Investing in RFIs

MicroVest provides investment advisory services to private investment funds and other investors, which in turn provide debt capital to Responsible Financial Institutions or “RFIs” that serve micro, small, and medium enterprises (MSMEs) in emerging and frontier markets.

By catalyzing the availability of credit to RFIs, MicroVest’s portfolio delivers measurable social impact that advances economic development, facilitates financial inclusion, promotes gender equality, and reduces poverty.

MicroVest invests in RFIs that act as financing agents in a niche largely untapped by global banks and present a commercially sound growth case to address the funding gap for small businesses in emerging markets.

By putting our investments to work in institutions that offer fair and competitive rates and operate in a manner that serves and protects customers, we are strengthening the financial impact of our capital, promoting transparency and helping to diminish the footprint of problematic lenders.

Our Philosophy

We believe and our track record demonstrates that selectively allocating private debt capital to RFIs can generate risk adjusted returns in addition to quantifiable social impact. Our investment process combines a proprietary top down country risk assessment with rigorous bottom up due diligence to identify RFIs whose culture and lending policies are aligned with supporting end borrowers in the communities they serve.

An Emphasis on Risk Management

Given that much of low-income lending is unsecured, risk management is our highest priority. To protect investors’ capital and ensure portfolio quality, MicroVest only invests in RFIs with strong credit profiles, sound operations, and business models that possess favorable strategic and financial prospects. The processes RFIs utilize for borrower selection, underwriting and monitoring are critical, and our due diligence efforts focus on these.

We believe that financially sound institutions that adopt responsible lending practices are best positioned to facilitate productivity gains that spur economic growth and higher yields with typically less risk to investors.

Why It Matters

Without RFIs to serve un- and under-banked end borrowers, irresponsible actors (more commonly known as “loan sharks”) in this sector can contribute to borrower over-indebtedness and/or threaten the stability of a country’s financial sector through high delinquencies and/or nonperforming loans. Due to the position of trust that financial institutions occupy and the importance of empowering end borrowers throughout their financial lives, MicroVest believes scaling institutions with integrity is even more critical and our work anchors on this principle.