health, Education, Economic Empowerment, Human Liberty, Disaster Recovery and the Environment.”

Legatum Ventures, the venture capital arm of Legatum Global Development, has made a several investments in the microfinance sector. The group invested USD 20m in the Unitus Equity Fund II (UEF II), a private equity fund investing in commercial microfinance institutions (MFIs) around the world. While the financial data for the new fund was not yet available on MIX Market, its predecessor the UEF is listed. To learn more about UEF II, please read this previous MicroCapital story.

Legatum’s largest microfinance investment was USD 25m for a majority stake in SHARE Microfin Ltd (SHARE). According to the Legatum website, this is the largest single equity investment in the global microfinance industry. As of March 31, 2008, SHARE had totals assets of almost USD 164m and a debt to equity ratio of 440 percent. It also had a gross loan portfolio of USD 148m which included 989,641 active borrowers. A return on equity was not given for this date, by a year prior it was 15 percent. All financial data was taken from MIX Market, the Microfinance Information eXchange. To learn more about this investment, please read this previous MicroCapital story.

Legatum has also invested USD 8.4m in Intellecap, a financial advisory and strategy firm working exclusively in the microfinance sector. This money will be used to help Intellecap continue to improve their services and begin an expansion outside of India. Financial data for Intellecap is not available on MIX Market, the Microfinance Information eXchange. To learn more about the deal, please read this previous MicroCapital story.

Legatum Ventures also invests in companies that help improve the technological abilities of MFIs. These investments include a USD 4.5m share in FINO, which provides technological infrastructure for financial institutions, and a USD 2m for a 13 percent share of A.Little.World, a company that provides banking services through mobile phones and biometrics. According to MIX Market, Legatum Ventures has invested USD 59.9m in microfinance.

Mark Stoleson is the president of both Legatum Capital and Legatum Global Development. He received his BA in International Relations from Occidental College and a JD-LLM from Duke University Law School. Stoleson was President of Sovereign Global Development and Head of Group Investments at Sovereign Global Investment. Prior to joining Sovereign he worked as an attorney for Akin Gump Strauss Hauer & Feld LLP, in Moscow, Russia and Dallas, Texas.

By Greg Casey, Research Assistant

Additional Resources:

MIX Market: Profile for Unitus

MIX Market: Profile for Intellecap

MIX Market: Profile for SHARE

Mix Market: Profile for Legatum Ventures

MicroCapital Story, June 25, 2008: “Unitus Launches $56m Microfinance Fund; Key Stakeholders Include Legatum, Omidyar Network”

MiucroCapital story, October 10, 2007: “Legatum Invests $8.4m in Mumbai-based Microfinance Investment Consultant, Intellecap”

Microcapital Story, May 17, 2007: “SHARE Microfin Ltd. Receives Historically Largest Indian Microfinance Equity Investment from Legatum and Aavishkaar Goodwell”

MicroCapital story, May 31, 2007: “New Zealand-based Billionaire’s Legatum group buys $4.5 million Stake in Indian Microfinance Firm”

Legatum Global Development: Home

Legatum Global Development: Microfinance