Microfinance and Capital Markets - Council of Microfinance Equity ...

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Table 7: Equity BankYear of Establishment 1984CountryKenyaNumber of Branches 36“Mobilize resources to maximize value andMissioneconomically empower the microfinance clientsand other stakeholders by offering customerfocusedquality financial services and solutions”2004 59,306 (9.0)Number of Borrowers (year over year growth %)2005 110,112 85.72006 239,541 117.5Average Loan Balance per Borrower 2006 $4442004 $40,088,984 81.7Gross Loan Portfolio (year over year growth %)2005 $38,303,996 (4.5)2006 $106,374,014 177.7Average Loan Balance per Borrower/GNI per Capita (%)* 2005 65.642004 413,095 63.8Number of Savings Accounts (year over year growth %)2005 556,000 34.62006 1,014,474 82.5Average Saving Balance Per Saver 2006 $1652004 $57,932,010 30.3Saving Balance (year over year growth %)2005 $108,240,431 86.82006 $167,645,004 54.9Average Savings Balance per Borrower/GNI per Capita (%)* 2005 36.73ROA (%) 2006 4.85ROE (%) 2006 40.36Profit Margin (%) 2006 31.53Borrowers per Staff Member 2006 172Operating Expenses/Loan Portfolio (%) 2006 42.38Portfolio Risk (%) 2006 12.19Write off Ratio (%)* 2005 1.92All data taken from The MIX Market, http://www.mixmarket.org.*2006 data unavailable30
THE CAPITAL MARKET LISTINGS/OFFERINGS 58The previous section of this paper analyzed each of the four MFIs that have conductedIPOs or listed and demonstrated that these MFIs are strong performers with opportunitiesfor future growth. Given their profitability, strong management and social missions, it isnot surprising that all four companies were able to successfully list their stock, generallywith great demand. It is also important to note that all four companies’ stocks have shownremarkable growth since going public.Yet, each of these institutions had different structures and purposes for their action. Infact, unlike the other three MFIs, Equity Bank did not actually have an IPO, but rather alisting of stock that was held by many of their clients and employees This section isintended to describe the individual nature and causes for each IPO or listing. We willexplain the reasons each of these companies believed there was an advantage to goingpublic, as well as the performance to date of each company’s stock after the IPO. 59I. BRI LISTING/OFFERINGOn October 31, 2003, BRI became the first bank with a predominant focus onmicrofinance to go public. By the time of its IPO, BRI had passed its stage of dramaticgrowth and was a mature institution. The BRI IPO was part of a larger process where thegovernment was slowly trying to divest its holdings in the banking industry. In part, thiswas a way to raise funds for the Indonesian treasury as well as to allow the government tofollow through with its IMF commitments after the East Asian crisis. 60BRI was listed on the Jakarta Stock Exchange, but shares were also offered, under U.S.SEC Rule 144A, to international institutional investors without a listing on any of theU.S. or other major stock exchanges. Some 41% of BRI’s capital stock was sold, andtherefore, it was only a partial privatization, with the state retaining a majority interest inthe bank. The IPO raised close to $489 million, of which 61% went to reimburse theGovernment of Indonesia. The rest of the proceeds were retained by BRI, with theintent to “fund future growth [and] investment in technology,” according to the BRIOffering Circular. 6158 Unless otherwise noted, the information in this section of the paper comes from the offeringmemorandum or prospectus the MFI published before its IPO. See the two “IPO Details” tables for moreinformation.59 All stock price data is as of September 10, 2007. All numbers are converted at the time of thetransaction. For example, if BRI went public on November 10, 2003, we have converted November 10,2003 Indonesian Rupiah to November 10, 2003, U.S. Dollars. Currency exchange fluctuation will affectdata.60 “Jakarta Puts Its Banks on the Block,” BusinessWeek, October 31, 2005.http://www.businessweek.com/magazine/content/05_44/b3957084.htm.61 BRI, Offering Circular, October 31, 2003. Also see Table 7 below.31
Page 1: MICROFINANCE AND CAPITAL MARKETS:TH
Page 5: ACKNOWLEDGEMENTSWe appreciate the g
Page 8 and 9: a larger process in which the Indon
Page 10 and 11: Table 1: IPO/Listing DetailsName of
Page 12 and 13: (approximately at GNP per capita),
Page 14 and 15: compared to per capita GNP. Average
Page 16 and 17: that prepare their clients economic
Page 18 and 19: director and Ivan Mancillas serving
Page 20 and 21: • Cash mobilization and handling
Page 22 and 23: would be appropriate for the microf
Page 24 and 25: expenses increased rapidly as well
Page 26 and 27: Ownership incentivesIn two of the i
Page 28 and 29: its NGO offering microfinance and i
Page 30 and 31: Table 3: Bank Rakyat Indonesia (BRI
Page 32 and 33: Table 5: BRAC Bank—SME bank2004 -
Page 36 and 37: BRI’s stock has performed excepti
Page 38 and 39: improving health and nutrition for
Page 40 and 41: IV. EQUITY BANK LISTINGAs previousl
Page 42 and 43: limits for MFIs and “truth in len
Page 44 and 45: OVERALL CONCLUSIONSOur conclusions
Page 46 and 47: Annex 1: Poverty Data for Locations
Page 48 and 49: Profit Margin 2006 16.09% 22.35% 31
Page 50 and 51: Portfolio at Risk >30 days 2006 3.7
Page 52 and 53: Holloh, D., Microfinance Institutio
Page 54: ABOUT THE STUDYThis paper discusses

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