Emerging markets fund of funds CDC has committed $30 million (€21 million) to microfinance fund Minlam Microfinance Offshore Fund run by Minlam Asset Management, CDC, a UK government agency, said in a statement
Minlam invests across 20 countries mainly in Africa and latin America. The fund has also raised nearly another $10 million from other investors, including its founder John Muse, from US firm HM Capital.
Minlam acts as a credit provider to underlying microfinance initiatives. It manages the credit risk of the initiatives’ customer bases, as well as taking into account the currency risks of lending in a diverse group of countries.
Microfinance is typically the use of small loans of several hundred dollars to entrepreneurs in developing nations.
It is becoming attractive to commercial financial services groups, having traditionally been an industry supported by non-government organisations. The World Bank estimates microfinance initiatives have had compound growth rates of 13 percent worldwide with the initiatives achieving repayment records of up to 97 percent.
CDC has committed another $12.7 million since 2004 to microfinance initiatives AccessHolding, Lok Capital and ShoreCap International.