ShoreCap Management Ltd--which has launched its second microfinance fund ShoreCap II with a target corpus of $100 million--has received commitments for raising $10 million from UK development finance institution CDC Group PLC. ShoreCap, a subsidiary of ShoreBank Corporation of Chicago, is a private fund management company making equity investments in regulated microfinance and small business banks in sub-Saharan Africa and Asia.
CDC, a government-owned development finance institution in the UK, operates a fund-of-funds investment model investing in companies through intermediary fund managers. It has net assets of £2.3 billion (around $3.72 billion) under management, and invests primarily in private equity funds focused on the emerging markets of south Asia and sub-Saharan Africa. In India, it has invested an undisclosed sum in Hyderabad-based microfinance institution Bhartiya Samruddhi Finance Ltd (BSFL).
ShoreCap II plans to invest in small business banks and microfinance institutions, which in turn invest in entrepreneurs and small businesses in low-income countries in Africa and Asia. It seeks to invest $2 million to $10 million in each firm, with a preference for those with strong local roots in Africa and Asia, the statement added.
CDC, which had earlier invested $4 million in ShoreCap’s first microfinance fund ShoreCap I (SCI), is one of the largest contributors to the fund. ShoreCap I has so far invested in 16 financial institutions across Africa, Asia and Central Asia. These institutions in turn had provided development loans to over 2.5 million micro and small business borrowers with an average loan size of $3,200, added the statement.