2 European firms seek to expand presence in PH, eye rural ventures

Two European fund managers focused on countryside development are seeking more investment opportunities in the Philippines after recently buying into the country’s first nonbank automated teller machine (ATM) deployer Electronic Network Cash Tellers (Encash).

Key officials of Belgium-based Incofin Investment Management and Zurich-based responsAbility Social Investments, who were recently in town to sign a deal to buy 40 percent of Encash, said in an interview that they would like to invest more in rural development in the country.

“We’d like to invest in rural banks but foreign ownership is not allowed,” Incofin private equity manager Sara Vermeir said in an interview.

Vermeir said her company’s expertise was in microfinance and had related investments in other Asian countries, including Cambodia, Indonesia and India. She said her company was also lending to cooperatives.

“We would like to increase our exposure in the Philippines. We are looking at health care, education, technology for rural markets, financial inclusion and energy,” said Anand Chandani, regional director for South and Southeast Asia at responsAbility.

Incofin is an international fund manager specializing in “double-bottom line” investments pursuing both financial and social returns. It has six funds under management amounting to 300 million euros and has offices in Belgium, Colombia and India. Its Rural Impulse Fund II, the fund that invested in Encash, is a 120-million-euro fund launched in 2010 to contribute to poverty alleviation in rural areas through investments in microfinance institutions.

With assets under management of $1 billion, responsAbility is one of the world’s leading social investment companies. The assets it manages are currently invested in 383 companies in 72 countries.

“As a global fund, this (Philippines) is one of the countries in Southeast Asia that we are looking at closely,” Anand said.

While specific business model was a big part of the investment consideration for Incofin, Vermeir said the overall macroeconomic environment was also a key factor.

“The Philippines is doing well and we find a lot of comforting factors here,” she said.

Asia plays a significant role in the global business of both fund managers.

Anand said responsAbility was seeing a lot of opportunities in Asia, given its large population and the portion that falls below the poverty line.

For Incofin, 15 to 20 percent of its funds are invested in Asia, now its fastest-growing region in its portfolio, dislodging Latin America.

Incofin has a mix of social and commercial investments. For socially oriented investments, it has an average return of 2-3 percent per year while for commercially oriented ventures, the return is about 10-15 percent.

Anand said his firm also had a lot of debt-oriented funds where returns were lower compared to equity funds.

In terms of investment horizon, Incofin typically invests commensurate to the lifetime of its funds of five to 10 years while responsAbility usually invests for five to seven years.