Analysis of Microfinance Investment Funds

Microfinance investment funds are vehicles or institutions that channel funds to the microfinance sector. The term covers a diversified range of vehicles with different missions, objectives and types of shareholders. MFIFs' sponsors range from NGOs or development agencies to commercial players. A useful definition is that microfinance investment funds are vehicles which have been specifically set up to invest in microfinance assets (in some cases with trade finance investments) in which social or commercial, private or institutional investors can invest. Foundations would not qualify as investment funds, but they would qualify as investors in microfinance and take stakes in microfinance investment funds.

The results of a survey of investment funds are summarised in this section, with additional details in appendices to this paper. The survey, as noted previously, was conducted jointly by CGAP, The MIX and the author, on behalf of ADA in Luxembourg, between July and October 2004. It also identified the most active development agencies and donor institutions investing in microfinance. Summaries were prepared for all the investment funds which responded to the survey, and validated by the respective investment managers. A list of these institutions is provided in Table 1. These survey results highlight key characteristics of each investment fund in a consistent format. The target audience, in addition to microfinance practitioners, are potential investors in microfinance and MFIs seeking descriptions of potential investors.

A Summary of Survey Findings

Of the 43 microfinance investment funds identified, 38 were existing entities and 5 were new structures to be established in 2005, most of which have been launched since the surveys were conducted. The purpose of this study was to identify investment fund assets invested specifically in microfinance. The overall asset size of an investment fund tells little about how much is actually invested in MFIs. There are funds which invest actively but which include trade finance or similar activities. Some funds invest only in microfinance but hold a relatively high portion of cash, liquid assets or committed amounts not yet disbursed.

The total assets of the 38 MFIFs amount to € 700 million, but their combined microfinance portfolio is € 338 million. A small portion of these assets consists of investments in other funds (e. g. the responsAbility Global Microfinance Fund

Table 1. Key Players: Microfinance Investment Funds Surveyed between July and October 2004

Accion Gateway

Accion Investments in Microfinance (AIM)




ASN-Novib Fund

AXA World Funds - Development Debt

BlueOrchard Microfinance Securities I, LLC

Calvert Social Investment Foundation -Community Investment Notes


Deutsche Bank Start-up Fund (New)

Deutsche Bank Microcredit Development Fund

Développement Int'l Desjardins -Partnership Fund

Dvt Int'l Desjardins - Guaranty Fund

Dvt Int'l Desjardins - FONIDI Fund

Dexia Micro-Credit Fund - Blue Orchard Debt Sub-Fund


Fonds International de Garantie (FIG)

Global Microfinance Facility

Global Commercial Microfinance Consortium (Deutsche Bank) (New)

Gray Ghost Microfinance Fund Hivos-Triodos Foundation Incofin

Investisseur et Partenaire pour le Développement

Impulse (Incofin) (New)

Kolibri Kapital ASA

La Fayette Participations

La Fayette Investissements (New)

Latin American Bridge Fund (Accion)

Latin American Challenge Investment Fund

MicroVest Oikocredit

Opportunity International (OTI) Solidus (New)

PlaNet Finance - Revolving Credit Fund

ProCredit Holding (formerly IMI) ProFund responsAbility Global Microfinance Fund

Sarona Global Investment Fund ShoreCap International SIDI

Triodos Fair Share Fund Triodos-Doen Foundation investment in ProCredit Holding). Eliminating these duplications, the estimated net investment in MFIs by these 38 funds is € 321 million. Some funds are actively seeking further investment opportunities. Together with the 5 new funds, their liquid resources waiting to be placed will boost investment funds' net investments in microfinance by € 180 million. In total, the 43 microfinance investment funds' net investments in microfinance equal € 501 million.

The most active development agencies, foundations and NGOs acting as investors in microfinance have also been surveyed to assess the overall level of investments in this sector. These institutions are listed in Table 2.

Table 2. Investors in Microfinance: Development Agencies, Foundations and NGOs

Development agencies:

• BIO (Belgian Investment Company for Developing Countries)

• Corporation Andina de Fomento (CAF)

• European Bank for Reconstruction and Development (EBRD)

Foundations and NGOs:

• DOEN Foundation

• Inter Church Organization for Development Co-operation (ICCO)

• International Finance Corporation (IFC)

• Kreditanstalt für Wiederaufbau (KfW) / DEG

• Multilateral Investment Fund of the Inter-American Development Bank

• Partners for the Common Good

• Rabobank Foundation

The 16 development investors listed in Table 2 have a total microfinance portfolio of € 1,010 million. Eliminating the investments these institutions have in microfinance investment funds (such as IFC's investment in the Global Microfinance Facility), direct investments in MFIs by these development agencies, foundations and NGOs reach € 884 million. This means that, based on figures collected during the surveys, the total net microfinance portfolio invested by all these parties (microfinance investment funds, development agencies, foundations and NGOs) amounted to € 1,385 million, as listed in Table 3.

Table 3. Net Investments in Microfinance: All Institutions

Net amounts invested in MFIs

43 existing and new microfinance investment

€ 501 million


16 development agencies, foundations and

€ 884 million

NGOs acting as investors

Types of Investors

The main types of investors in microfinance investment funds are illustrated in Figure 1 and described below:

Development Dual objective Commercial

Institutions Investors Investors

Development Dual objective Commercial

Institutions Investors Investors


MFIs conditions


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