Public and Private Investors Launch New Lending Facility for Microfinance in Can...
Cancun, Mexico, March, 20 2010 -
Citigroup’s Banamex joins the IDB Group and its partners in launching the Microfinance Growth Fund, which opens its doors for business in Latin America and the Caribbean.
The Inter-American Development Bank’s Multilateral Investment Fund (FOMIN), the Inter-American Investment Corporation (IIC), the Corporación Andina de Fomento (CAF), and four private investors today signed documents launching the Microfinance Growth Fund (MIGROF), a new lending facility for microfinance institutions in Latin America and the Caribbean.
Banamex, Mexico’s largest private bank and a subsidiary of U.S.-based Citi, joins MIGROF as an investor and partner who is expected to play a major role in the corporate governance of the new lending facility.
U.S. President Barack Obama announced MIGROF at the Fifth Summit of the Americas in Port of Spain, Trinidad, in April 2009, saying that the United States Overseas Private Investment Corporation (OPIC), FOMIN and the IIC would partner to launch a new source of funding for microfinance institutions in response to the reduction in their lending capacity due to the global credit crisis.
FOMIN and the IIC took a leading role in structuring the microfinance facility and defining its lending strategy. In September 2009, the partners agreed to establish the Microfinance Growth Fund, managed by Swiss microfinance investment management company BlueOrchard Finance S.A, and OPIC pledging a $125 million loan for its operation.
“A great project has become something real, we are open for business,” said IDB President and Chairman of the Board of the IIC, Luis Alberto Moreno, at the signing ceremony. “MIGROF will fuel the engine of growth in microfinance, an industry serving millions of entrepreneurs throughout the region.”
“We are pleased to join this initiative to further expand microfinance in the region,” said Manuel Medina-Mora, Chairman and CEO of Citi Latin America and Mexico. “By contributing to the Microfinance Growth Fund, Banamex and Citi are furthering their commitment to promoting development in Latin America, as well as leading the way for other Latin American investors to contribute to this initiative.”
At the launching ceremony today, OPIC reiterated its pledge to lend $125 million to the new facility, derived from to U.S. President Obama’s announcement. FOMIN is providing $10 million in equity, the IIC will contribute up to $5 million, and CAF will invest up to $10 million. The private partners in MIGROF are Banamex, the Norwegian Microfinance Initiative, ACCION International and BlueOrchard.
The new facility will offer medium- and long-term financing both in local currency and in U.S. dollars, targeting 35 percent of the total financing to be provided in local currencies. It is expected to begin its lending activity in following weeks.