Bamboo in Asia investment & fundraising push(2)

The microfinance-focused PE firm is one of the co-investors in Philippine company Bridge, and is in the process of launching two funds with increased focus on Asia.

Private equity firm Bamboo Finance has made a $3 million investment in Bridge, a financial services company focused on rural Philippines, and is in the process of launching both a global and a regional fund to increase its investment in Asia, according to the firm.

Bamboo’s contribution to Bridge was part of a $24 million investment in the new company, in which the largest investors were global non-profit Accion and development bank the Netherlands Development Finance Company, according to a company statement.

Bamboo’s capital injection earned the firm a 12 percent stake in Bridge and one board seat on the company, according to Xavier Pierluca, Bamboo’s chief investment officer.

“The interest for us as a private equity firm [in this investment] is the large unmet demand for financial services in the Philippines,” he added. According to Paul Kocourek, Bridge’s founding principal and chairman, 82 percent of provincial Filipinos do not have bank accounts, and only 6 percent of small provincial business growth is funded by bank loans.

“We hope that this will be the start of a series of targets in Asian microfinance,” Pierluca told Private Equity International.

This is the final investment from Bamboo’s $195 million Financial Inclusion Fund, the firm’s global fund. A second global fund, which will target investments between $200 million and $250 million with a focus on emerging economies, is set to launch, according to Pierluca.

Bamboo has already made several microfinance investments across Asia – especially in India – and hopes to increase its focus on Asia in its second fund, though the fund has no set allocation targets as of yet, Pierluca said.

In addition to the global fund, the firm is also launching an Asia-specific fund, though that is still in early stages, according to the firm. Bamboo now has a total of $100 million dedicated specifically to Asia across three global funds.

Bamboo’s latest deal with Bridge is a typical five- to six-year investment, and the firm expects to earn traditional private equity returns from the investment. Pierluca also believes that the commercial focus of a private equity firm will be critical for the sustainability of the microfinance project.

There are only a few countries in Asia at this point that have good enough regulation surrounding microfinance for private equity investment, Pierluca said – primarily India and the Philippines. But it is still difficult for private equity to find microfinance investments in countries like Laos or Vietnam because specific regulations haven’t been developed.

With $250 million assets under management, Geneva-based Bamboo Finance focuses mostly on microfinance investments worldwide.