BlueOrchard Follows Grameen, SKS to Boost Microfinance Investments in Asia
BlueOrchard Finance SA, which manages more than $1 billion of microfinance investments, said it plans to triple its allocation to Asia to about a third of its global portfolio.
Geneva-based BlueOrchard Finance, which opened its first Asian office in Phnom Penh yesterday, plans to make its first investment in China early next year and is exploring more projects in India, Melchior de Muralt, vice chairman of BlueOrchard Finance’s board, said in an interview from the Cambodian capital.
Microfinance gained prominence when Muhammad Yunus won the Nobel Peace Prize in 2006 for his role in founding Bangladesh’s Grameen Bank. India’s SKS Microfinance Ltd., backed by George Soros, this month raised the maximum 16.3 billion rupees ($353 million) sought in an initial public offering.
BlueOrchard is also considering setting up an Asia-focused microfinance fund to invest in institutions that provide funding to the region’s poor, Chief Financial Officer Geert Roosen said in the same interview today. BlueOrchard Finance manages about $115 million of investments in South and Southeast Asia, of which Cambodia accounts for $36 million, according to the firm.
“Asia is the birthplace of microfinance; it should be at least a third of our global coverage,” Roosen said. “We have to rebalance our portfolio to get Asia up to the level it deserves due to its size and the importance of the industry in this continent.”
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About 40 percent of the firm’s global portfolio is invested in South America, Roosen said. The firm also plans to raise more assets from Asian investors, he said. Most of the fund’s investors are based in Europe and include foundations, development banks and financial institutions, he said.
“Further Asian projects will be launched in the coming months as we see great opportunities both on the fundraising and on the placement side,” de Muralt said.
The Phnom Penh office will be managed by Julie Cheng, one of the firm’s investment directors who ran the team for Asia in Geneva for more than six years, according to BlueOrchard Finance. She has relocated to Phnom Penh with Matteo Marinelli, a senior investment analyst.
BlueOrchard Finance has since 2001 provided debt financing to microfinance institutions. BlueOrchard Investments Sarl has since 2007 invested in the equity of microfinance institutions and microfinance network funds, according to the firm.
SKS Micro
SKS attracted anchor investors including funds managed by Morgan Stanley, BNP Paribas SA and Fidelity Investments.
The Indian company provides loans from $22 to $260 each for women raising cows or opening a village tea stall in a nation where 828 million people live on less than $2 a day. India has an untapped credit demand of 1.2 trillion rupees, according to Crisil Ratings, the local unit of Standard & Poor’s.
Microfinance lending in India, the world’s largest market for such loans, may surge about 40 percent annually over the next few years, according to Sanjay Sinha, managing director at New Delhi-based Micro-Credit Ratings, which provides ratings services to potential investors.
To contact the reporter on this story: Netty Ismail in Singapore nismail3@bloomberg.net.
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