CDC Group, the UK’s development finance institution, is committing USD10m to ShoreCap Management’s microfinance fund ShoreCap II.
ShoreCap seeks to raise USD100m for the fund to invest in small business banks and microfinance institutions, which in turn provide financial services and capital to entrepreneurs and small businesses in low-income countries in Africa and Asia.
The investments the fund makes in banks and financial institutions are expected to be between USD2m and USD10m, with a preference for those with strong local roots in Africa and Asia.
The commitment of USD10m by CDC is one of the largest made to the fund and is expected to attract other investors.
CDC’s commitment follows an earlier investment of USD4m in ShoreCap’s first microfinance fund, ShoreCap I, in which CDC was the single largest investor.
Last year, half-way through SCI’s life, the fund invested in 16 financial institutions across Africa, Asia and Central Asia. These institutions in turn had provided development loans to over 2.5 million micro and small business borrowers with an average loan size of USD3,200.
Hywel Rees-Jones (pictured), managing director of the alternative investments team at CDC, says: “With our commitment of USD10m to ShoreCap’s successor fund SC II, CDC continues to support micro entrepreneurs and small businesses in Africa and Asia.
“CDC was the largest investor in ShoreCap’s first microfinance fund with USD4m, and the fund is proving to be a great success, generating sustainable returns whilst providing financial services and capital to over 2.5 million unbanked borrowers in predominantly low-income countries.”
