First Pakistan Flood Relief Microfinance Fund
SIMA promotes impact investments in for-profit businesses that align with financial, social and environmental goals. We work with individual, institutional, and philanthropic investors and with public sector development finance investors to create market-based investment opportunities with mitigated risk.
We aim to create positive economic, social and environmental impact through well-designed investment funds that raise the standard of living of people and communities at the Bottom of the Pyramid (BOP). We focus on solar energy, financial inclusion and affordable housing sectors in some of the poorest countries of the world. We maintain a strong local presence and over 95% of our staff are located in Sub-Saharan Africa and South Asia.
For impact investors, we offer opportunities to invest in leading companies generating attractive financial returns and measurable impact. We also conduct impact assessments and portfolio reviews for investors. For practitioners, we advise on valuations, risk management, internal control, investment readiness, ESG compliance, gender action, impact reporting, etc.
SIMA has created the SIMA Impact Foundation with a mission to advance impact investing and spur emerging impact sectors by making early-stage investments to help demonstrate the potential of emerging sectors which cannot yet be financed commercially.
Structure of the Fund
The First Pakistan Microfinance Fund would result in connecting some larger financial players in the country’s thriving capital markets including Arif Habib (largest brokerage firm), leading commercial banks, and other investors, with the intermediate-sized MFIs.
Strategic and Social Focus
- Bringing a systemic change by providing increased access to local currency financing to the intermediate MFIs
- Broadening the MFI field by including insurance companies, mutual funds, and large corporate conglomerates as investors
- Designing the fund structure as a liquid instrument and listed on the stock exchange
- Promoting women’s financial inclusion and addressing youth unemployment
- Creating a council of MFIs, investors, and guarantors to better track women financial inclusion, MSME financing, and youth employment
Very Limited Credit Risk
- Strong operational track record of more than 10 years
- Excellent asset quality with weighted average PAR>30 of 0.57% relative to the overall industry average of 1.45%.
- Loan loss coverage of PAR>30 portfolio – more than 9 times on an average basis
- No prior history of defaults on private debt
- Strong equity level relative to the loan portfolio at around 30% – most of which comprises internally generated profits over time
- Low correlation between the MFI sector and the economy’s performance in general, which implies operational stability for the overall MFI sector
- Excellent geographic diversification with operations spread across 68 districts mainly in three provinces
- Good mix of sector exposure in MSME, agriculture & livestock, personal consumption, and other sectors
- Granular average loan size of USD 310 (PKR. 42,751) vs industry average loan size of USD.372 (PKR 51,262)
- Good diversity in the lending methodology of overall portfolio MFIs comprising of group lending (53%) vs individual lending (47%)