Mi­cro­fi­nance lender to ex­pand on May­bank loan

The Myanmar Times - - Business - STEVE GIL­MORE sgilmore@mm­times.com

MYAN­MAR Fi­nance In­ter­na­tional Lim­ited (MFIL) – a mi­cro­fi­nance joint ven­ture be­tween a Lon­don­listed in­vest­ment firm and a Nor­we­gian fund for de­vel­op­ing coun­tries – is plan­ning to ex­pand its oper­a­tions af­ter re­ceiv­ing a local cur­rency loan from the Yan­gon branch of May­bank.

The lender will use the pro­ceeds from the US$1 mil­lion equiv­a­lent loan to ex­pand its busi­ness and loan port­fo­lio, ac­cord­ing to Lon­don-listed Myan­mar In­vest­ments In­ter­na­tional Lim­ited, which owns 37.5pc of MFIL.

The Nor­we­gian In­vest­ment Fund for De­vel­op­ing Coun­tries (Nor­fund) owns 25pc, while Myan­mar Fi­nance Com­pany holds the other 37.5pc.

MFIL has grown its cus­tomer base from around 10,000 in Septem­ber 2014, when Myan­mar In­vest­ments In­ter­na­tional first in­vested, to over 38,000, ac­cord­ing to the Lon­don-listed firm. The lender’s loan book has in­creased from K800 mil­lion to K6.5 bil­lion over the pe­riod, it added.

Nor­fund took its stake in MFIL last year, giv­ing the lender around $5 mil­lion in paid-up cap­i­tal Chung Chee Tham, an in­vest­ment direc­tor at Myan­mar In­vest­ments In­ter­na­tional, told The Myan­mar Times. That has been drawn down, and so the lender fol­lowed its plan to raise debt in or­der to ex­pand, he added.

The Lon­don-listed firm said the mi­cro­fi­nance lender is con­sid­er­ing launch­ing new prod­ucts, and plans to ex­pand its branches from six to 10 in 2017. The May­bank loan is only the first in a se­ries of debt fi­nanc­ing ini­tia­tives that MFIL is plan­ning in the com­ing years, it added.

This will be ad­di­tional fi­nanc­ing aimed at ex­pand­ing the busi­ness fur­ther, rather than rolling over the new loan, Mr Tham said.

Myan­mar’s mi­cro­fi­nance sec­tor re­ceived a boost re­cently from a loos­en­ing of reg­u­la­tory re­stric­tions. The shift in­cludes al­low­ing lenders to take de­posits, and let­ting local and in­ter­na­tional mi­cro­fi­nance in­sti­tu­tions take loans in ei­ther dol­lars or kyat.

As MFIL is an in­ter­na­tional lender bor­row­ing from an in­ter­na­tional bank, it could have signed the May­bank loan be­fore the reg­u­la­tory change, Mr Tham said. But the change in reg­u­la­tions does means MFIL can con­sider bor­row­ing from local and in­ter­na­tional banks in the fu­ture, he added.

The mi­cro­fi­nance sec­tor has also seen ac­qui­si­tions and new firms set up in the last few months. Thai-listed firm Group Lease bought a ma­jor­ity stake in BG Mi­cro­fi­nance Myan­mar in Septem­ber and in­tends to in­vest al­most US$7 mil­lion and in­crease the num­ber of branches. Korean credit card firm Shin­han Card re­cently re­ceived a tem­po­rary one-year li­cence for mi­cro­fi­nance oper­a­tions.

But peo­ple in the mi­cro­fi­nance in­dus­try say the demand for credit is eas­ily large enough to ac­com­mo­date more play­ers and ex­panded oper­a­tions

“At this point the mar­ket is def­i­nitely big enough,” Mr Tham said. “There’s def­i­nitely ex­cess demand over what the mar­ket can sup­ply.”

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