BIL Micro Credit Fund
SPONSOR: Banque Internationale a Luxembourg INVESTMENT MANAGER: Axa Investment Managers, Paris MEMBERS OF THE ADVISORY BOARD: United Nations Conference on Trade and Development (UNCTAD), Government of Luxembourg, other international organizations and personalities of the micro-finance movement AUDITORS: Coopers & Lybrand TARGET INVESTMENT: Micro-Banks in emerging markets (progressive and increasing part of total portfolio). Balance of assets will be made of high quality, highly liquid listed OECD countries or supranational securities. INVESTMENT INSTRUMENT: Debt securities TARGET AMOUNT: USD 100 million (starting: min. USD 25 million) CURRENCY: United States Dollar-denominated YIELD: 8-10% on dollar INVESTMENT AUDIENCE: Institutional investors TARGET REGION: Over two thirds of the investment will be in Latin America in the first two years. FEATURES: Closed-end for the first six months. Later open-end, as a secondary market develops and debt instruments from micro-banks become more liquid. INVESTMENT RESTRICTIONS: The Fund may not:
- invest more that 80% of its assets in securities not listed on a stock exchange or another regulated market
- acquire more than 10% of the same securities from any one issuing body (except for micro banks);
- invest more than 15% of its net assets in securities issued by the same body.
OVERVIEW
The objective of the Fund is to offer a high level return, while contributing to the growth of micro-lending institutions in emerging markets. This promising new sector is expected to develop rapidly in the coming years and to offer attractive investment opportunities.Micro-Finance Institutions (MFIs), also known as "Micro-Banks", lend to the micro- entrepreneurial sector which is at the core of most developing countries= economies. They have shown that micro lending can generate employment and create wealth among the poor and be at the same time a profitable business. No longer depending on donor funding, many MFIs are becoming self-sustainable and are ready to mobilize external funds under market conditions to finance their growth and serve the enormous demand they are facing.
MFIs represent the fastest growing segment in the finance industry. It is estimated that there are approximately 7,000 Micro-Banks in the developing world. Their annual rate of growth is between 30-100%. Although small in size, MFIs have a much better risk profile than the average emerging market commercial banks which are exposed to fluctuating economic cycles. Micro-Banks on the other hand, are exposed to survival economies, enjoy a wide diversification of risks and, overall, boast high repayment rates.
The investment decision will first be based on a country analysis consisting in an evaluation of political risks and an analysis of the socio- economic situation. Once the country is identified, an analysis of the securities on the market as well as those issued by Micro-Banks (unlisted) and the risks involved will be scored. In the specific case of Micro-Banks, these will be scored according to an evaluation of management, a credit analysis and performance.
The Fund will initially invest only a fraction of its total assets in Micro-Banks and, as the market develops, it will gradually increase this proportion up to 80%.
Investment will be made according to strict economic logic. The Fund reserves the right, should market conditions require so, to invest temporarily all or part of its assets in debts securities issued or guaranteed by an OECD country or issued by a company governed by the law of one of those states or in cash, cash equivalents or any financial instruments or money market instruments.
Although the Fund is denominated in USD, investment may also be made in local currencies.
Contact Address for BIL Micro Credit Fund: ...