Success Criteria for a Tier 2 Investment Fund

• 1. Thorough Due Diligence
• 2. Significant ownership providing board access and allows influencing the business strategy
• 3. Acknowledgement that the institution will go through a transformation process after which the size and organization will be significantly different
• 4. Dedicated Technical Assistance which guides the MFI through the investment period (local presence)
• 5. Preparedness to invest in technology as well as technical assistance
• 6. Sophisticated Risk Management Process that guides the MFI through its growth process

Three tools in the investment process

In a Due Diligence Processthe Institution is analyzed for its invest ability based on current business model and growth potential.

After initial investment, a cost/efficiency management study is executed which is the core of the strategic plan. Follow up projects are executed over time. In parallel risk management support is provided.

PPP has developed a generic Due Diligence Process. We also rely on the input of the investment manager using his approach in order to ensure consistency. The due diligence is executed mainly as a desk study with verification visits (including field trips).

The results of the work are treated highly confidential!
Please refer to: Due dilligence PDF

Contact Us

• info@perfectpointpartners.com

PPP supports Management of a Tier2 Fund

• Over the past years several new Investment Funds started the focus on Microfinance Institutions. As Investors and Managers get more familiar with the asset category, new products and niches are explored.
• Current focus of attention are Tier 1 MFIs for which debt investment is provided. Few global institutions (try to) build up international networks of MFIs (FINCA, Pro Credit). Fund Managers start looking at options to invest in Tier 2 MFIs.
• Investors are interested in such MFIs as they provide an extensive growth opportunity. Similar to Venture Capital Investments we expect that a few institutions will achieve extraordinary success while the risk of failure is possible.