Global Commercial Microfinance Consortium II

Building on the success of the recently matured landmark fund, Global Commercial Microfinance Consortium I, the Global Commercial Microfinance Consortium II (“Consortium II”) is bringing capital to support the growth of institutions that want to pursue objectives that balance social goals with financial responsibility and that demonstrate a high level of customer care and product innovation to better serve their clients. Consortium II utilized an innovative fund structure, introducing self-generating reserves to address the perpetual challenge of raising sizable funds in subordinated tranches for microfinance and other social enterprises.

Consortium II provides both long-term senior and subordinated debt in USD or Local Currency to MFIs operating globally that prioritize the highest standards of client care, transparency of operations and pricing, and product innovation. The Fund not only incorporates extensive financial analysis and enterprise level due diligence, but also includes analysis of the MFIs’ adherence to their social mission and focus on customers. In addition, the Fund will offer short-medium secured term loans to social businesses in the fields of healthcare, education, energy, agribusiness, and technology that improve the quality of life at the “Bottom of the Pyramid”, providing investors with exposure to new social business models.

Financial description

Consortium II provides both long-term senior and subordinated debt in USD or Local Currency to microfinance institutions and social enterprises operating globally that prioritize the highest standards of client care, transparency of operations and pricing, and product innovation.
Consortium II has developed a diverse pipeline of over 30 MFIs and social enterprises operating in nearly 20 countries. Although the fund was just established in June 2012, the Fund has already provided 13 loans to MFIs in nine countries totaling US$28.7mm.
Consortium II introduced a new concept to social investing, with a unique self-generated reserve to provide risk protection to investors. At the time of closing, a bridge facility holds a second loss position, to be repaid after two years into the Fund’s life. While the bridge facility is outstanding, the Junior and Senior Noteholders receive lower coupon payment, which allows reserved profits to build up, gradually replacing the bridge facility without impacting the subordination levels of the various investor tranches. Six months after the bridge facility is repaid in full, the Senior and Junior Noteholders are scheduled to receive higher coupon payments, sufficient to achieve the lifetime return targets.