Microfinance Private Equity

CDC Group Pumps $30 Million Into India Microfinance Funds

CDC Group has committed $15 million each to a pair of microfinance funds: India Financial Inclusion Fund, managed by Caspian Capital Partners, and Catalyst Microfinance Investors.

CDC Group plc (“CDC”), the UK government-backed private equity emerging markets fund of funds investor, is making new commitments totalling US$30m to two private equity funds which will invest in microfinance institutions (MFIs). By investing in MFIs the funds aim to give people on low incomes access to a range of financial services, including credit, savings and fund transfers.
The commitments are:

US$15m to India Financial Inclusion Fund, managed by Caspian Capital Partners. The fund provides growth capital and strategic support to existing and start-up MFIs to help them grow. The fund focuses solely on India, with an emphasis on towns in rural areas with low microfinance penetration.

US$15m to Catalyst Microfinance Investors. This fund will invest in a network of highly efficient, rapidly growing greenfield microfinance institutions in countries such as India, Pakistan, Nigeriaand Ghana. The fund will aim to help MFIs accelerate their expansion and provide capital to low-income groups and micro-enterprises located in poor communities.

CDC commits to private equity funds investing in MFIs with the knowledge that such funds help small businesses and individuals gain access to capital, which is essential for economic growth and development in poor regions.

Hywel Rees-Jones, Managing Director, Alternative Investments, CDC, said:
“Around 400 million people do not have access to formal, affordable financial services in India. The India Financial Inclusion Fund will improve funding to microfinance institutions, bringing improved credit opportunities in much needed regions. Caspian Capital Partners have proven their ability to increase microfinance penetration in India, contributing to the growth of the sector and making a lasting developmental impact in rural regions.

“Catalyst Microfinance Investors will be using the expertise of ASA, a renowned Bangladeshi NGO, which has an impressive track record having been involved in microfinance since 1991. Microfinance has played a vital role in boosting development in Bangladesh by increasing the range of financial services available to poor people traditionally excluded from the mainstream. We hope and expect that this success can be applied to other emerging markets.”

Caspian Capital Partners is an independent microfinance adviser based in Hyderabad, India.

Catalyst Microfinance Investors is managed by Catalyst Microfinance Investment Company, a joint venture between ASA and Sequoia – a Dutch corporate finance boutique. ASA is a leading NGO and one of the big four MFIs in Bangladesh.

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