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Best Practices voor een duurzame toekomst
30 augustus 2008

Dutch pension giant ABP now leading European private investor in microfinance

Since 2005 ABP has invested a total USD 40 million in BlueOrchard Debt Funds. According to ABP, BlueOrchard has “rare experience and accumulated knowledge in this very specific industry”. In a press release ABPs Jan van Roekel declared: “These investments are particularly fit for a pension fund as a risk diversifier. They have so far proven to be relatively non-correlated with most other asset classes and it appeared natural to follow-up with an investment in private equity, a most needed form of financing in this industry.” Investor confidence in the microfinance sector is increasing thanks to the impressive results it produced over recent years. In a volatile environment, the microfinance sector remained stable and productive.

ABPs money will reach hundreds of thousands of micro-entrepreneurs in Latin America, Asia, Eastern Europe and Africa. Poor people in developing countries are not bankable, as they have no collateral or guarantee. Microfinance institutions fill the gap. They rely on the operation of peer group pressure in poor peoples communities to ensure loans are paid back. Repayment track records beat that of most commercial banks (97% on average). With the investment ABP expects to achieve reasonable financial returns (6% on a yearly basis) through responsible investments.

The BlueOrchard Private Equity fund is capitalized at USD 111 million, following ABPs recent commitment. The fund targets USD 220 million by the final closing date at the end of 2008. The fund seeks to forge long-term partnerships with microfinance institutions across the world. It acquires minority stakes in their capital while playing an active governance role by sharing international experience, information, networks, knowledge and taking active part at board level.

ABP is the pension fund for employers and employees in service of the Dutch government and the educational sector. With assets of EUR 217 billion, ABP ranks among the top three pension funds in the world.

P+ webtip: ABP

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