by vuthy chea, blueorchard cambodia office vuthy chea, blueorchard cambodia office 15 – 17 may...

By Vuthy Chea, BlueOrchard Cambodia Office 15 – 17 May 2017, Bangkok

SWITCH-Asia Workshop Case study: Microfinance Initiative for Asia (MIFA) Debt Fund SA, SICAV-SIF

Tableofcontents

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Renewable Energy Component & Technical Assistance

Fund Objectives and Structure

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Fund Portfolio Update

Examples of MIFA’s Investees

5 Conclusion

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5 Conclusion

TheMIFADebtFund:objec<ves

§  Providefinancing(seniorandsubordinatedloans)mainlyinlocalcurrencyoncommercialtermstoMicrofinanceIns:tu:ons(MFIs),especiallyTier2andTier3MFIs,inemergingAsianandCentralAsianmarkets.

§  Strengthenfinancialintermediaries,encouragethemtolendtomicroandsmallenterprisesandlowincomehouseholds.

§  Fosterresponsiblefinanceprinciplesintheregionandfurtherdeveloplocalfinancialmarkets.

more than 15 countries

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Advantagesofthepartnershipconcept

USD 175m size §  Public-privatepartnershipasameansto

promotefinancialinclusion

§  PublicinvestorsarecatalystsinaErac:ngnewinvestors:crowding-inofprivatesectorgeneratesabroaderimpactandensureslong-termsustainability

§  Privateinvestorsbenefitfromthesubordina:onofpublicinvestorsinthefundstructureandearnaJrac<verisk-adjustedreturns

§  Technicalassistanceprovidedbypublicdonors

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Fundstructure:3TrancheswithDifferentRiskProfile:ContributedCapitalasof31March2017:USD172Million

Investors meeting Luxemburg SICAV-SIF requirements

Senior Tranche USD 72,126,112

Mezzanine Tranche USD 53,848,499

Junior Tranche USD 45,846,114

Fully private sector funded

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USD 13 Mil private investor

USD 40.8 Mil DFIs & Investment Manager

USD 36.4 Mil BMZ USD 9.3 Mil EU

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5 Conclusion

MIFAPorQolioUpdateasof31March2017

§  TheoutstandingporMolioasof31March2017wasUSD153Milin42MFIsand15countries.

§  USD240Mildisbursedfromincep:on(11Dec.2012)to54MFIs.§  TheFundhasanoutreachto15countries.

§  AnaverageamountdisbursedperMFIofUSD4.4Million.

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5 Conclusion

RenewableEnergy/EnergyEfficiencyComponent

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•  TheFund sponsorshaveundertaken toassign specificaddi:onal funding tofinancingMFIsthatarealreadyac:veinlendingtorenewableenergy/energyefficiency(RE/EE)projectsbornebymicro-borrowers.

•  TheRE/EEcomponent includes:BMZ investment in theC tranche,andBMZtechnicalassistancefunding.

•  A long-term technical expert –Econoler from Canada- accompanying thedevelopmentoftheRE/EEporMoliowasselectedinNovember2016.

•  Thelong-termexpertassistsBlueOrchardovera3yearperiodintherevisionof the MIFA Investment Guidelines, the defini:on of the specific eligibilitycriteriaforRE/EEinvestees,andrepor:ng/monitoringtemplatesforMFIs.

MIFATechnicalAssistanceFacility(TAF)

§  SinceAugust2014,theTAFapproved16TAprojects–EUR1.7m:

–  4TAprojectsfinalised:§  Humo,Tajikistan;OXUS,Tajikistan;FirstFinance,Cambodia;andTYM,Vietnam

–  8TAprojectscurrentlyongoing:§  Over-indebtednessStudy,Cambodia;SalymFinance,Kyrgyzstan;BinaArtha,Indonesia;

Arohan,India;Saija,India;LOLC,Myanmar;TrainingCourseProgram(variousMFIs);andBRACLanka,SriLanka

–  3TAprojectstobestarted:§  Alliance,Myanmar;SocialPerformanceManagement(SPM)support(variousMFIs)and

Opera:onalEfficiency(OE)Framework(variousMFIs)

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§  Averagecostsharecontributedbytheinvesteeisbetween10and25%

§  Mainareasaddressed:Strategicandbusinessplanning,Qualityofcreditprocess,Productdevelopment,RiskManagement.

Tier1,8%

Tier2,17%

Tier3,75%

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5 Conclusion

KhanBank-Mongolia

§  AclientofMIFAsinceAugust2015.§  KhanBankisthelargestbankwiththewidestoutreachinMongolia.TheBank

maintainsthenumberoneposi:onforbothloansanddeposits.Withover500branches,KhanBankisakeyagentoffinancialinclusioninMongolia,par:cularlyinruralareas.

§  KhanBank’stargetclientsaremainlyretailandSME.§  ThroughKhanBankMIFAisenabledtoreach70%oftheMongolianpopula:on.

50%oftheBank’sclientarerural.§  Eventhoughinpercentageterms,thetotalmicrofinanceporMolioisasmallpartof

KhanBank’sbusiness(giventhelargesizeofthebank),intermsofabsolutevaluesKhanBankhasthelargestmicroandSMEporMolioinMongolia(asofDec-2016,USD200mmaremicroloansloansbelowUSD10k).

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MicrocredChina–HongKong(China)

§  AclientofMIFAsinceDecember2016.§  MicrocredChinaviaitstwoaffiliatesinSichuanprovinces,mainlandChinahas

servedmorethan27,000clientswhoaremainlymicro,smallandmediumentrepreneurs.Around50%oftheloanporMolioisbelowUSD10,000.TheaverageloansizeisaroundUSD4,500.

§  ThefundreceivedfromMIFAwouldallowtheins:tu:ontoexpanditscoverage

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AyeFinance–India

§  AyeFinanceisexpectedtobeinMIFA’sporMolioinMay2017.§  WhilemostofMIFAporMolioinIndiaisfocusingontradi:onalgrouplending

microfinance,AyeFinanceoffersworkingcapitalloanstoSMEswhicharepartofvariousindustryclusters.Currently40+clustershavebeeniden:fied,suchasshoemaking,garment-makingandKinara(corner/groceryshop).TargetclientsarethoseSMEswhoonaverageemploytenpeople,and/orwithannualturnoverbetweenUSD15ktoUSD60k.

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5 Conclusion

Conclusion

§  TypicalMIFA’sinvesteesareTier2andTier3MFIswithtotalassetsbelowUSD30mm.Inaddi:ontotradi:onalmicrofinanceborrowerswithsmallerloansize,mostoftheMIFA’sinvesteesalsotargetsmallentrepreneuraswellasSMEs.

§  WiththeREcomponent,theFundisalsoabletoprovidesupporttotheMFIswhoareofferinggreenfinancing.

§  ViatheTAfunding,MIFAhascontributedsignificantlytothestrengtheningandcapacitybuildingofselectedTier2andTier3MFIs.

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by vuthy chea, blueorchard cambodia office vuthy chea, blueorchard cambodia office 15 – 17 may...

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