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Kinnevik Invests $14m in African Microfinance Institution Bayport Financial Services

 
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Kinnevik Invests $14m in African Microfinance Institution Bayport Financial Services
   

Investment AB Kinnevik, a Stockholm-based international investment firm, announced that it has invested USD 14 million in the African microfinance institution (MFI) Bayport Financial Services. The financing is provided as a combination of debt and equity.

As of June 2007, Investment AB Kinnevik held USD 3.96 billion (SEK 25.6 billion) in total assets. Shareholders’ equity and liabilities also totaled USD 3.96 billion. The Parent Company manages a portfolio focused around three areas: Major Listed Holdings, including Millicom International Cellular, Tele2 and Transcom Worldwide; Major Unlisted Holdings, including the cardboard and paper company Korsnäs; and New Ventures, which actively finds and invests in small- and mid-sized companies with considerable growth potential.

According to a Kinnevik press release, the financing of Bayport is the second major investment in the area of New Ventures for Kinnevik this year. In May, the firm invested in Gateway TV, a company which offers satellite-based pay-TV services in Sub-Saharan Africa. It is expected that the service will be available in 8 countries by the end of 2007. In total, Kinnevik has invested USD 124 million (SEK 800 million) in New Ventures, and the market value of new ventures at the end of second quarter 2007 was approximately USD 150 million (SEK 969 million).

Bayport, founded in 2002, currently has 1,000 employees and 61 branches in Zambia, Tanzania, South Africa, Ghana and Uganda. Bayport serves 150,000 clients, the majority of whom are employed but are unable to access conventional sources of credit. About 20 percent of the MFI’s clients are civil servants who live in rural villages. Bayport deploys teams that travel to villages to disperse loans to people who would otherwise be unable to access financial services.

Bayport clients use the loans for a variety of purposes. Thirty to 40 percent take out loans to pay for education. Twenty percent borrow to fund home improvements. The rest of the loans serve various functions, including funding small businesses and consolidating more expensive debt.

Bayport’s loans range in size from just USD 20 up to USD 1,500. The average loan issued is USD 250–no small amount considering that a teacher in Zambia earns just USD 200 per month. Annual interest is between 70 and 90 percent. The MFI’s repayment terms range from one to 36 months, and repayment rates are high (96.5 percent in Zambia).

No further financial information on Bayport is currently available. To learn more about this author, visit David Satterthwaite's Website.

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About the Author


David Satterthwaite
(Visit David's Website)
David brings 10 years of experience in microfinance management, social entrepreneurship, non-profit management/fund-raising and microfinance investment research. David is the Chairman and President of Prisma Microfinance, Inc., a retail “microbank” operating in Central America. He is also Chief Editor of MicroCapital.org, a news and information service for the microfinance community and its investors. Each month, MicroCapital.org publishes the MicroCapital Monitor, the leading industry newspaper. David writes and speaks frequently on microfinance. He has been a quest speaker at many events, including: Microcredit Summit 5+: Panel on Private Investment, Milken Institute Global Conference, United Nations Year of Microcredit Symposium for Wall Street, Chicago Conference on Microfinance, Harvard Social Enterprise Conference, Dartmouth’s Business Sustainability Conference, Wharton’s Conference on Social Entrepreneurship, Stanford’s Social Enterprise Club, Columbia’s Social Enterprise Program and the Net Impact Annual Conference. Through his work with Prisma and MicroCapital, he has been featured or quoted in The Wall Street Journal, the Boston Globe, “All Things Considered,” Reuters and SocialFunds.com. David has been recognized with the Compaq Computer Corporation Leadership Award, the City Year Inspiring Leader Award and the National Social Venture Business Plan Competition award for Best Social Impact Analysis. David has supported many non-profit and for-profit social enterprises in different capacities, including Access Technology Learning Center, Agora Partnerships, Bridges to Business, City Year, Fonkoze, Kiva and National Social Venture Competition. David holds a B.A. with Honors in Political Science from Haverford College.
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