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Archive for the ‘ Financial Agents ’ Category

Blue Orchard is the main commercial investor in the microfinance sector. Created in 2001 and headquartered in Geneva, Blue Orchard supported in the year 2008 more than 140 institutions in 40 countries .

Blue Orchard’s mission is to empower the poor world-wide and improve their quality of life by promoting income-generating activities through private investments in microfinance.

Practically, Blue Orchard creates a bridge between the international financial markets and the microfinance institutions (MFI) by investing in them through debt or capital.

Using innovative placement solutions and innovative financial tools, Blue Orchard favours the flow between the private capital markets and microfinance institutions. This enables Blue Orchard to generate an attractive return on investment while supporting the growth of millions of microenterprises. 53% of Blue Orchard’s clients are women and receive microloans oscillating between $50 and $8000.

Blue Orchard considers its investments in the MFIs as long-term partnerships and wants to be present at all their development stages. During our visit at CRECER, we observed that microfinance institutions strongly appreciate this approach as their capital needs vary along their evolution.

In order to be able to inject more capital within the microfinance sector, Blue Orchard launched its own private equity fund in 2007. On December 31st 2008, this fund managed $130m originating at 80% from institutional investors and at 20% from private investors. The fund’s results have been excellent up to now. This trend should maintain and enable Blue Orchard to remaining the reference institution supporting MFIs financially.

For more info, visit www.blueorchard.com

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One of the main challenges of the microfinance institution CRECER is to have enough capital to answer the growing demand for micro-loans while preserving its solidity. To face this challenge, CRECER needs the support of external investors such as Alterfin that provides it with financial backup. The impact of such external investors is huge as each capital contribution of $500,000 allows CRECER to provide credit to 1,200 additional people.

Alterfin is a Belgian Social Investment Fund based in Brussels. Its aim is to reinforce the North-South cooperation by investing in microfinance institutions and fair trade producers in the developing countries. With its investments, Alterfin wants to contribute to the construction of a financial network that is accessible for the most destitute.

Alterfin does not provide grants but invests. Through this market based financing strategy, Alterfin is able to raise more capital while reducing the dependency that charity involves.

Alterfin raises funds in the Western countries by emitting stocks for private investors. The stock capital constitutes the financial base that Alterfin uses for its investments. At the end of 2008, Altefin’s stock capital was worth €8.8m and had been brought by more than 1,200 shareholders.

In addition to its own capital, Alterfin manages a portfolio of €18m that belongs to the Swiss investment fund responsAbility. Alterfin also collaborates with the sustainable Bank Triodos which makes credit lines available for Alterfin thanks to the savings generated by its accounts.

Altefin mostly invests through credit (94%) with the rest of the capital being invested in participations or warranties. The size of the credits varies between $30.000 and $600.000 for a maximum period of 5 years and at an annual interest rate that fluctuates between 6 and 10%. The projects that Alterfin finances must have a positive social and economical impact on the local communities while being financially sustainable.

After more than 15 years of experience, Alterfin manages today a total portfolio of more than €25m supporting more than 60 initiatives that have an impact on more than 50.000 families. In 2008, Alterfin has met a 17% growth in capital.

For further information, visit www.alterfin.be

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In 2002, Coronilla received $400 000 from the SEAF investment fund. This contribution, in debt and capital has enabled Coronilla to convert itself into a stock corporation and to develop its exports. In 2004, Coronilla has bought back its shares to SEAF.

Small Enterprise Assistance Fund (SEAF) is an investment fund based in Washington DC. It focuses on small and medium enterprises with high growth potential in developing countries by providing them with capital, technical and operational support.

SEAF positions itself as a sustainable and professional institution caring for the return of its shareholders. In addition to the financial return, SEAF wants to contribute to the economic and social development of developing countries. It uses its capital, its know-how and its global network to accelerate the growth and the sustainability of its investees with the central objective of allowing them to generate profit that beneficiates to local communities.

SEAF is structured in local teams that are present in markets that generally seem unattractive to traditional investors (they have recently opened a local office in Afghanistan). In addition to providing capital, SEAF offers technical and operational support to its companies helping them professionalising and improving their organisational structure. In the case of Coronilla, SEAF assisted Martha Wille in converting the family business into a stock corporation. Moreover, working with local teams and paying attention to the national culture is an essential element of the SEAF fund.

SEAF has invested more than $260m in more than 30 countries mainly in Asia, Europe and Latin America. Up to now, the fund has made more than 150 investments generating an average added value 1.7 times higher than the amount initially invested.

SEAF considers that investing in SMEs is a promising tool to dynamise growth in developing countries and to fight poverty. It focuses on companies having a positive impact socially and environmentally and exclude investments linked to tobacco, alcohol, weapons and other activities generating speculation or having a negative impact on society.

SEAF mostly invests using capital and debt. It pays a strong attention to the liquidity of its investments developing exit rights rigorously defined . It also favours a flexible approach to answer adequately the specifics of each enterprise.

The impact of SEAF is considerable on the financial and social aspects. It has been proved that each dollar invested by SEAF generates on average 12 dollars in the local economy. Its investments positively influence many stakeholders including employees, suppliers, consumers and the society as a whole.

The average financial return of SEAF’s investments is 21%. It is worth mentioning that the global return (Economic Rate of Return) rises to 66% if we include the social factors and the global impact on society.

SEAF is financed mainly through institutional investors (World Bank, European Bank for Development, Belgian Investment office, etc) willing to invest on a sustainable way.

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E+Co supported Sobre La Roca in 2005 with a loan of $20,000. This financial support has triggered Sobre La Roca’s recent impressive development during which the company saw its sales increase by 300%.

Created 15 years ago, E+Co is an American venture fund that exclusively supports entrepreneurs active in the clean energy business in developing countries. E+Co is convinced that there is a demand for clean and affordable energy in developing countries and that this demand can be satisfied by local entrepreneurs. Furthermore, this fund is a great example that an efficient financing in clean energy can have a significant impact on the environmental situation of our planet.

Today, E+Co invests in more than 200 companies. For a total of $28.8m, 88% of its investments are debt whereas the remaining 12% are in equity. E+Co’s investments vary between $20,000 and $1,000,000.

The majority of these investments is in Africa and in South America. On the technological side, solar energy constitutes the main field of investment focusing with 32% of the portfolio.

E+Co has a very clear investment strategy guided by the following principles:

The business idea of the activities in which they invest:

1) Must be well defined and involve capable people

2) Should employ approaches to energy production, use or finance using established affordable, reliable technologies that move communities up the energy ladder

3) Must offer clear social and environmental benefits, while being competitive with conventional alternatives

4) Must have the potential to be economically self-sufficient and offer growth potential


For E+Co, capturing the impact of the investments is critical to demonstrating the effectiveness of its approach. To calculate the return on investment, E+Co measures its clean energy businesses across 34 social, environmental and financial indicators. E+Co collects data from each investee company biannually and then compiles the results into an organizational summary called an Impacts Table.

Since its creation, E+Co has enabled 4.8m people to use clean energies. E+Co’s investments have also made possible the reforestation of 335,000 trees as well as a reduction of 4.6m in CO2 emissions. Everything put together, all E+Co’s actions saved $11.2m.

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Following the interview of Michael Chu, here is a more detailed description of IGNIA Fund, the social venture fund that he co-founded and manages.

Founded in June 2007 and headquartered in Monterrey, Mexico, IGNIA Fund is a social venture capital fund that supports social enterprises with high growth potential. IGNIA builds bridges between financial markets and the « Base of the Pyramid » by providing capital to enterprises of this sector. Traditional investors are usually reluctant to invest in this sector as the incubation period is longer than for regular companies. As a consequence, social enterprises face major underserved financing needs. IGNIA’s founders believe that the market constituting the « Base of the Pyramid », has a huge potential. In Latin America, it is composed of more than 360m people whose purchasing power is valued to $520 billion.

In May, IGNIA completed his third closing bringing its equity commitment to $40,7m. The round was led with $5m from Soros Economic Development Fund, created by philantropists investor George Soros. According to Michael Chu, IGNIA’s fund raising have not been affected by the current economic slowdown. Moreover, it made it possible for IGNIA to come closer to its objective of $50m - $75m in equity. If we also consider the credit line of $25m provided by the InterAmerican Development Bank, IGNIA will have a total of $75m - $100m that can be invested in initiatives dealing with the most urgent problems of our planet. The invested amounts will vary between $2m and $10m for a period that lasts 12 to 15 years. In IGNIA’s founders’ opinion, this is the necessary period for having a major social impact.

IGNIA does not only focus on a specific industry and is willing to have a highly diversified portfolio. On the geographical level, its ambition is to go beyond Mexico and to participate to the development of the « Base of the Pyramid » in South America as a whole.

In addition to a major social return, IGNIA also wants to offer above average return to its investors (e.g. IRR 30%). If the two founders, Michael Chu and Alvaro Rodriguez, are convinced that social enterprises represent the future of our society, they also believe that a sustainable change can only be obtained through the development of entire industries (requiring the emergence of numerous companies). As the development of industries implies superior financial return, maximizing financial value is, together with having a social impact, one of the two pillars of IGNIA’s investor proposition.

IGNIA’s first investment is an equity investment of $3m in Primedic‘s capital, a Mexican firm based in Monterrey. Primedic provides healthcare to the most destitute people through an innovative membership program. The capital provided by IGNIA will allow Primedic to extend its services to other cities of Mexico. Up to now, the performance of this investment exceeded IGNIA’s expectations.

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Oikocredit is a Netherlands-based financial institution which specializes in ethical investments and whose aim is to finance development projects in the South. The name Oikocredit is a perfect representation of the organization’s philosophy: the word “Oiko” is derived from the ancient Greek oikos (meaning “house”, “community”, “world”), and “credit” refers to the Latin credere, “to believe”.

Working on a cooperative model, Oikocredit offers sustainable financial services to microfinance institutions, social enterprises and SMEs (small and medium-sized enterprises) with the main objective of obtaining financing which is favorable to development. The criteria for attributing capital are based on the feasibility and viability of business projects, but also take into account gender equality and social and environmental impact.

With over 30 years of experience, Oikocredit has succeeded in developing a solid structure, and is currently present in 69 countries. The institution has survived the present financial crisis particularly well, returning positive results in 2008: in that year its investments grew by 32%.

Through financial services such as loans, share placements and credit lines, Oikocredit and its partners have helped 15 million people throughout the world to improve their living standards in 2008.

For further information, visit www.oikocredit.org

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The aim of Fair Street is to present the face of ethical and responsible finance. Along the way, you will not only discover the financial players involved in the Fair Street Project, but also other models which fascinate us. They all share the same objective: to combine social performance and economic performance. Their diversity will give you an idea of the numerous existing possibilities and opportunities available…