> Posted by Bill Harrington
“Gee, if I had realized a few months ago that investors worked that way, it would have really helped.”
That response from one participant summed up a four-day workshop sponsored by the MicroFinance Center (MFC) and the Center for Financial Inclusion in Warsaw, Poland, in early December. I, together with the Center’s Deborah Drake, led the investment-readiness training for the Microfinance Centre.
As MFIs seek to grow in scale and outreach, they increasingly require access to broader, commercial sources of funding. These MFIs may have some experience in accessing the capital markets, but still struggle with transitioning from donor to commercial capital and navigating the challenges that arise. Enter the Center. These trainings offer a crash course in how to make a pitch to potential investors, manage investor relations, build back office capacity to manage liability, and evaluate, structure, and close financings.
In Poland, about 16 attendees—representing mid-level and growing MFIs from Georgia, Romania, Macedonia, Armenia and Central Asia—participated in hands-on training that tested their understanding of debt and equity, negotiation techniques, and valuation. In addition, they learned about the importance of non-financial factors to investors, such as the quality of governance and the regulatory environment. They concluded by negotiating a term sheet between fictitious investors and a fictitious MFI. The result of that exercise gave everyone an appreciation for the many variables that affect the relationship between MFIs and equity investors.
Stay tuned for news from future trainings as we venture into India during the spring of 2010.