FFI also enjoys collaboration
with ProCredit Holding
AG, a microfinance investment company that
supports institution building. ProCredit
Holding’s shareholders include IPC (21.8%); the DOEN Foundation
of the Netherlands (24.4%); KfW Bankengruppe, a development bank
owned by the German government (14.9%); FMO, a development bank owned
by the Dutch government (8.5%); IFC, part of the World Bank Group
(9.2%); IPC-Invest, composed of IPC and FFI staff members (4.2%);
ProCredito, a Bolivian foundation (3.5%); BIO the Belgiische InvesteringsMaatschappij
voor Ontwikkelingslanden a belgium investment company ( 8.2%); and
several smaller organizations including responsAbility, Andromeda
and Fundasal with a combined stake of 5.2%.
ProCredit
Holding AG provides
equity capital for microfinance institutions in Eastern Europe,
Africa and Latin America. Its participation ranges
from as low as 17% to as high as 81% but is generally not less than
10% of the capital of such institutions. ProCredit Holding was established
in 1998 with subscribed capital of DM 10 million, of which DM 3 million
was paid in at the founding. As of April 2005, ProCredit Holding’s
capital was EUR 73.7 million and it held investments in 19 microfinance
institutions. Several additional deals were in various stages of
development.
The purpose of ProCredit
Holding is to complement IPC or FFI’s
role as management consultants and to support institution building.
ProCredit Holding links the consulting aspect with the long run performance
of the institution being operated under management contracts. While
the consulting presence declines over time as a microfinance institution
that is started from scratch matures, the equity holding endures,
assisting the institution to realize economies of scale and to cope
with external shocks of the types that can be expected in transition
and developing economies.
Another aspect of ProCredit
Holding’s involvement is that
considerable equity is often required to form a financial intermediary,
especially one that accepts deposits. ProCredit Holding helps address
the capital requirements directly with its own commitments and also
indirectly by attracting other equity investors. A sufficient supply
of equity capital enables an institution to realize economies of
scale quickly.
In this context, FFI provides ProCredit Holding with liaison services
to important US based investors, financiers and technical assistance
providers including IFC, IIC, MIF, IADB and USAID. In addition, FFI
is actively involved in developing and implementing expansion strategies
for ProCredit Holding and the ProCredit Bank network in Latin America
and beyond.
