Paris/ Washington DC, December 8, 2005
—
The International Finance Corporation, the private sector arm of the World Bank Group, has helped create the Solidus Investment Fund S.A., a new $30 million investment company that will provide Tier II capital instruments to microfinance institutions. Solidus’ initial funding amounts to $19.3 million, with a final capitalization at $30 million.
IFC’s investment will be $3 million in equity representing 15.54% of Solidus’ initial capital. In addition to IFC, investors participating in this first closing include Cordaid, Cyrano Management, Finnfund, Fonidi, IDB/MIF, KfW, Norfund, OVF, and SECO. There has been great interest in this investment vehicle from various investors, and the capitalization of $30 million is expected to be reached shortly after the initial closing.
Solidus will provide long-term financing in the form of quasi-equity type instruments to well-managed and profitable microfinance institutions in the Latin America region. It will thus strengthen the capital structure of microfinance institutions and support their growth in lending to microentrepreneurs across the region. The company will also promote commercial microfinance in a region that is pioneering it and where such financing has high growth potential.
The manager of Solidus will be Cyrano Management, an investment management firm based in Lima with experience in managing funds that invest in microfinance institutions in Central and South America. Cyrano Management currently manages about $50 million in assets through two microfinance investment vehicles, the Latin America Challenge Investment Fund and the Global Microfinance Facility.
“The investment fits IFC's strategy of supporting well-managed and financially sustainable microfinance institutions by providing them with quasi-equity financing to help them grow and increase their lending,” said Jyrki Koskelo, IFC’s Director for Global Financial Markets.
Atul Mehta, IFC’s Director for Latin America and the Caribbean, added that, “IFC’s support to Solidus will help satisfy the demand for credit from underserved microenterprises in Latin America. This demand far exceeds the funding provided by donors and commercial lenders. In turn, expanding access to credit will help unleash the productive capacity of microenterprises in the region.”
Solidus is expected to ultimately serve the credit demand of about 200,000 people in the region who currently have no access to the formal financial sector.
The International Finance Corporation, the private sector arm of the World Bank Group, promotes sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Its 178 member countries provide its share capital and collectively determine its policies.
From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit
www.ifc.org
.
