Características de los virus

5.1

C

D

M

I

F

Microfinance as a part of the socially responsible investment sector has experienced growth in the number of investment possibilities in recent years. By the end of 2009, 122 microfinance investment intermediaries (MIIs)44_{, of which around 73 were active}

microfinance investment vehicles, could be identified, compared with 23 MIIs in 2000 (CGAP (ed.), 2010b, 7; CGAP (ed.), 2010c, 2). In 2011, seven new MIVs were founded, while nine closed their operations (Symbiotics (ed.), 2012b, 8). According to an annual survey conducted by MicroRate, a specialist microfinance industry service provider, a slowdown in MIV asset growth was observed in 2009 and in 2010 resulting in USD 7 billion in 2011 (see Figure 5.1) (CGAP (ed.), 2010c, 1; MicroRate (ed.), 2012, 5). The rea- son for this slowdown is partly due to increased competition in several major countries as discussed earlier (see Chapter 3.4). Nevertheless, according to a study conducted by CGAP, the top ten MIVs again showed a 7.2-percentage growth in 2011 (CGAP (ed.), 2012, 1), total microfinance assets grew by 15% in the same year and they are expected to grow by another 19% in 2012 (Symbiotics (ed.), 2012b, 7).

The structure and form of MIVs is constantly changing. For example, the proportion of equity investments is growing rapidly and the demand from MFIs for local currency is expanding (CGAP (ed.), 2010b, 15; Symbiotics (ed.), 2010, 2; Brugger, 2004, 4).

Most funds use Luxembourg or Lichtenstein45 _{as their preferred microfinance fund ju-}

risdiction. In Switzerland, the Swiss Financial Market Supervisory Authority (FINMA) has to date only approved the responsAbility Global Microfinance Fund to be sold publicly (Symbiotics (ed.), 2011, 28). Most funds not being approved by the regulator are not allowed to publicly advertise and are therefore limited to restricted groups of accredited investors (Lhabitant, 2006, 404).

44 _{MIIs combine MIVs, holding companies and other MIIs such as cooperative companies, NGOs or}

foundations (CGAP (ed.), 2010a, 37).

45 _{Reasons for the choice of Luxembourg / Lichtenstein are the policy to back microfinance and impact}

investments, fast registration process, comparably low fees etc. For more details refer to Symbiotics (ed.), 2011, 28.

58 5. Microfinance Investment Funds

Figure 5.1 Growth in Microfinance Investment Vehicles

Source: CGAP, 2010b, 7; MicroRate, 2012, 4.

In recent years, MIVs have found it difficult to place their funds as there have been few investment opportunities and a lack of regulated MFIs, and this has led to a growing liquidity position in their portfolios (MicroRate (ed.), 2010, 3; LUXFLAG (ed.), 2010b, 16). This excess liquidity on the balance sheets of many MIVs puts pressure on the fi- nancial returns of the funds. The global financial crisis, which led to a decline in de- mand for funding by MFIs in late 2009 and early 2010, could be one reason for this de- velopment. Another explanation for the increasing proportion of the MIV’s liquid as- sets is that they took a more conservative and defensive position. Recent surveys show that investment vehicles have improved the selection procedures for the placement of their funding (MicroRate (ed.), 2011, 4).

MFIs are commonly classified into four different “Tier-Groups” (see Figure 5.2). The institutions are grouped according to their financial and operational track record and their maturity. So-called Tier 1 MFIs are the best known and most mature MFIs with a strong financial and operational track record46_{. Taking account of all MFIs, approxi-}

mately 1% can be classified as being Tier 1 quality, and most of the profit-orientated funds aim to invest in these highest quality MFIs. This means that the number of MFIs that MIVs find feasible for investing is limited to a few hundred, and these are pursued by all MIVs. A recent study shows that in 2009 the top 7 MIVs were financing 574 MFIs, of which 85.35% could be classified as Tier 1 (Wiesner / Quien, 2010, 11). Experts cur-

46 _{A precise definition of the “Tiers” is not applied, CGAP uses a classification system that is only based}

on assets: Tier 1: Assets in excess of USD 50 million; Tier 2: Assets of between USD 3 million and USD 50 million; and Tier 3: Assets less than USD 3 million (Reille et al., 2009, 13).

0.5 0.5 0.8 1.1 1.8 1.7 1.7 2.3 0.7 1.5 3.1 3.8 4.2 4.7 5.3 6.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 2005 2006 2007 2008 2009 2010 2011 2012 (proj.) A ss et s ( U S D b ill io n s)

Total Assets MF Portfolio 40 58 80 90 23 25 29 34 40 61 35 35 31 32 0 20 40 60 80 100 120 140 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 N u m b er o f M IIs

5. Microfinance Investment Funds 59

rently express serious concerns about the future of the MIV market due to the limited investment universe (Urgeghe, 2012, 5).

Figure 5.2 Segmentation of Microfinance Institutions47

Source: based on Mehan, 2004, 7.

Because of the relatively large supply of investment funds available from MFIFs and the comparatively low number of profitable (Tier 1) MFIs, a certain bargaining power exists for selective MFIs. This may explain the current trend towards granting longer- term equity and local currency loans by MFIFs. When funded by equity investments or loans in local currency, MFIs are able to reduce their risks, especially by shifting the currency risk to the investor (Reille / Forster, 2011, 7). Some funds even seek local cur- rency investments for speculative reasons and for emerging market exposure (Reille / Forster, 2011, 7.)

According to responses collected by MicroRate in their yearly survey on MIVs in 2010, factors perceived to hinder growth were government regulation, negative publicity and lack of demand from investable MFIs. Meanwhile, a number of official agencies, do-

47 _{Percentages of all MFIs.}

Tier 1 ~ 1%

Tier 2 ~ 9%

Tier 3 and 4 ~ 90% Mature and best known

MFIs; strong financial & operational track record.

Successful but smaller, younger, or less well-known MFIs.

At or near profitability.

Tier 3: Approaching profitability. Understandable shortcomings due to young