Jean philippe tbli financial inclusion presentation final
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  • Deposit-taking institutions present a more stable capital structure as they are less dependent on international financing, and less prone to political interference in emerging markets. Further, the regulation of structures providing services to low-income clients forces more transparency, which limits fraud and corruption. Development of deposit-taking financial intermediaries is a critical component to the progress of financial inclusion. Low-income clients are in dire need of access to savings to protect household resources and banking services to develop businesses. While many microfinance / MSME asset managers are sometimes invested in deposit taking structures, it is typically not a core part of their strategy.

Transcript

  • 1. 1 A Global Private Equity Firm Bamboo Finance is a commercial private equity investor specializing in business models that benefit low-income communities in emerging markets. • Microfinance pioneers • Management team with track record • Diversified portfolio by geography and stage • Demonstrated returns; funds target 20% IRR • Offices in Geneva, Luxembourg, Singapore, Bogota and Nairobi Confidential 11/26/2013 $250M Private Equity 46 Investments 30 Countries 4 Regional Hubs
  • 2. 2 A $200 Million Financial Inclusion Private Equity Portfolio Financial Inclusion Fund I Objective: Support Sector Growth Through Private Equity Deliver Commercial Returns Raise What Could Be Profitably Deployed Deploy Multiple Strategies based on Geography Confidential 11/26/2013
  • 3. 3 Financial Inclusion Fund Portfolio Today 31 Investments Operating in 28 Countries Russia Poland Luxembourg Switzerland Romania Albania Mongolia Lebanon Palestine Mexico Guatemala Honduras Kyrgyzstan Iraq Jordan India El Salvador Philippines Panama Colombia Nigeria Ghana Ecuador Uganda Cameroon Kenya Peru Singapore Nairobi Zambia Bolivia Argentina South Africa Bamboo Financial Inclusion Fund I Portfolio Companies Offices Confidential 11/26/2013
  • 4. 4 Financial Inclusion Fund Financial Returns 2011 An exit delivering a 23% IRR 2013 An exit delivering a 26% IRR and 2x Cash Multiple An exit delivering a 24% IRR and 2x Cash Multiple 2014 - 2017 The forecasted growth (CAGR) of the book value for mature and transforming portfolio companies in the Financial Inclusion Fund is 17% and 40% for start-ups and transforming stage companies with several companies projected to IPO in the next three years . Bamboo Finance Overview Confidential 11/26/2013
  • 5. 5 Financial Inclusion Fund Impact Returns SYSTEMS & PROCESSES Financial Inclusion Portfolio Outreach* MONITORING AND MEASUREMENT BEST PRACTICES AND FIELD BUILDING We developed an Impact Management System defining a comprehensive process to identify, measure, monitor and enhance impact in our investments. • We developed and apply a proprietary social performance scorecard, ASPIRE. • We engage with industry initiatives that promote best practices in the field of social performance, such as the UNPRI/PIIF, the SPTF the Smart Campaign and Micro Finance Transparency. Photo Sarah Djari • Confidential 11/26/2013 *As of 9/30/12
  • 6. 6 Lessons Learned COUNTRY AND REGIONAL DIVERSIFICATION IS CRITICAL TO PORTFOLIO BUILDING STRATEGY SOME COUNTRIES HAVE UNDERDEVELOPED CAPACITY SOME COUNTRIES ARE CROWDED AND COMPETITIVE EXCEPT IN NICHES LESSONS LEARNED DEPENDENCE OF ECONOMY ON CONCENTRATED EXPORT SECTOR AND REMITTANCES IS A MAJOR RISK FACTOR THE MICROFINANCE/MSME ACTIVITY PROVES TO BE COUNTERCYCLICAL POLITICAL STABILITY AND INTERFERENCE WITH REGULATORY AUTHORITIES Confidential 11/26/2013
  • 7. 7 Lessons Learned: Asmitha Asmitha started operations in Andhra Pradesh as a NBFC (non-deposit taking institution) in 2002 Bamboo became their first institutional investor in 2008 Focus on the transformation of credit-only institutions into regulated organizations and full-fledged banks. Increased Stability Confidential 11/26/2013 Less Dependence on International Funding Transparency Savings
  • 8. 8 The Next $200M in Private Equity Financial Inclusion Fund II Objective: Accelerate financial inclusion through multi level, multi channel private equity investing We estimate the absorptive capacity of the market is $2B over the next fund cycle Global, multi-stage vs. country or niche sector focus Focus on deposit-taking transformation 20% to adjacent services Confidential 11/26/2013
  • 9. 9 The Next $200M in Private Equity The Investment Case QUALITY LOAN PORTFOLIOS LOW LEVELS OF LEVERAGE 5 4 INCREASING EXITS WITH A GROWING INTEREST FROM A VARIETY OF BUYERS 3 DIVERSIFICATION 2 RAPIDLY GROWING MARKET Confidential 11/26/2013 PROFITABLE AND SCALABLE 1
  • 10. 10 The Next $200 Million Performance Driven A Mixture of Mature and Growth Stage MFIs Key Performance Indicators 2007 2009 2011 Yearly Average 2006-2011 Gross Loan Portfolio Growth 72%* 21%* 34%* 31% Debt/Equity Ratio 4.23* 4.21* 4.12* 4.28 Portfolio > at risk 30 days 1.73%* 3.38%* 2.21%* 3.67% Return on Equity 18.8%* 10.22%* 18.8%* 16.42% Price/Book Value Multiple 1.2* 1.7* 1.4* Not available * Annualized average growth for the 2 previous years. JPMorgan/CGAP, Global Microfinance Survey 2012 Bamboo Finance Overview Confidential 11/26/2013
  • 11. 11 The Next $200 Million Global Diversification Latin America • Mature market with mature organizations • Consolidation strategy through holding companies •Domestic or cross border acquisitions led in cooperation with banks • Regional expansion into new countries Confidential 11/26/2013 Asia • Strong Demand • Rise of family owned banks and credit-only structures •Consolidation strategy on base assets above $25M •Enter into underserved markets in China and Myanmar Africa • An enhanced regulatory framework in some countries • Demand is outpacing supply in most countries •Supply is disorganized •Creation of regional holding structures to maximize efficiencies • Targeting organizations with assets above $30M
  • 12. 12 The Opportunity: Xac Bank Example • Xac Bank is part of the major Mongolian financial group TenGer Financial Group (TFG). • Started as a nonprofit microfinance lender in 2001 • Has evolved into the fourth largest bank in Mongolia • It is a fully regulated commercial bank, recognized for its transparency, governance and fair lending practices, with 500,000 customers in 21 provinces, 97 branches, and US$935 million in assets Loan Portfolio Growth Trajectory Confidential 11/26/2013 Responsible lending contributed to low defaults Historically strong profitability
  • 13. 13 The Opportunity: Xac Bank Example Bamboo sold its stake in Xac Bank in 2013 Returns above 25% and 2x multiple Transaction demonstrates attractive financial returns can be combined with positive social impact Confidential 11/26/2013
  • 14. 14 The Opportunity in Financial Inclusion Access to Finance is Top 3 Driver of Growth in Low-Income Markets Consumer Demand in Low-Income Markets is Growing. There is a $400B Small and Medium Enterprise Funding Gap. Financial Access Investments Doubled in 2011 with attractive Valuations; Demand is Outpacing Supply. Economic Drivers Confidential 11/26/2013