The Unitus Equity Fund (UEF) is a private equity fund that makes strategic investments in emerging microfinance institutions (MFIs). Launched in early 2006, the UEF was designed to encourage the development of a commercial equity market to serve the global microfinance sector. The UEF is affiliated with Unitus, a microfinance organization that provides access to capital and strategic consulting to the world’s highest potential, emerging microfinance institutions. Closing in March 2007 with $23.4 million in capital commitments, the UEF works to create social impact while generating a financial return.
MFIs promote economic self-empowerment by enabling the poor to lift themselves out of poverty. Through the provision of small loans and other financial services to those who do not qualify for mainstream financial services, MFIs enable people to focus beyond subsistence, build businesses, increase their income and reduce their vulnerability to economic shocks.
With additional equity capital, MFIs will be able to strengthen their capital base and have increased access to the funds they need to offer more and better services to their clients. A robust equity market will also lower costs and increase the amount of capital available to the world’s poor.
The UEF has adopted a venture capital approach, seeking to invest in younger, growth-oriented MFIs run by visionary, entrepreneurial leaders. Working with its partner institutions, the UEF encourages growth strategies and the development of new financial services such as savings and insurance, as well as efficient distribution channels for those products. Moreover, the UEF supports profitable exit strategies, such as an IPO, to attract still more capital to the market.
To date, the UEF has invested in SKS Microfinance, serving the rural poor in India; Ujjivan Financial Services, serving India’s urban poor; and Credex, serving the working poor in southwestern and central Mexico. The UEF expects to make a number of additional investments in the coming year, further increasing global access to microfinance services and providing more and more people with the means to address their needs and improve their lives.