All Eyes on Microfinance Asset Quality

Document summary

2009 was challenging for microfinance; not since the Asian financial crisis has it faced such a difficult economic environment. Despite this most microfinance institutions (MFIs) proved up to the challenge. MFIs in the private equity market traded at a median of 2.1 times book value, a 62% increase since 2007, reflecting sustained demand for microfinance equity, Globally, the microfinance private equity market is still young, lacking in performance benchmarks but statistical analysis of private transactions shows that age, income growth and asset quality are significant valuation drivers. Despite current market uncertainties the medium-term outlook for microfinance equity investment remains positive.