PGGM Invests $60m in Microfinance Fund

Jul 2009
Netherlands, July, 20 2009 - PGGM has invested €43m (US$60.6m) in a microfinance private equity fund.

The fund, Grassroots Capital’s Global Microfinance Equity Fund, will invest in early-stage or start-up microfinance institutions, said Grassroots managing partner David FitzHerbert.

The investment is part of PGGM’s €200m (US$282.1m) microfinance program launched in 2008 which seeks out a “double bottom-line” of reaping returns while making a social contribution, said PGGM head of responsible equity strategies Alex van der Velden.

Van der Velden said: “We believe that microfinance private equity can generate a competitive investment return while helping to increase the availability of credit to lower income people in emerging markets.”

He added: “Our investment in Grassroots comes at a time when microfinance institutions are particularly needing to bolster their capital to address the global credit crisis and many developing regions still lack basic access to microfinance.”

Grassroots is looking to raise up to $150m in the fund and has already received interest from other Dutch and Danish investors, said FitzHerbert, though he declined to name them.

“What we’ve found with these pension funds, particularly in the Netherlands, it that they seem to have a higher degree of experience in social investing,” said FitzHerbert.

He declined to provide the projected returns for the fund, but said returns on these types of strategies are generally in line with those of emerging market equity funds. And while some investors worry about the risk involved in targeting micro-finance, he said the default rate over the past decade for micro-finance institutions has only been 2%. 

Source : Global Pensions

Research Analysis Tools

The fund indexes, institution benchmarks and other market information displayed here are all Symbiotics designed analysis tools, created in-house by our analysts and experts. Symbiotics has one of the oldest track records in microfinance investment analysis dating back to the late 1990s; its indexes and benchmarks have been regularly used as markers by investors, asset managers, financial institutions and practitioners. These, as well as several other research products, are available through the Research Account. Click on the link below to find out more.

Learn More