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Monthly Archives: August 2010

Top 100 Microfinance Institutions in the World

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For the third year running, MIX has released it’s Composite Ranking of the performance of microfinance institutions and Grameen Financial Services Pvt Ltd is the highest ranked Indian MFI at No 4 . Next comes SKS Microfinance at No 7, followed by Spandana at No 8. BASIX is ranked at No 11, SHARE at No 12  and Bandhan Microfinance at No 13.

top 100 microfinance companies mix

What is the MIX Global 100 Composite Ranking ?

The MIX Global 100 attempts to provide a composite picture of MFI performance using a series of attributes: outreach, efficiency, and transparency. It views MFI performance, something that is inherently local and influenced by the conditions of the market in which the MFI must operate, through the lens of universal goals—a financially sound institution and expanding outreach to clients at the lowest possible cost—and all done in the public arena so that others may learn from the experience.

Managers must strike a balance in achieving progress toward these goals, and the ranking methodology captures important trade-offs: strong growth without compromising credit risk, improving efficiency without compromising portfolio quality, and expanding access while still offering an array of services. While it does not purport to be the definitive microfinance ranking, this ranking does intend to offer a starting point for analysis of institutions operating in the sector.

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While readers may use the MIX Global 100 for many analytical purposes, several are explicitly not intended. The Composite Ranking is not intended to be a buy list of MFIs. The institutions have not been screened for their openness to foreign investment nor for the legality or practicality of cross-border investment in securities which they might issue.

The composite is also not intended to be a rating of the MFIs presented. The simplistic quantitative methodology used to construct the rankings does not replicate the scope and depth necessary to provide anything like a rating, and far less, a recommendation.

Download the 2009 MIX Global Composite Ranking of Microfinance Institutions at the link below
2009 MIX Global 100 Composite – PDF – 15 Pages – 650 KB

List of Top 100 Microfinance Institutions in the world

2009 Rank OverallPercentile Microfinance Institution Country 2008Rank
1 85.1% MBK Ventura Indonesia 1
2 84.8% SDBL Sri Lanka 4
3 83.6% Shakti Bangladesh 106
4 82.2% GFSPL India 180
5 81.5% CARD Bank Philippines 12
6 81.4% BURO Bangladesh Bangladesh 28
7 81.2% SKS India 3
8 80.9% Spandana India 23
9 80.8% Grameen Bank Bangladesh 2
10 80.3% Lead Foundation Egypt n/a
11 80.3% BASIX India 32
12 80.3% SHARE India 26
13 80.3% Bandhan India 5
14 79.9% Life Bank Philippines 25
15 79.8% VFS India 219
16 79.8% AMK Cambodia n/a
17 79.7% Ameen Lebanon 87
18 79.6% AML India 127
19 79.6% ASA Philippines Philippines 48
20 79.4% GV India n/a
21 79.4% Enda Tunisia 20
22 79.3% Caja Popular Mexicana Mexico 143
23 79.2% SWAWS India 269
24 78.9% Al Amana Morocco 8
25 78.7% ASBA Egypt 467
26 78.3% D-Miro Ecuador 99
27 78.0% Al Tadamun Egypt 30
28 78.0% GU India 196
29 77.9% JVS Nepal n/a
30 77.7% CEP Vietnam 89
31 77.7% BISWA India 90
32 77.7% COAC Jardín Azuayo Ecuador 33
33 77.6% Cashpor MC India 7
34 77.6% BRAC Bangladesh 9
35 77.6% FINCA – ARM Armenia 18
36 77.1% Credi Fé Ecuador 17
37 77.1% SEAP Nigeria 35
38 77.1% ProCredit – SLV El Salvador 51
39 77.0% SKDRDP India 59
40 76.9% Fundación Espoir Ecuador 86
41 76.8% CrediComún Mexico 380
42 76.6% CrediAmigo Brazil 68
43 76.6% FONDESOL Guatemala 516
44 76.6% FIE FFP Bolivia 60
45 76.5% Saadhana India 109
46 76.4% Maata-N-Tudu Ghana 244
47 76.4% DBACD Egypt 46
48 76.3% AMRET Cambodia 37
49 76.2% PRIZMA Bosnia and Herzegovina 70
50 76.2% ProCredit Bank – MKD Macedonia 42
51 76.1% VFC – KHM Cambodia 65
52 76.1% CARD NGO Philippines 16
53 76.1% CompartamosBanco Mexico 53
54 76.0% TPC Cambodia 67
55 76.0% ASA Bangladesh 71
56 75.9% ABA Egypt 168
57 75.8% Sarvodaya Nano Finance India 15
58 75.7% EcoFuturo FFP Bolivia 208
59 75.7% AgroInvest Serbia 204
60 75.6% Tamweelcom Jordan 10
61 75.6% Valiant RB Philippines 217
62 75.6% Khan Bank Mongolia 38
63 75.6% OIBM Malawi 93
64 75.5% ProCredit – BOL Bolivia 69
65 75.5% MIKROFIN Ecuador 58
66 75.5% PRODEM FFP Bolivia 309
67 75.4% Azercredit Azerbaijan 94
68 75.1% BCSC Colombia n/a
69 75.0% Pro Mujer – PER Peru 80
70 75.0% ADOPEM Dominican Republic 155
71 74.9% ACSI Ethiopia 61
72 74.8% ProCredit Bank Serbia Serbia 44
73 74.8% FODEMI Ecuador 52
74 74.8% CEOSS Egypt 270
75 74.7% EKI Bosnia and Herzegovina 50
76 74.6% ProCredit Bank – BIH Bosnia and Herzegovina 11
77 74.6% INECO Armenia 36
78 74.5% SMSS India 407
79 74.5% AREGAK UCO Armenia 525
80 74.5% ProCredit Bank – KOS Kosovo 63
81 74.5% FBPMC Morocco 39
82 74.4% CSD Nepal 77
83 74.4% Banco Solidario Ecuador 135
84 74.4% BSS India 40
85 74.4% FINCA – ECU Ecuador 81
86 74.3% ESAF India 19
87 74.3% Partner Bosnia and Herzegovina 192
88 74.3% Alwatani Jordan 176
89 74.3% NEED India 293
90 74.2% ProCredit Bank – BGR Bulgaria 41
91 74.2% Banco ADEMI Dominican Republic 300
92 74.2% MiBanco Peru 108
93 74.2% NWTF Philippines 27
94 74.2% ProCredit Bank – ROM Romania 24
95 74.1% ACLEDA Cambodia 64
96 74.1% COAC Kullki Wasi Ecuador 369
97 74.1% ASC Union Albania 22
98 74.0% TYM Vietnam 113
99 74.0% XacBank Mongolia 62
100 73.9% FONDEP Morocco 54

Money For Good: $120 Billion Impact Investing Market Opportunity

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By Hope Neighbor

HopeOn Friday, I talked about principles to guide efforts to improve the quality of charitable giving. Today, I’ll talk about another opportunity to achieve social impact – by addressing the $120 billion market opportunity for impact investments for individuals. Today, these dollars are “hiding in plain sight,” in individuals’ investment accounts.

In addition to charitable giving, the Money for Good research analyzed Americans’ demand for impact investments, and what was required to meet that demand. In other words, what do American investors need to make more impact investments? To get at the answer to this question, we surveyed 4,000 Americans with household incomes of $80,000 and above. Here’s what we found:

To start, there’s a strong, untapped appetite for impact investments. Almost 90 percent of the individuals surveyed expressed openness to impact investing. We calculated a market opportunity of $120 billion for these investments, with half of that opportunity in investments of under $25,000. What’s more, even the very affluent are interested in smaller investments: over half those with household income of over $1 million a year still want to make impact investments of $10,000 or less. Long story short – there is a very large market for small impact investments that is largely unmet in the market today.

In addition, we found that Americans won’t cannibalize their charitable giving in order to make impact investments. When asked where they would draw the funds to purchase impact investments from, only 10% said that they would pull the money from their charitable giving.

Finally, we found that individuals were more receptive to impact investments if they are positioned as investments, not alternatives to charity. Americans are 1.8 times more likely to make an impact investment if they’re placed in an investment mindset rather than a charitable one.

The Money for Good research yielded several findings that point to how to best open up the retail impact investing opportunity. First, Americans want to receive information from and transact through their standard financial services provider; financial advisors were by far the top place investors would turn to learn about impact investment opportunities.

Second, Americans break out into six specific investor segments. The segments include Safety First, Socially Focused, Quality Organization, Hassle Free, Personally Recommended, and Skeptics. The first three – Safety First, Socially Focused, and Quality Organization – represent over 80% of the impact investing market opportunity we identified. Each of these segments has different core motivations for making impact investments – Safety First prioritizes downside risk protection, Socially Focused prioritizes the cause the investment is addressing, and Quality Organization investors want to invest with a reputable organization that has a strong track record and business plan.

Third, we found that there are five barriers to investment that are common across all those open to impact investing. Interestingly, the five barriers are all related to the immaturity of the market, not the social or environmental impact investments are having.

Building on these findings, there are seven steps that we believe will help to open up the retail impact investing market:

  1. Clarify what impact investing means for individuals and professionals
  2. Structure products with small initial investments (<$25,000)
  3. Tailor products and messages by segment, to appeal to different motivations
  4. Make opportunities accessible to retail investors, as many existing impact investment opportunities are open only to accredited investors
  5. Position these as investments, not as alternatives to charity
  6. Address market immaturity barriers, to provide confidence to investors
  7. Build awareness of impact investing overall and the specific opportunities available today with investors and their advisors

We’ve heard many times that opening the retail market will be too hard – too hard even to try. In conversations in the past six weeks, that’s not what we’ve heard from those with deep retail investing or banking experience. Instead, we’ve heard that there are gaps in knowledge that make it difficult to know how to address the retail impact investing opportunity today. More must be understood about financial advisors’ incentives, retail distribution networks, and how impact investments can be structured and sold to accommodate those incentives instead of being defeated by them. We also need to understand the economics and expected social impact of different retail impact investing alternatives. But once the sector is armed with this knowledge, we believe that it will have the insights that it needs to attack this $120B market opportunity “hiding in plain sight.”

SKS Microfinance Jumps in IPO Debut – WSJ.com

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By JOHN SATISH KUMAR

MUMBAI—Indian microlender SKS Microfinance Ltd. climbed 11% on its stock-market debut, as investor expectations of strong growth helped overcome its high valuation.

SKS Microfinance, which counts among its investors George Soros’ Quantum Ltd., Sequoia Capital, Kismet Capital, Unitus, venture capitalist Vinod Khosla and Infosys Technologies founder N.R. Narayana Murthy, closed at 1,088.58 rupees, up from its 985-rupee offering price.

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Bloomberg NewsA woman receives a micro-loan during a meeting organized by SKS Microfinance Ltd. in Sadasivpet, India, on Friday, Aug. 6, 2010.

The stock offering, the first of its kind in India for a microfinance institution, has attracted significant attention to an area that is still developing as an organized sector of the economy.

SKS is the country’s largest microlender by market share, outstanding loans and number of borrowers. It provides credit to India’s poorest in what is probably the world’s largest microfinance market, with 150 million households that don’t have access to banking and financial services, the IPO prospectus said, citing World Bank estimates.

SKS

Agence France-Presse/Getty ImagesSKS Microfinance clients ring in the microlender’s stock-market debut at the Bombay Stock Exchange on Monday.

The Indian microfinance sector had an estimated 22.6 million clients in 2009, according to data from Sa-Dhan, an agency that reports on microfinance.

“The opening was broadly in line with market expectations due to high institutional investor interest, but high valuations are likely to prevent further upsides from these levels over the next 12 to 18 months,” said Vaibhav Agrawal, vice president of research at Mumbai-based Angel Broking.

Mr. Agrawal said he is advising investors to book profits at current levels from a one-year perspective.

“The company is probably going to come to the market every two years to raise capital, so the next capital-raising cycle may present an interesting point of entering the stock again,” he said.

At current levels, the stock trades at 26.3 times estimated earnings for the fiscal year that began April 1 and at 18.4 times its estimated earnings for the fiscal year that begins April 1, 2011.

But it trades at 40.3 times earnings for the last fiscal year, compared with a global average of 19.1 times. It trades at 5.8 times trailing book value after the IPO, according to the estimates of brokerage Execution Noble. Its global peers trade at 3.7 times trailing average.

Angel Broking says it recommended that investors subscribe to the share sale despite its expensive valuations, based on “the strong and sustainable growth and return on equity prospects for the company.” But Execution Noble maintained that its rich valuations don’t factor in some risks.

SKS

Bloomberg NewsSKS founder Vikram Akula.

“The valuation factors in expectations of significant return of equity expansion in the future to which we see challenges from competitive, political and regulatory risks to yields, a likely uptick in credit costs and limited operational and financial leverage,” a house note from Execution Noble said.

Analysts say the microlender can sustain a return on equity of between 20% and 25%.

It plans to use the proceeds of the offering to shore up its capital base.

Kotak Mahindra Capital Co., Citigroup Global Markets India Pvt. Ltd. and Credit Suisse Securities (India) Pvt. Ltd. were in charge of the IPO.

Microfinance Equity Investments Showing High Performance: WSAS Index

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Microfinance Focus, July 23, 2010: Witnessing an unprecedented level of growth, the microfinance sector is increasingly attracting the interest and investment of equity investors world over. According to a recently released ‘Microfinance Institutions Shareholder Value Index 2006’ (WSAS MFI SVIX) by Wall Street Advisory Services, the sector has posted a 148% increase (in US$ terms) in the shareholder value of equity investments made in 29 microfinance institutions from 19 countries over the three-year period ending 2008.
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The Index shows that the single-largest increase in IV ’06 value was for SKS Microfinance Ltd. (India), a staggering 3-year cumulative increase of 2,566% (a 199% CAGR). The simple average 3-year cumulative change in IV ’06 shareholder value was about 182%. Leaving out the spectacular SKS Microfinance gain and the three losses, the simple average was 113%.
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The single-largest IV ’06 in the MFI SVIX 2006 was from Financiera Independencia (Mexico), at 30% of the index’s shareholder value at the start of the series in 2005, and it produced a cumulative 214% increase in IV ’06 shareholder value, due largely to the sell-out proceeds realized during 2008. This sell-out removes Mexican representation from the MFI SVIX 2006 from 2009 forward.
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However on the downside, the Shareholder values decreased over the period for K-Rep Bank (Kenya) by -26%, for Tameer Microfinance Bank (Pakistan) by -32%, and for the new IV ‘06 of PNG Microfinance (Papua-New Guinea) by -66%.
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Two other MFI SVIX 2006 constituents saw their IV ’06 investors’ sell-out during 2008 – Peru’s Bco. del Trabajo (via a trade sell to Scotia Bank, producing a 3-year increase of 210%), and Uganda Microfinance Ltd. (via a trade sale to Equity Bank Kenya, producing a 3-year increase of 335%).
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The Composite Index result show that throughout the period, MFI SVIX 2005 represents around 80% of the Composite’s shareholder value. India had the largest number of MFI Investor Vintages represented (8), followed by Peru (7), Cambodia (4), and Mexico (3), while 7 countries had 2 IVs represented, among 59 Investor Vintages from 51 MFIs. Indian MFIs produced some spectacular gains for investors of 2005 and 2006 (largely from capital expansions at high multiples to book values), but typically from low US$ starting points.
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By the end of 2008, the combined book values of the Composite’s 59 IVs represented about US$ 1.34 billion, up from 2005’s combined book values of US$ 0.61 billion. Since period-end book value represents money still invested in the MFIs, it is a measure of ‘money-at-risk’, and it is the best measure of index diversification. The top five countries in this regard at the end of 2008 were Mexico (18%), Kenya (14%), Peru (10%), Cambodia (7%), and Bulgaria (5%), for a combined 54% share of book value. This was very similar to 2005’s 56% share by the same 5 countries, though weights shifted significantly in some cases (Kenya up from 4.5% to 14%, Mexico down from 26% to 18%, for instance)
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WSAS uses “Shareholder Value” in the classic sense, as a measure of financial value. It considers the total accumulation of value (or loss) an investment generates for investors. For Index purposes, “Shareholder Value” can be summarized as the cumulative result of the cash flows which equity investors in an MFI experience in a period, with book value owned at the end of any particular period as the ‘terminal value’ for the period.
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In the context of the principally private equity investing approach used for MFI investment, equity investors’ outflows consist of Initial negotiated buy-in prices, and subscriptions to capital increases, typically rights issues for current shareholders or capital expansions, but also negotiated purchases from other current shareholders representing shifts in ownership between Investor Vintages.
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Equity investors’ inflows are determined by cash received as cash dividends, increases (losses) in their share of the company’s book value arising from net income (net losses) from MFI operations, increases (losses) in the value of their share of the company’s book value arising from dilution of their ownership from new issues of shares and proceeds arising from sales of their equity positions (usually negotiated and frequently not publicly disclosed) when no new shares are issued. Such transactions are often called “secondary sales”.
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The WSAS MFI SVIX results approximate what investors achieved in the past, and provide the basis for accumulating historical performance characteristics of the niche asset category, MFI equity. The WSAS MFI SVIX Composite shows a 4-year, 295% cumulative increase in shareholder value in US$ terms from the blended results of the MFI SVIX 2005 and 2006 investor groups. The combined end-2005 equity capital of the two sets of Investor Vintages (MFI SVIX 2005 and 2006) making up the WSAS MFI SVIX Composite, at US$ 608 million, represented about 32% of that of the 378 MFI universe’s US$ 1,917 million in book value.
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SKS Microfinance – 10% gains on first day of trading

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Shares of SKS Microfinance closed up by more than 10 per cent at Rs 1,084 over its issue price of Rs 985 on its listing day on Monday on the NSE. A poll conducted on India Microfinance Business News had predicted that SKS Microfinance would close at around Rs 1100 on it’s first day of Trading. A total of 2.05 crore shares of SKS Microfinance were traded on both the BSE and the NSE and SKS Microfinance was the most actively traded security on the National Stock Exchange.

sks microfinance closing price

Mr SP Tulsian, an independent investment analyst said to CNBC-TV18 that he felt there was no reason to expect a big premium as the IPO was clearly overpriced. He also added that the fair value for the stock is Rs 1,050 and he would not buy the stock in four digit prices. Mr Tulsian also said the stock is trading at 20 times 2010-11 estimated earnings, while most non-banking financial services firms are trading at 13-15 times 2010-11 estimated earnings.

Brokerage house Mehta Equities has released a note saying that the recent IPO listings have been encouraging and in that context, we can expect SKS Microfinance to touch Rs 1200-1220 per share in the near term and expect Rs 1450 -1500 by March 2011.

SKS Microfinance Bulk Deals

According to NSE bulk deal data, Fundamental Investor Inc has picked up 62,000 shares at the price of Rs 1,126.77 a share.SKS Microfinance has more than 36 Anchor Investors  who are subject to a 30 day lock-in period on their investment, as per SEBI Guidelines.

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Share Price of SKS Microfinance on first day of trading

SKS Microfinance IPO Subscribed 13.55 Times – WSJ.com

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By JOHN SATISH KUMAR

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MUMBAI—The initial public offering of SKS Microfinance Ltd. was fully subscribed on the third day of subscriptions Friday, an investment banker involved in the share sale said.
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Earlier

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“The bids have been coming in and the institutional book has been covered multiple times. We’re on course for the book to be covered about 20 times,” the banker, who didn’t wish to be named, told Dow Jones Newswires.
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The issue of the micro-loan lender consists of more than 16.79 million shares, including an anchor portion of over 3.02 million shares.
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Bids came across the indicative price band of 850-985 rupees ($18.31-$21.22), data on the National Stock Exchange showed.
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The company had already finalized the allotment of shares to anchor investors at 985 rupees a piece. The anchor investors include Smallcap World Fund, BNP Paribas Arbitrage, Reliance Equal Opportunities Fund and J.P. Morgan Indian Investment Trust.
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The issue opened for subscriptions Wednesday and the institutional book closes later Friday. The retail book will remain open till Monday.
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SKS Microfinance IPO Subscribed 13.55 Times

By Monday evening, August 2, the issue to raise as much as US$353 million had received bids for 13.55 times the overall shares on offer. This is likely to go up slightly as bids are still being counted for a few more hours. Most bids were at the top end of the INR850-985 (US$18.40-21.30) price band, indicating a strong demand among investors. On Friday July 30, the last day for bidding for institutional investors, the total offer had been subscribed 10.5 times, with the institutional part itself subscribed 20.3 times.
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Last week, SKS allocated 3.02 million shares at INR985 (US$21) per share to 36 cornerstone investors including the fund management arms of JP Morgan, Morgan Stanley, Goldman Sachs, ICICI Prudential, BNP Paribas, Nomura and Reliance Capital.
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