Investment approach

Introduction

An estimated 2.5 billion people, or close to half the world’s population, have no access to formal financial services. They are unable to open a bank account, negotiate a loan to start a business or buy insurance. Having access to these financial services has a fundamental impact on the lives of millions of people. It enables them to build their assets gradually, develop micro, small and medium-sized enterprises and improve their income earning capacity, create employment and provide a financial cushion for the future.

While there is still a long way to go to make sure that everyone everywhere has access to a diverse range of financial services, the past ten years have seen tremendous growth in financial services being offered to poorer people by an increasing number and variety of financial institutions. The industry has proved that low income populations are bankable and can be offered financial services in a sustainable way. On the back of the microfinance industry’s success, commercial banks in developing countries have partnered with microfinance institutions to reach lower income customers. In some markets, microfinance institutions (MFIs) have transformed into licensed banks, enabling them to further expand their services to small and medium-sized enterprises or provide mortgages.

Significant challenges remain, however, not least because millions of people are still excluded. As the microfinance sector becomes integrated into mainstream financial systems, it also inherits many of the industry’s existing problems. This means that as the industry matures it must address its challenges in a balanced way in order to shape an inclusive financial services industry that keeps the interests of its low-income clients at its core.

Mission

Triodos Microfinance Fund, established in 2009 as a sub-fund of Triodos SICAV II, enables investors to actively contribute to the development of the microfinance sector into an inclusive financial sector in which the majority of people have access to financial services. The fund provides loans and equity to microfinance institutions and banks that have a sustainable approach toward providing financial services to those traditionally excluded.

Triodos Microfinance Fund is an initiative of Triodos Investment Management, a wholly-owned subsidiary of Triodos Bank NV. Triodos Investment Management started investing in developing countries in 1994 because it recognised that sustainable development, and addressing poverty issues in particular, was a global issue. Since 1994, assets under management in the microfinance sector have increased to more than EUR 530 million, making Triodos Investment Management one of the leading investors in the industry. As an investor it wishes to contribute to the development of a sustainable financial sector in developing countries based on fair pricing, transparency, access for all and care for the earth.

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