Fueled by the attractiveness of the industry’s social mission and strong performance of microfinance institutions (MFIs), MIVs grew rapidly over the last five years. In 2009, that growth slowed only marginally (to 22% from 28% in 2008). However, microfinance assets grew much more slowly than total MIV assets with the result that MIV liquidity increased dramatically. Interestingly, despite weak demand for funding from MFIs and against the backdrop of a worldwide recession, a number of new MIVs appeared during 2009. At the end of 2009, too many MIVs were chasing too few MFI lending opportunities.
The 2010 MIV Survey
MicroRate’s 5th annual Survey of microfinance investment vehicles (MIVs) measures the development of a relatively new category of funds and other intermediaries that mobilize investments in rich countries and channel them to microfinance institutions (MFIs) in the developing world. The assets of MIVs have grown from $ 1.2 billion in 2005 to over $ 6 billion at the end of 2009. It is one of the triumphs of development that such a large amount has been made available by investors for on-lending to the poor in the slums of cities like Mumbai, Lima and Addis.
Of the 88 active MIVs identified by MicroRate as of December 31, 2009, 78 completed the Survey, resulting in an 89% response rate. Total MIV assets grew 22% in 2009 to over $6 billion. This was the lowest growth rate since MicroRate began tracking MIVs (2008: 28% growth to $4.9 billion; and 2007: 97% growth to $3.9 billion). The slow-down is dramatic, particularly when compared to the 97% growth rate in 2007. Nonetheless, it is remarkable that at a time of unprecedented stress and uncertainty in financial markets, MIVs were able to attract over $1 billion in additional funding.
The MicroRate 2010 MIV Survey results also contain a note of caution: MIVs are finding it difficult to place the funds they are raising from investors. Less than half of the funding mobilized in 2009 ended up in microfinance. Most of the rest increased fund liquidity. The share of microfinance assets in total MIV assets fell from 78% to 71% during 2009. Eleven new MIVs were created in 2009 and 14 MIVs took part for the first time in this Survey.As of December 31, 2009, MIVs held in aggregate 3,033 microfinance investments with an average investment size of $1.4 million (2008: $1.2 million). The average size of an equity microfinance investment increased 35% to $2.3 million from $1.7 million in 2008.
Download the complete 2010 MIV Survey Report released by Microrate at the link below