An investment company started by Zurich-based microfinance fund provider responsAbility has completed another capital hike, taking in CHF23.5m (€19m) from its shareholders, which include pension funds, Swiss banks and German development bank KfW.
The company, responsAbility Participations (rAP), invests in equity issued by microfinance institutions in emerging countries. The company has now raised a total of CHF65m and aims to take in up to CHF200m. The pension funds were not named.
Under the microfinance model, investors provide microfinance institutions in emerging countries with capital so they can make loans to local small- and midsize enterprises. The short-term, unsecured loans can carry interest rates of up to 50%, but responsAbility puts the default rate at just 3%.
Until the formation of rAP, responsAbility – through its funds – provided microfinance firms with capital by investing in their debt. As of August 2013, 94% of the Swiss firm’s $1.4bn (€1.03bn) in assets under management was invested in microfinance firms’ bonds.
ResponsAbility is handling rAP’s investments and has already completed three transactions, worth CHF16.4m. As with responsAbility’s funds, investment opportunities are sought out by the Swiss firm’s experts in Zurich, Lima, Nairobi and Mumbai.“As an active partner, we support our investee companies through representation on their boards and by offering them strategic and operational advice. In this way, we can successfully contribute to the development of their strategy, the creation of new products and institutional transformation,” rAP said in its prospectus.
The investment company’s expected internal rate of return, a measure of profitability, is 15% before fees and expenses.
Chief executive of rAP is Rochus Mommartz, who is also Head of Equity Investments at responsAbility. And responsAbility’s own CEO, Klaus Tischhauser, sits on rAP’s Board of Directors. How much responsAbility and rAP’s other shareholders own of the company has not been disclosed.
ResponsAbility’s shareholders include Swiss cooperative bank Raiffeisen and Swiss private bank Baumann, which together own 28.5%, re-insurance giant Swiss Re (13.4%) as well as Tischhauser and his staff (30%).
See RI’s recent interview with Tischhauser here.