May 4th, 2006
Morgan Stanley Issues MicroFinance Bonds
Is Wall Street waking up to the promise of Microfinance?
Tom Marshall of the WSJ writes.
BlueOrchard Finance SA, a Swiss investment-management boutique, has teamed up with Morgan Stanley to turn these loans — called microfinance — into bonds, using the capital markets to provide small business in the developing world with long-term financing.
The five-year deal raised almost $100 million from bond investors through BOLD 2006-1, a special-purpose finance vehicle backed by loans to 21 microfinance institutions. While it’s not a huge transaction by bond-market standards, it’s the first time investors have been able to buy into microfinance through a bond issue. It could be the first step in a revolution in how money is raised to pay for development in the third world — and it could also give yield-hungry bond investors a whole new asset class to put their money to work in.
Also covered at the FT (more…)
March 28th, 2006
Vinod Khosla Makes Microfinance Investment
For a long while now, rumours have floated about Vinod Khosla’s personal interest in the microfinance space. People have speculated as to whether Khosla was raising a fund of his own, offering lines of credit etc etc. The Indian newspaper, Business Standard, today confirmed that Khosla has in fact made an investment, with a couple of other VCs, in one of India’s fastest growing MFIs.
Top Silicon Valley venture capitalist (VC) Vinod Khosla, along with other social venture capitalists, Small Industries Development Bank of India (Sidbi) and the SKS borrower community, made a $2.5 million investment in SKS Microfinance today. The deal is the biggest investment in a microfinance institution in the country, a media statement said. SKS will use the money to access commercial debt and increase operations from its current base of 200,000 clients to 700,000 in 2006-07. SKS serves over 3,000 villages spread across five states - Andhra Pradesh, Maharashtra, Karnataka, Madhya Pradesh and Orissa. It has a portfolio of $18 million and has achieved an annual growth rate of 250 per cent.
Of the $2.5 million investment, Khosla contributed about $450,000, while tech entrepreneurs Ravi Reddy and Sandeep Tungare, co-founders of Vistaar Technologies, and Unitus Equity Fund (UEF) also pitched in with about $450K each. The rest of the money was raised by SKS borrowers and SIDBI.