Accion Microfinance China (AMC), a microfinance institution delivering financial services to microentrepreneurs in Chifeng Prefecture, Inner Mongolia, has received a RMB 140m (approximately US $21.9m) equity investment from Sagamore Investments.
The investment will be made by Sagamore’s Grassland Finance Ltd., which aims to take stakes in microfinance organizations in China.
The initial commitment amounts to RMB 40m (US $6.25 million), with an additional RMB 100m to be invested over the next two years, bringing Grassland’s ownership stake to 70%.Accion, currently AMC’s sole owner, will retain a 30% stake and will continue to serve as the operating partner.
Established in 2009 by Accion to provide previously underserved regions of Chifeng with access to quality financial services, AMC now provides working-capital and fixed-asset loans for urban and rural, small and medium-sized enterprises in the Chifeng region. Loan amounts start at RMB 1,000 ($150).
Since inception, AMC has disbursed RMB157m in loans to almost 2,000 clients, with an average outstanding loan of RMB 55,000 ($7,891). It has invested significantly in training, and has built a strong local team of 37 full-time staff in order to support its micro-entrepreneur clients.
The Chinese banking industry has provided tremendous support to corporate and state-owned enterprises over the past decade, but has been unable to meet the demands for formal financial services of micro, small and medium-sized enterprises (MSME). This underserved market segment not only provides a major opportunity for AMC, but is also in line with the Chinese Government’s efforts to find solutions for overcoming MSME funding challenges.