Azure Partners, the Swiss based investment house founded by Jack Lowe and Vincent Oswald, previously of Blue Orchard, is launching the first global Microfinance fund of funds, the Azure Global Microfinance Fund; open to investors from January 2012.
Microfinance is the provision of basic financial services such as micro loans, deposits and insurance schemes to poor people that are excluded from the mainstream financial world. It is one of the fastest growing global asset classes, currently serving more than 150 million people in over 50 countries, representing USD40 billion of gross loan portfolio with a projected yearly growth of between 30%-40%. Not only is it a powerful tool to fight poverty, it is also a profitable and sustainable industry. There are more than 120 funds active in this market providing healthy returns to investors and a vast social impact.
Azure Global Microfinance Fund is the first global fund of funds in microfinance, enabling optimal exposure to the best funds in the field. These range from larger to smaller more innovative funds as well as regional and private equity funds. This mix of funds delivers steady net returns combined with extremely wide diversification. The majority of debt investment funds targeted have monthly liquidity and cash reserves. The advisor negotiates fee rebates with most of the targeted funds enabling a decrease of overall fee levels. Large geographic diversification within the fund drives risk down without diminishing returns.
The fund is investing up to 65% in debt funds and 25% in private equity funds with the remainder in a cash reserve. The overall net return in USD should reach between 5% + 6% annually. The fund will keep investors abreast of new developments and products in the asset class, as well as the evolution of each fund in terms of performance and professionalism. It will achieve a meaningful social return in addition to a de-correlated, stable financial return.
Chairman Jack Lowe and Managing Director Vincent Oswald have been active in Microfinance since 2004, bringing in their in-depth expertise of the industry and their knowledge of the investor base, having managed the leading Private Sector Fund Manager Blue Orchard. During the last 7 years, they have co-invested with 74 microfinance funds, 36 fund managers, 10 microfinance networks and 10 development banks – with one of the longest and more successful track records in the private microfinance investment world.
Lowe says: ‘‘Microfinance has three distinct advantages for the investor; negative correlation with most other asset classes, extremely low volatility and enormous geographic diversification in emerging markets. This combination of factors has provided historic returns of between 4% and 8% for debt funds and 12-18% for private equity funds. These advantages enable the Azure Global Microfinance Fund to provide extremely attractive ’double bottom line’ investment opportunities to both private and institutional investors with immense and invaluable social impact. Since its very beginning the microfinance sector has never experienced a negative yearly performance.’’