The Fund will be managed by an experienced global investment manager which specializes in microfinance. The Fund is being structured jointly by IFC, KfW and BlueOrchard Finance.

The MIFA Fund will be funded by issuing up to 3 classes of shares. Initially, the investors are expected to be IFC, KfW, and Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (German Federal Ministry for Economic Cooperation and Development, “BMZ”).

The Fund has a target size of $100 million, including up to $25 million in donor-funded concessional funding. IFC’s investment in the Fund is proposed to be up to $20 million in mezzanine shares.

20.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
Equity	0.0

* These investment figures are indicative

The MIFA Fund will be domiciled in Luxembourg, with special purpose vehicles to be established in Mauritius and India. The Fund will make debt investments across the Asia region, including East Asia, South Asia, and Central Asia.

i) Poverty reduction: The project is in line with the IFC microfinance strategy for increased outreach in South, East and Central Asia, especially in large countries like India and China, home to 40% of the world''s population. Microfinance penetration rates in this region remain among the lowest globally. By supporting the expansion and sustainability of well performing MFIs, the project will improve access to finance for thousands of micro and small borrowers. This in turn will stimulate growth, employment generation and poverty alleviation in the region.

ii) Access to local currency commercial longer-tenor funding for MFIs: By lending in local currency, the Fund will facilitate the access of Asian emerging market MFIs to commercial funding that is better tailored to their needs. It will reduce the volatility of MFI loan portfolios, as currently most MFIs are unable to properly address the currency mismatch risk. Further, the Fund aims to provide longer tenor funding and subordinated debt products, a clear need for MFIs currently.

iii) Mobilization: the Fund will mobilize resources from local and private partners to promote microfinance as a viable asset class.

iv) Capacity-building: the TA Facility will aim to build the capacity of microfinance institutions, with a focus on business and finance skills, MIS development, and corporate governance.

(i) Mobilization: IFC will play a catalytic role in encouraging the participation of other investors including both IFIs and private sector investors at a time when fundraising is particularly difficult;
(ii) Structuring expertise: IFC offers expertise and experience in structuring microfinance investment vehicles;
(iii) Local knowledge: IFC can add further value through its global expertise in microfinance and ground presence. Through its local presence, IFC can provide critical market knowledge and support to the Fund as needed.

This project involves IFC support for the business of microfinance and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. The envisaged fund manager under this project will have capacity for environmental and social risk management relevant for microfinance. Considering the nature of activities supported, the fund manager will be required to: (i) develop and implement a procedure relevant to its business process, prior to disbursement, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on the Microfinance Exclusion List; (ii) identify qualified persons to manage and implement the procedure; (iii) ensure that the MFIs it supports establish a similar screening process to avoid supporting activities on the IFC Microfinance Exclusion List; (iv) apply the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions; and (v) submit a periodic report to IFC as per a format to be provided by IFC.