June 26, 2012, CHIFENG, China– Accion®, a pioneer and leader in global microfinance, announced today that Sagamore Investments has agreed to invest RMB 140 million (US $21.9 million) in Accion Microfinance China (AMC), a microfinance institution delivering financial services to microentrepreneurs in Chifeng Prefecture, Inner Mongolia.
The equity investment will be made by an investment company established by Sagamore, Grassland Finance Ltd., to take stakes in microfinance organizations in China. The initial investment is RMB 40 million (US $6.25 million), with an additional RMB 100 million to be invested over the next two years, bringing Grassland’s ownership stake to 70 percent. Accion, currently AMC’s sole owner, will retain a 30 percent stake and will continue to serve as the operating partner.
Accion was one of the very first foreign organizations to be granted a license to launch microlending operations in China, and established AMC in 2009 to provide previously underserved regions of Chifeng with access to quality financial services. AMC now provides working-capital and fixed-asset loans for urban and rural, small and medium-sized enterprises in the Chifeng region. Loan amounts start at RMB 1,000 ($150).
Since inception, AMC has disbursed RMB 157 million in loans to almost 2,000 clients, with an average outstanding loan of RMB 55,000 ($7,891). AMC has invested significantly in training, and has built a strong local team of 37 full-time staff in order to support the success of its micro-entrepreneur clients.
“We are delighted to welcome Sagamore as a partner in AMC,” said Michael Schlein, Accion President and CEO. “Sagamore has both the expertise and the patient-capital approach we were seeking, and this partnership will help provide AMC with the capital it needs to grow and reach more people, broaden our product offerings and attract great talent. Sagamore’s investment supports our strategic goal of building the next generation of top-tier microfinance institutions, and shows that our belief in Chinese microfinance, and our commitment to making it work, was well-founded.”
The Chinese banking industry has provided tremendous support to corporate and state-owned enterprises over the past decade, but has been unable to meet the demands for formal financial services of micro, small and medium-sized enterprises (MSME). This underserved market segment not only provides a major opportunity for AMC, but is also in line with the Chinese Government’s efforts to find solutions for overcoming MSME funding challenges.
“We have been seeking an entry point into the still-nascent microfinance sector in China, and we could hope for no better partner than Accion, with its proven record of success building strong MFIs in undeveloped markets,” said Peter Moody Brooks, Co-Managing Director of Sagamore Investments.
About Sagamore Investments
Sagamore Investments’ companies were established in 2002 by Rodrigo Yang and Peter Moody Brooks to make private investments in global biotechnology and healthcare services, as well as more broadly across several sectors in China. The combined firm now has approximately $250m of funds invested across venture capital and private equity funds, as well as directly managed private and public equities, including $150m in Chinese funds and companies.
Accion is a global nonprofit dedicated to building a financially inclusive world, with access to economic opportunity for all, by giving people the financial tools they need to improve their lives. A world pioneer in microfinance, Accion has helped build 62 microfinance institutions in 31 countries reaching millions of clients on four continents over the last 50 years. For further information, visit www.accion.org.