Microfinance Taps Mainstream Market Solutions
August 07, 2019
Calvert Impact Capital is excited to grow our portfolio with a new investment to promote financial inclusion in emerging markets around the world. Along with several other investors, we are investing in a $175 million securitization of loans to 26 microfinance institutions and small and medium enterprise (SME) banks in emerging and frontier markets. The deal is led by responsAbility Investments, a leading impact asset manager with a focus on development-related sectors.
This investment supports the continued growth of the microfinance sector, strengthening its ability to tap into mainstream capital markets and access capital more efficiently, at higher volumes. The securitization model enables a broader range of investors with differentiated risk and return preferences to participate in the deal. While the practice of securitization has not been widely applied in impact sectors, it holds important potential to catalyze investor participation and ultimately, get more capital to communities that need it. We hope this deal can provide a template for the field going forward.
This investment fits squarely in the “Sustain” category of our Build-Grow-Sustain portfolio strategy as we seek to capitalize proven intermediaries at scale. Loans in the securitization are originated and serviced by responsAbility Investments and 81% of borrowers will be women. This is our first investment with responsAbility and we’re excited to add yet another quality microfinance investment manager to our portfolio.