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Successful exit from Accion fund

18/12/2012

The Accion fund was one of the first to invest in the microfinance sector and its operations have been fruitful.

accion_1.jpgFinnfund has divested its share of Accion Investment microfinance fund to Bamboo Finance, the world’s largest private microfinance private equity fund. In the same transaction, the other development finance institutions involved with Accion Investment since 2002 have also exited, and the fund is now controlled almost entirely by private investors.

Finnfund and other development finance institutions (Germany’s KfW, Belgium’s BIO, the Netherlands’ FMO and the IFC) invested in “ACCION Investments In Microfinance” in 2002. The fund raised new capital in 2007, when private institutions BlueOrchard Private Equity Fund and responsAbility became investors. Finnfund also increased its total investment at that time.

The original sponsor of the fund and chief investor was Accion, a non-profit founded by US students in 1961 to help the poor in South America. Accion soon realised that the lack of finance was a major factor that maintained the cycle of poverty and began to work actively to make financial services available to the poor. Its operations expanded greatly at the start of the 2000s when international development finance organisations became involved. The Accion fund has supported more than 60 microfinance institutions in 32 countries worldwide.

"Our exit from Accion’s fund shows that microfinancing is gradually starting to become a normal activity for the private sector. When we made our investment in 2002 it was regarded as high-risk business that was the natural domain of development finance institutions, which were specifically able to bear the risks,” says Helena Arlander, responsible for Finnfund's microfinance portfolio.

The Accion fund was one of the first to invest in the microfinance sector and its operations have been fruitful. Investments by Accion have helped provide small loans to about 1 million people and accept deposits from 1.3 million. Within the microfinance sector, Accion Investment has catalysed other equity investors and served as a global model for good governance and commercial investments to promote social development. The establishment of good microfinancing practices has been an important part of Accion’s work.

It is estimated that more than 2.7 billion people still have no access to traditional bank accion_.jpgservices. Microfinance is a way of extending these services to people on low incomes and of financing business operations beyond the normal banking sector. It also supports employment in lower income groups. Microfinance generally reaches marginalised national groups, inhabitants of rural and marginal urban areas and particularly women, who make up an average 60-80% of its customers.

 

 

For more information please contact Ms Helena Arlander tel. +358 9 3484 3355, firstname.lastname@finnfund.fi