VENTURES AFRICA – Bamboo Finance has purchased a controlling stake in Accion Investments in Microfinance for $105 million, in an acquisition that sees private equity increase its role in the microfinancing sector.
The private equity group announced the $105 million transaction on Friday, revealing that it had acquired a controlling interest in Accion, which provides capital for microfinancing insititutions (MFIs) across emerging markets – its most recent projects involving investments across Sub-Saharan Africa, including in Cameroon, Ghana, and Tanzania.
Explaining the decision to include Accion in Bamboo’s global-reaching portfolio, Chief Investment Officer Xavier Pierluca pointed to the growth being felt within the microfinance sphere, and said: “This transaction complements our portfolio of investments…We are excited to provide continuity to the project alongside Accion, and to further the financial inclusion work of MFIs that are positioned for solid growth well into the future. Many of these MFIs, as well as our current portfolio companies, have moved well beyond Microfinance 1.0, starting to offer micro-insurance and remittance services while still growing at a fast pace.”
The acquisition is an indicator of the increasing role of private equity in the microfinancing sector, which through its initial stages of development has seen a dominance of public funds. This was echoed by Enrique Ferraro, Managing Director of Accion in his initial reflections as to the acquisition by Bamboo. He noted: “When we launched the fund, 90 percent of its capital was public money. Today, 90 percent of it is private. That’s attributable to the fund’s return, which we believe is a significant achievement for socially-responsible investing. By attracting private capital to MFI funding, we furthered our vision of building a financially inclusive world.”
Bamboo also highlighted the role of private equity in microfinance, with Chief Executive Officer of Bamboo Jean-Philippe de Schrevel suggesting that the current deal between the two significant sector players constitutes a turning point within the microfinancing market, saying: “This $105 million transaction is a landmark for the …It demonstrates the maturity of the sector and its readiness for private investors.”