beirut - may 2009
DESCRIPTION
Sanabel 6 th Annual Conference. Beirut - May 2009. Foreign Commercial Investment in Microfinance – Overview of Market Trends. Cedric Lombard. Director. Symbiotics. Symbiotics - Professional Services for Microfinance Investors and Fund Managers. Investment Portfolio by Region. - PowerPoint PPT PresentationTRANSCRIPT
Beirut - May 2009
Foreign Commercial Investment in Microfinance – Overview of Market Trends
Cedric Lombard
Director
Sanabel 6th Annual Conference
Symbiotics
Symbiotics - Professional Services for Microfinance Investors and Fund Managers
Volume Under Advisory/ Management Investment Portfolio by Region
RCCA SAM CEE CAM EAP MENA
RCCA; Volume MUSD; 116 SAM; Volume
MUSD; 109
CEE; Volume MUSD; 85
CAM; Volume MUSD; 42
EAP; Volume MUSD; 23
MENA; Volume MUSD; 3
RCCA; Nb of MFIs; 22
SAM; Nb of MFIs; 31
CEE; Nb of MFIs; 16
CAM; Nb of MFIs; 15 EAP; Nb of MFIs;
8 MENA; Nb of MFIs; 2
Volume MUSDNb of MFIs
Q2-
05
Q4-
05
Q1-
06
Q2-
06
Q3-
06
Q4-
06
Q1-
07
Q2-
07
Q3-
07
Q4-
07
Q1-
08
Q2-
08
Q3-
08
Q4-
08
Q1-
09
050
100150200250300350400450500
0
20
40
60
80Quarterly (right)Cumulated (left)
State of Commercial Financing – Market Patterns
Number of MIVs ($ Million)* 103
Market Volume ($ Million)* 6’500
Average MIV Assets ($ Million)* 63
MIV Juridiction (%Total Assets)
Western Europe 81.4%
North America 11.5%
Geographical Distribution (% MP)
Central & Eastern Europe (33.6%)
South America (22.4%)
Russia, Caucasus & Central Asia (14.3%)
Central America, Mexico & Caribbean (11.7%)
Sub-Saharan Africa (8.3%)
East Asia & Pacific (5.8%)
South Asia (3.8%)
Middle East and North Africa (0.2%)
Market Data
Source: 2008 CGAP MIV Survey
* Symbiotics estimates for 2008; all other data are for 2007
» Very few commercial investment to MEDA countries» 0.2% of MIV portfolio & 0.8% of Symbiotics portfolio » Share of MENA’s MFIs in MIX Market database: 2.7% (USD 1.12 bln market)
Recent Trends – Slower but Positive Growth of MIVs
Year MIVs (Nb)
Total Volume($ bl.)
Growth Rate
2004 45 1.10 -
2005 63 1.50 36%
2006 75 3.05 103%
2007 91 5.43 78%
2008 103 6.50 18%
» Slow but positive growth in 2008, fueled by socially oriented investors:» Large pension funds maintain their allocation as part of their SRI strategy » Public investors invest more in response to the global credit squeeze » Retail investors continue to make new allocations to support microentrepreneurs in emerging markets
» Leading MIVs constitute the main potential source of growth:» Positive track record (risk-return profile) » Critical size attracting institutional investors
2004 2005 2006 2007 20080
1
2
3
4
5
6
7
0
20
40
60
80
100
120Volume (USD Billi...
Lux MIVMarket Growth
2006 2007 2008 20090
500
1,000
1,500
2,000
2,500MF PortfolioTotal Assets
2004 2005 2006 2007 2008 20090.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
100
107
114
121
128
Monthly performance (left)Index Value (right)
Recent Trends – Stable Interest Rates but Higher Spreads
2006-05
2006-07
2006-09
2006-11
2007-01
2007-03
2007-05
2007-07
2007-09
2007-11
2008-02
2008-04
2008-06
2008-08
2008-10
2008-12
2009-02
2009-040%
2%
4%
6%
8%
10%
12%
0
5
10
15
20
25
30
35
Nb of Deals Average Coupon Average Reference RateAverage Spread
Spread Analysis SMX Index USD
» Stable interest rates
» Lower reference rates
» Higher credit premiums
» Increasing cost of hedging
» Increasing cash level for redemptions
» Lower but still positive net returns
Recent Trends – Slow deterioration of the MFIs Risk
SYM 50
Key Indicators Mar. 2009 Δ 3m Δ 12 m
Assets ($ ml.) 92.9 2.29% 17.70%
Loan Portfolio ($ ml.) 69.8 -2.03% 12.65%
Active borrowers 45’007 2.36% 18.33%
Average loan 1’996 -4.44% -3.95%
Debt/equity ratio 4.29 -0.91% 0.23%
Portfolio yield 29.48% -3.22% -2.06%
Cost of funding 8.75% -5.34% 1.21%
OER 14.73% -3.12% 2.22%
OSS 110.08% -8.48% -13.81%
ROE 4.12% -72.89% -82.56%
PAR> 30 days 4.46% 36.68% 57.04%
Risk coverage ratio 127% -29.60% -76.78%
6.0%
7.0%
8.0%
9.0%
10.0%
Cost of Funding
2.0%
2.5%
3.0%
3.5%
4.0%
Portfolio at Risk
Investors’ Expectations – Towards increased partnerships
» The struggle to maintain high quality MFIs and progessively
» Need for transparency
» Compare to the benchmarks
» Find a growingly better equilibrium between subsidized and commercial funding sources
» Work on solutions jointly with the lenders in order for them to lend loans in local currencies with affordable hedging instruments