Myanmar Investments International Ltd (MIIL) and Myanmar Finance Co Ltd (MFC) have entered a deal under which Norwegian Investment Fund (Norfund) has the option to subscribe to a stake in the firms’ microfinance joint venture.
Under the deal, Norfund has the right to subscribe for up to a 25 percent stake in Myanmar Finance International Ltd (MFIL), which was set up in August last year. If the deal were completed, the joint venture partners’ stakes in the company would be diluted to 37.5 percent each.
Norfund is the Norwegian development finance institution, established and owned by the Norwegian government to combat poverty in selected countries through private sector development.
One of the areas that it specialises in is microfinance and as a result brings significant experience to MFIL, MIIL said in a statement.
Aung Htun, MFIL managing director, said, “Norfund is an experienced investor in microfinance businesses in developing countries where they provide equity and debt financing. We welcome their experience to help build MFIL into a leading Myanmar microfinance company.”
MFC was formed in 2012 in Myanmar by U Htet Nyi to provide microfinance products to local communities in Yangon and later Bago. By mid-2014, MFC had nearly 10,000 clients and an outstanding loan portfolio of around K800 million ($833,000).
U Htet Nyi, managing director of MFC, said, Norfund’s extensive experience in microfinance in other frontier economies will be invaluable as the firm continues to grow its business.
Kjell Roland, Norfund’s managing director, said, “Myanmar represents a very important market to Norfund, and we are confident that MFIL will contribute to the development of the microfinance sector in the country.”
MIIL was the first Myanmar-focused investment company to be admitted to trading on the AIM market in London and has been established for the purpose of investing in businesses operating in or with business exposure to Myanmar.
The firm closed an additional equity fund raising of $3.8 million in December last year.