PGGM mandates $60m to manager from €200m microfinance programme

Cornerstone investment made with Grassroots Capital, notably for India investment potential.

PGGM, the €75bn Dutch pension fund asset manager is making a cornerstone investment of up to $60m (€43m) in a global microfinance equity fund run by Grassroots Capital, the New York, London and Hyderabad-based manager, as part of a massive €200m programme announced last year (see foot). The new investment is the second allocation by PGGM under the programme, which will invest in both microfinance debt and private equity over the next two years. The first investment worth €27m was made in March 2008 to the Dexia Microcredit Fund operated by Swiss fund manager BlueOrchard Finance. It means PGGM still has around €130m to commit to the microfinance sector. Grassroots Capital runs total assets of $160m across two funds, the first-generation Gray Ghost Microfinance Fund and the latest Global Microfinance Equity Fund that PGGM is anchoring. Grassroots has established equity relationships with nearly 50 microfinance institutions in over 24 countries. Alex van der Velden, head of responsible equity strategies at PGGM, said: “Our investment in Grassroots comes at a time when microfinance institutions are particularly needing to bolster their capital to address the global credit crisisand many developing regions still lack basic access to microfinance. We chose to invest in Grassroots because they had the strongest and most experienced team of the upcoming microfinance equity funds that we reviewed over the past year. Grassroots already had a promising track record, and particular strength in India which we consider to be one of the most promising growth areas for microfinance.” PGGM is the pension administrator and asset manager of Pensioenfonds Zorg en Welzijn, the Dutch pension fund for the care and welfare sector and AENA, the professional pension fund for independent artists.
The two largest Dutch pension fund managers, ABP and PGGM have been amongst the world’s most active pension investors in microfinance. ABP and its US peer TIAACREF, the higher education and medical workers fund, were named amongst investors in a $125m fund close by Catalyst Microfinance Investors (CMI) in 2008.
ABP already had microfinance investments amounting to approximately €20m at the end of 2007.

PGGM makes one of world’s biggest institutional investments in microfinance