10 Dec

EFA Group launches credit fund for financial institutions in developing markets

EFA Group, an asset manager specializing in private debt, has launched the EFA Financial Institutions Debt Fund to provide credit to banks and financial institutions in developing areas of Asia and Eastern Europe. In these markets strong GDP growth, shallow local capital markets and limited access to international markets means there is more demand for credit than is available locally. By capitalizing on EFA’s credit expertise and track record of direct lending in Asia, the Fund aims to raise US$100 million to service this widening funding gap.

The EFA Financial Institutions Debt Fund will provide short and mid-term financing to leading banks and financial institutions in emerging and developing economies, giving investors access to these rapidly expanding financial sectors. The investment strategy aims to deliver superior risk-adjusted returns thanks to the low default rates of targeted financial institutions and their attractively priced debt.

EFA’s Kashama Pascal Nyangombe, who will manage the fund, explained:

“If you are a well-run bank or solid financial institution operating in a country with a low credit rating your ability to grow by raising money internationally will be tainted by the sovereign credit rating. This taint is not justified: default rates for such banks and financial institutions are similar to the default rates on institutions enjoying lower investment grade ratings elsewhere in the world.”

The Fund will exploit this disconnect by analysing the individual risk profiles of the financial institutions and differentiate these from the country risk factors. This distinctive approach should allow the Fund to target a net return of 10% – 12% per annum.

Kashama Pascal Nyangombe added:

“EFA has deep experience in credit and direct lending in these markets. Our portfolio selection includes a rigorous counterparty selection and due diligence process, in which we analyze the country risks, conduct in-depth reviews of local banking regulations and examine the fundamentals of each bank or financial institution. Those that meet our exacting requirements typically have sound shareholder support, a strong business model, and solid track record in accessing external funding or established partnerships with multilateral development banks.” Kashama has over 18 years of financial services experience, including in emerging and frontier markets. He headed Corporate and SME banking units at leading African banks and previously was a Director at UBS.

One of the Fund’s early investee firms will be JSC MFO Crystal, the largest microfinance organization in Georgia serving more than 97,000 clients made up primarily of microentrepreneurs and farmers. The Fund will provide a senior loan agreement to MFO Crystal, who will use the financing to provide credit to micro and small enterprises, creating jobs and supporting the development of tourism, agriculture and service sectors.

Francois Dotta, CEO of EFA Group, said:

“The Fund stays true to EFA’s mission of creating a meaningful impact to businesses and livelihoods through financing. Doing so through an intermediary such as Crystal means that we can ensure even more businesses have access to credit, which is key to a financially inclusive economy.”

-ENDS-

About EFA Group

EFA Group is an independent asset manager specializing in private debt strategies, with a focus on real economy businesses. Headquartered in Singapore, the Group provides alternative financing solutions to enterprises in Asia, Middle East, Europe and Africa and currently has over US$1 billion of assets under management. Since its inception in 2003, the Group has since expanded in size and capabilities, and now employs over 60 personnel between its offices in Singapore, Geneva, Dubai, Istanbul, London and Melbourne. The firm is regulated by the Monetary Authority of Singapore and Dubai Financial Services Authority under EuroFin Investments Pte Ltd.

Media Contact

Siti Rasiqah

Head of Communications

E: siti.rasiqah@efa-group.net

T: +65 6513 9215

Maitland

James Isola/Freddie Barber

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E : fbarber@maitland.co.uk

T : + 44 207 379 5151

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