BlueOrchard to manage US microfinance fund for Latin America, Caribbean

Microfinance Focus, Oct. 1, 2009: Swiss fund manager BlueOrchard Finance has been chosen to manage the US-backed fund Microfinance Growth Facility (MIGROF) worth US$250 million, which was created recently to support the growth of MFIs to refinance their lending activities to people with no access to main banks.
Responding to US President Barack Obama’s announcement at the Summit of the Americas in April, the Inter-American Development Bank’s Multilateral Investment Fund (IDB/MIF), the U.S. Government’s Overseas Private Investment Corporation (OPIC), the Inter-American Investment Corporation (IIC), the Swiss-based microfinance investment management company BlueOrchard Finance S.A. (BlueOrchard Finance), and other international investors signed an MoU on Sept. 30, 2009 to establish the microfinance facility that will provide up to US$250 million to microfinance institutions (MFIs) in Latin America and the Caribbean.
The fund is part of President Obama’s policy to help for micro- and small businesses which provide a majority of the jobs in the Southern hemisphere. “The facility will provide stable medium- and longer-term sources of finance to microfinance institutions to help rebuild their capacity to lend during this difficult period and to increase the supply of finance for micro- and small businesses as recovery takes hold”, he declared at the Summit.

According to the MOU, signed at the Inter-American Forum on Microenterprise (FOROMIC) in Arequipa (Peru), OPIC, pending approval by the OPIC Board of Directors, will provide a loan of up to US$125 million to the facility. The IDB, through the MIF, took a leading role in structuring the new facility, committing a US$10 million equity investment. Proceeds of the OPIC loan, together with the equity contributions from IDB and other sponsors, will be used to make loans to MFIs in Latin America and the Caribbean, which in turn will expand their microfinance lending activity. BlueOrchard Finance will manage the fund relationship with the MFIs.

“We are proud to have been entrusted with the management of this facility, it is a recognition of our deep commitment to microfinance and of our professional excellence,” said Jean-Pierre Klumpp, CEO of BlueOrchard Finance, who was taking part in the meeting in Arequipa.
“BlueOrchard maintains solid relationships with over 80 microfinance institutions throughout Latin America and the Caribbean based on mutual trust and a track-record of successful cooperation. The healthy growth of their activities will increase employment and socio-economic progress for people who lack access to basic financial services.”

BlueOrchard Finance presently has outstanding loans with 50 MFIs in 12 countries in Latin America for a total amount of nearly US$340 million representing over 45% of its total current loans.

The MIGROF is expected to begin investing by the second quarter of 2010. It will offer medium- and long-term financing both in local currency and in U.S. dollars, targeting 35 per cent of the total financing to be provided in local currencies.

Other sponsors signing the MOU were the Andean Development Corporation, Norwegian Microfinance Initiative Global Fund KS, FMO (the Netherlands’ Development Finance Company), FONIDI S.E.C./Gestion Fonidi Inc., a subsidiary of Développement International Desjardins of Canada and Acción International.

According to a recent report funded by the MIF, there are an estimated 636 MFIs currently financing about 9.5 million microenterprises in Latin America and the Caribbean, with an outstanding loan portfolio of US$10.9 billion.

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