Launched in 2012, the Microfinance Initiative for Asia – Debt Fund is a public-private partnership investing in responsible microfinance institutions that offer financial services to the poor in emerging Asian economies. While all investments are made on commercial terms, the Fund features an innovative capital structure: public funders assume a higher level of risk and thereby offer downside protection to commercial senior investors. In doing so, the public sector acts as catalyst to attract
It is thus on an unprecedented scale that funding is made available to microfinance players in the early stages of financially sustainable growth. Current investments and pipeline opportunities span institutions in more than fifteen markets in Central, South and East Asia that have demonstrated a clear commitment to socially and environmentally responsible finance principles, as well as to long-term sustainability.
In the course of 2013, the Fund successively drew the junior and mezzanine tranches to invest funds provided by the German Ministry for Economic Cooperation and Development, the European Union, and by IFC and KFW namely the Fund’s sponsors. BlueOrchard in its capacity as investment adviser of the Fund also invested in the mezzanine share class to ensure an optimal alignment of interests.
With the fourth closing of the Fund on 30 September 2014 both the senior and mezzanine tranches have been fully subscribed and the Fund has reached its target size. BlueOrchard is proud to have achieved another important milestone in the development of the Fund. “We are extremely pleased to have attracted discerning French and Swiss institutional investors in both the senior and mezzanine tranches,” states Peter A. Fanconi, Chief Executive Officer and Member of the Board of Directors
of BlueOrchard, adding that “investment opportunities of this kind are quite exceptional: in addition to its social impact, the senior share class of the MIFA Debt Fund provides a 4% annual coupon in USD and a credit enhancement provided by its public investors.”
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MIFA, a strategic partnership between IFC, a member of the World Bank Group, and KfW Development Bank, is the first microfinance initiative of its size to exclusively target financial inclusion in Asia. Its two main objectives are to create and enhance institutional capacity for sustainable microfinance delivery and to strengthen linkages with domestic and international capital markets.
BlueOrchard Finance S.A. was founded in 2001 as the first commercial manager of microfinance debt investments worldwide. To this day, the company has deployed in excess of USD 2.5bn in loans to microfinance institutions, providing access to microcredit to over 30 million individuals across 50 countries. Investors in BlueOrchard-managed funds include private and institutional investors, supranational institutions as well as renowned foundations. The company employs highly experienced staff with backgrounds in traditional and development finance.