Myanmar Finance International Limited (MFIL), a microfinance joint venture of AIM-listed Myanmar Investments International (MIL), has raised an additional US$1 million debt facility from Maybank, the only Malaysian bank to be granted a banking license from the Central Bank of Myanmar.
The loan agreement was signed on May 3, adding on to the debt injection of US$1 million from the Yangon branch of Maybank back in November 2016.
In total, MFIL now has US$2 million in Kyat-denominated debt facilities in place.
“This is the second in a series of debt financing initiatives that are planned for MFIL in the near term, allowing MFIL to continue to consolidate its position as one of the leading microfinance operators in Myanmar,” said MIL’s managing director, Aung Htun.
“For the past two years, MFIL has had no non-performing loans and its profits have constantly grown. This additional leverage enhances profitability and returns on equity,” he added.
In fact, MFIL has grown its customer base from around 10,000 in September 2014, when Myanmar Investments International first invested, to over 42,000 as of February 2017; depicting a compound annual growth rate of 78 percent.
The amount of loan disbursed by the financing firm has also reached K7.8 billion (about US$5.7 million) by February 2017, representing a 148 percent growth rate when compared to its initial loan book of K800 million in September 2014.
The loan size has also increased as well, having reached K183,000 from K80,000.
Established in September 2014, MFIL is a joint venture between MIL and the Norwegian Investment Fund for Developing Countries (Norfund), with the former holding 37.5 percent and the later owning 25 percent, which represents a total paid-up capital of nearly US$ 5 million.
It supports the unbanked population through the provision of small loans to enable them to expand or start small businesses, such as cultivation of vegetables and flowers, production of handicrafts, woodwork furnishings, and roadside stalls, etc.
With the latest capital, MFIL said that it is considering launching new micro-business products to complement the strong growth in group loans, as well as to expand its branches from six to ten in 2017.
The microfinance lender also claims that the Maybank loan is only the first in a series of upcoming debt financing initiatives that it has planned in the coming years.
“There will be additional financing aimed at expanding the business further, rather than rolling over the new loan,” said Chung Chee Tham, an investment director at MFI.
In another development, MFIL announced that it is currently in the stage of finalizing the investment to set up two new joint ventures in the pharmaceutical and tourism space.
By Vivian Foo, VCNewsNetwork