Rural Impulse Fund II

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BIO committed EUR 5 million to Rural Impulse Fund II (RIF II), a new specialist microfinance fund backed by leading public and private financial institutions and investors. The Fund targets commercial microfinance institutions (MFI) providing financial services to the rural poor and will invest in Africa, Latin America, Central Asia, the Caribbean, Central and Eastern Europe, India and South East Asia. It has a total size of 120 million euro, whereas 86 million euro has been committed as per the first closing. RIF II will provide equity, quasi-equity, and debt and seek investments between EUR 500,000 and EUR 5,000,000. The Fund will endeavor to invest at least EUR 5 million of its portfolio in BIO’s eligible countries.

The expansion of the microfinance industry has been considerable over the last years. Leading microfinance operators have convincingly demonstrated that well-managed MFIs can make major contributions to poverty reduction and employment creation. However, the successful penetration of microfinance has been mainly concentrated in urban areas. The provision of sustainable microfinance services in rural areas remains weak, although the majority of the world’s needy live in those areas. As a result, notwithstanding the remarkable achievements of the microfinance industry, there are still substantial untapped opportunities for MFIs in that specific segment.

Back in 2007, BIO invested in Rural Impulse Fund I (RIF I), the world’s first microfinance facility to focus on commercially viable rural microfinance institutions, with an equity and mezzanine participation of EUR 1 million and EUR 1.3 million respectively. RIF I has proven that there is strong demand for financing from rural MFIs, as it achieved its planned deal flow in half the expected time and has now made investments with 24 institutions across 18 countries with a customer base of 1.5 million clients.

RIF II will commit a substantial amount of its means in equity, but also quasi-equity and debt. The Fund will focus on microfinance NGOs, non-bank financial institutions, credit unions, microfinance banks, finance companies specialising in microfinance, downscaling banks, etc., who have at least 30% of their clients living in rural areas. The Fund will be managed by Incofin Investment Management, which also acts as promoter and fund advisor to RIF I, its predecessor.
Website: www.incofin.com

  • Investment amount (€):

    EUR 5 million

    Registered offices: Luxemburg Beneficiary offices: Zambia; India; Bolivia; Colombia; Peru; Ghana; Kosovo; Tajikistan; Kazakhstan; Kyrgyzstan; Nigeria; Tanzania; Cambodia

  • Contract signature :

    2010

  • Nature of intervention :

    Debt

  • Development impacts :

    • 1 — Improve access to financing for the rural poor
    • 2 — Promote and stimulate investments in rural MFIs