Michael Hokenson Discusses How Microfinance Aspect Of Business Works

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Transcript

Hokenson02_localCurrencyFinancing

It's a simple idea. Basically, they work in local currency. They lend to their recipients in local currency. They pay their staff in local currency. If you give them dollars, you are exposing them to interest rate and foreign exchange rate risk and 90% plus of the NFIs out there are in no position to manage that risk and it's led to problems in Dominican Republic and African countries and some of the Latin-American countries and it works. Right now we are up to 55 million in assets. We have another $90 million committed from our strategic investors. We have seven months of positive performance. We have 25% of the portfolio allocated to microfinance institutions around the world. We have committee approval for another 20%. We have 40% active applications that are pending and we maintain a dialogue with 3 trillion dollars of investors, that includes some of the largest pension funds in the entire world like PGGM, ABP and the Netherlands, TIAA-CREF who has $100 million portfolio specifically targeted for microfinance. It includes small high net worth individuals because we're a hedge fund, so we can only reach certain strata of the market that might be interested in a million dollar investment or maybe a little more and everything in between, university endowments and so forth. And we've really seen institutional appetite for bottom of the pyramid commercial opportunities. Microfinance is an easy one. The business model has been replicated in a hundred plus countries, thousands of institutions, 30 billion dollars in global asset portfolio value, enormous media attention, mainly positive and it's, you know, it has these fantastic social benefits. It's got low correlation to other asset process. It's a wonderful story to tell an investor but there's other ones emerging. We see bottom of the pyramid investment activity in the private equity space, in the healthcare space, in the ICT space, consumer space in businesses, transportation businesses and I'd like to see Minlam move down the line across the bottom of the pyramid strata by sector and look at where money can be made, where money can be professionally managed and put to work and that requires aligning myself with a network of entrepreneurs around the world and to me the opportunity is boundless. I mean it's unbelievable how large... I mean just like the mortgage market in the BOP is a ten trillion dollar market. The healthcare market, the ICT market and this is just ... it's absolutely limitless and this is where you will find true innovation, you will find true inspiration and you know, I think even walking out of this program, hundred G's in debt, whatever you guys have, I mean it's completely worth the risk.