Infrastructure for Development
Investing in Financial Institutions
Rationale for Financial Institutions Investments
Development
Rationale
Investment
Needs
• Private sector development is dependent on access to
capital.
• Borrowing and saving money reduces vulnerability of
households.
• Large number of enterprises and individuals lack access
to basic financial services, such as banks accounts,
insurance and credit.
• Financial institutions need capital to develop products and
increase market outreach.
• Banks are dependent on debt in order to extend loans to
their customers, especially longer tenure local currency
debt.
• Capital investments are also necessary to build
infrastructure to expand service offering to unbanked.
Financial Institutions Strategy
Profile
• High financial returns and strong development effects.
• Focus on SME’s and unbanked.
• Mainly local owned with promising growth potential.
Institutions
• Banks.
• Micro finance companies.
• Non- deposit taking and other financial
institutions.
Instruments
• Equity
• Debt (USD and local currency)
• Mezzanine
Existing Financial Institutions Portfolio
NOK 2,4 billion committed
FI Portfolio per Region
FI Portfolio per Instrument
Africa
15%
9%
Asia
42%
44%
19%
Debt
Equity
Central America
49%
22%
Global
Mezzanine debt
Development Effects of Financial Institutions Portfolio
FI Jobs per Region
12%
Africa
26%
Customers:
52.9 millions
62%
Jobs (Direct):
130 183
Taxes NOK '000
1,000,000
Female Jobs:
38%
500,000
-
Taxes:
NOK 1,942,219,630
Taxes NOK '000
Africa
Asia
946,405
583,159
Central
America
410,222
Central
America
Asia & Pacific
Highlights 2013 - 2014
SUMMARY
HIGHLIGHTS
Committed NOK 627 million to 12 investments
NORFINANCE (“NF”)
PROXIMITY DESIGNS
• Investment company targeting
African financial institutions with
equity investments.
• Main rationale to mobilize
private Norwegian capital for
investment in the Financial
institution sector in Africa.
• Investors:Norfund,KLP,
Perestroika AS; Skagen KonTiki Verdipapirfond ; Solbakken
AS.
• First close USD 136.5 million.
• First investment in Myanmar.
• PD provides crop loans to small
and rural farmers.
• The organization boasts the most
extensive rural network, covering
80% of rural population.
• Loan will provide more access to
finance to rural farmers.
• Convert from a NGO to a
commercial company.
Key Next Steps
Fully Invest
NorFinance
Scale up NMI
• Invest available capital and possibly raise additional capital.
• Scale up Norwegian Micro Finance Initiative (”NMI”) and possibly
obtain more Nordic investors.
• Invest in scalable banking models with innovative distribution
channels like agency business models and mobile money
Scalable banking transfers.
models
• Examples of Brac Bank, Bangladesh and Equity Bank, East
Africa.
Innovative
• Invest in innovative business models outside traditional banking
business models sector addressing needs of SME’s and unbanked
Bank: DFCU Limited Uganda
Company Background
Shareholding Structure
 Was founded in May 1964 as a Development Finance
Bank and converted to a commercial bank in 2000 and
listed on the Uganda Security Exchange on 2004.
 Is Uganda’s
5th
largest bank, with 34 branches
27.5%
27.5%
15%
Other
30%
countrywide.
 We are an investor since 2004 and have increased our
shareholding in 2012 from 10% to 27.5% . This
Performance – Total Assets
investment has now been transferred to NorFinance.
 We have also provided debt capital
 The bank has transformed several private enterprises in
Uganda through provision of funding for projects using
products like Term Loans, Home Loans, Commercial
Mortgages and Leasing.
 In 2013 we initiated a strategic alignment of
shareholders with the introduction of Rabobank as a
new shareholder.
Unit: Shs million
Microfinance : Hattha Kaksekar Limited, Cambodia
(HKL)
Company Background
Shareholding Structure
 Started as an NGO food project in 1994 and a
17.49%
Microfinance operator in 2001.
19.75%
19.73%
 Norfund has been invested since 2007.
19.87%
 Is among one of the top 4 MFIs in Cambodia and is
23.16%
Local
SH
moving towards being the leading, sustainable
microfinance provider, helping clients to succeed in
their businesses.
 Employs 1872 people, of which 541 are female.
 We have provided equity funding, loans in both local
currency and in US dollar and an emergency liquidity
credit line, when there was political turmoil.
 Strategic plan initiated to transform to a fully fledged
SME/ Micro finance banking group.
Strong shareholder group who have been consistently supportive to HKL’s
growth.
Performance - Loan portfolio
Unit: USD million
250
200
150
100
50
0
2007 2008 2009 2010 2011 2012 2013
As of June 2014, loan portfolio stood at USD 194 million
with PAR>30 of only 0,04%.
1H
2014
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