Local Currency Fund II (Locfund II)

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In 2007, BIO was an anchor investor of Locfund I,  a fund in local currencies targeting smaller microfinance institutions in Latin America and the Carribean. BIO is now supporting the follow-up fund Locfund II – which is based on the success of Locfund I – and is again an anchor investor together with IDB , FMO and Norfund. BIO is bringing a significant additionality towards smaller MFIs attending excluded low income entrepreneurs in their majority women and especially in rural areas.

A key aspect of Locfund II is to further provide local currency funding to Tier II and Tier III MFIs, in order to allow them to better support the final clients with local currency loans. Locfund II will thus adequately support the growth of promising small MFIs, and thus play a significant role in developing a more inclusive financial sector. Furthermore, the Fund’s unique capital structure and the fact that the first closing will be achieved thanks to the commitments of 4 key DFIs, should enable to attract private sector capital to Tier II and Tier III MFIs where private investors on a stand-alone basis may not invest. Locfund II will as well support smaller MFIs in launching adapted capital market product to attract local private investors to the microfinance sector. The major anticipated development effects are : significant employment effects (consolidate or create 8,500 jobs), significant gender effects (target 60% women), mobilization of local capital (participation of DFIs attracts private sector), diversification of financial sector (local currency, capital market component) and contribution to institution building (e.g. technical assistance).

BIO is investing USD 4 million in equity, a USD 1 million senior loan and USD 150,000 in Technical Assistance.

Read more on Locfund I.

Website : www.biminvestments.com

  • Geïnvesteerd bedrag (€):

    Equity: $4M ; Debt: $1M

    Fund targetting Tier II & III MFIs Registered office: Canada Beneficiary countries: Latin America and the Carribbean

  • Ondertekening van het contract :

    2013

    2013: TA $150K

  • Aard van de investering :

    Equity and debt

  • Effecten op de ontwikkeling :

    • 1 — Local currency funding
    • 2 — Support of Tier II and Tier III microfinance institutions
    • 3 — Employment creation
    • 4 — Mobilization of local capital
    • 5 — Diversification of financial sector