Microfinance: The end of the El Dorado for Investors?

5 Mar 2010 09:00 Africa/Lagos

Microfinance: The end of the El Dorado for Investors?

PARIS, March 5, 2010/PRNewswire/ -- PlaNIS, an entity of PlaNet Finance Group dedicated to advising SRI (Socially Responsible Investment) funds, has noticed that during the last decade, the microfinance sector has benefited from a sustained growth due to an increased interest from many international investors. In 2008, European funds assets dedicated to microfinance have grown by 31% thanks to private investors and public entities.


In 2009, in a very tough economic environment damaged by the crisis, SRI funds dedicated to microfinance have continued to increase their fundraising, with a 16% volume growth, (an excellent rate compared to the asset management market). Today, SRI European funds represent more than 6 billion USD.


Nevertheless, in 2009 and contrary to the previous years, the earning rates for SRI funds dedicated to microfinance have strongly decreased to reach rates between 1.74% and 2.31% which used to be at an average of 4%.


These results can be explained by:


- An increasing credit-related risk: Outstanding payments linked to high-risk-portfolio, generated by credit repayment default reaching up to 20% in certain areas.


All this, has led some funds to settle very significant provisions.


- The growing over-liquidity of numerous microfinance funds leading to the drop of their revenues: Slowdown of MFIs' development, combined to a more regulated credit policy, has drawn to the decrease of their financing demand. At the present time, PlaNIS estimates the total non-used liquidity to 1 billion USD which represents about 20% of the asset under management.


- Local currencies volatility


Therefore, SRI funds in microfinance have to be careful before investing and need to work with specialists in order to mitigate the risks.


Despite hard market conditions, PlaNIS managed to maintain good results for 2009. Its portfolio has increased by about 30% (from 119M USD to 153M USD), and the average return of the financing programs proposed to advised funds has come about 9%.


These results proceed from its big ability in terms of sourcing, its high level of expertise of the market and its portfolio composed by promising MFIs.


NEWS :


PlaNIS is a partner of MicroFinancial Services World. Organised by Hanson Wade and chaired by Xavier Reille of CGAP MicroFinancial Services World is the largest gathering of Microfinance Practitioners and Socially Responsible Investors in Europe. The conference will take place from the 10th to the 12th of May 2010 in Amsterdam.


Website: http://www.mfs-world.com


About PlaNIS:


In 2009, PlaNIS' met 300 MFIs in 40 countries. 70 investment proposals were drawn up and close to 50 million USD were lent out to MFIs. PLANIS currently advises 9 microfinance funds and manages a 153-million-USD portfolio distributed among 75 MFIs across 30 countries, 4 of these funds are managed by responsAbility; PLANIS main partner.


PlaNIS is part of PlaNet Finance group and has the chance to benefit from its 13 years of expertise concerning microfinance.


http://www.planetfinancegroup.org



MicroFinancial Services World
Charlotte Whewell
charlotte.whewell@hansonwade.com
+44(0)20-3141-8700




Source: PlaNIS

Press Contacts: PlaNet Finance, Marlène Biard, mbiard@planetfinance.org, +33-1-49-21-26-15; Audrey Le Blanc, aleblanc@planetfinance.org, +33-1-49-21-26--5; MicroFinancial Services World, Charlotte Whewell, charlotte.whewell@hansonwade.com, +44(0)20-3141-8700