Review of Microfinance Investment Vehicle Market

1. Review of Microfinance Investment Vehicle Market Sebastian von Stauffenberg 10/23/2006

2. MIVs MFIs A Decade of Transparency 2006 1996

3. Development Agencies, Foundations & NGOs acting as investors in microfinance Regional Banks - local and second tier Private local investors Private, Social, Commercial, Institutional Investors Microfinance Investment Vehicles MIVs MFI Financial Funding Sources Domestic Markets International Markets 80% of MIF Funding 20% of MFI Funding MFIs

4. MicroRate Microfinance Investment Vehicle UniverseSurveyed as of December 2005 Commercial MIVs (16) Quasi-Commercial MIVs(18) Microfinance Development Vehicles (23) (N) : New MIV in 2005 (L): Liquidated in 2005 Source: MicroRate

6. Microfinance Investment Vehicle Growth

7. Microfinance Investment Vehicle Growth

8. - Commercial MIV - Quasi Commercial MIV - Development MIV 15 Largest MIV Microfinance Portfolios as ofDec 2005 (US$ Million)

9. 2001 2002 2003 2004 2005 2006 2007 Bonds, CDOs & Securitizations Regional Mi Banco S/.20 MM CompartamosUS$10 MM Mi Banco S/.20 MM S/.10 MM WWB Colombia $30 MM $22 MM WWB Colombia US$20 MM Compartamos US$50 MM Latin America Finamerica US$2 MM CompartamosUS$5 MM US$5MM SMF India US$4.3 MM BRAC $180MM India Global Comercial Mf US$75 MM European Investment Fund US$30 MM International BOMFS - I US$40 MM BOMFS - II US$47 MM BOLD - III US$99 MM XXEB US$60 MM

10. MIV Microfinance Portfolio Composition

11. Investor Importance 1 = Not Important 5 = Very Important

12. YI – Year of Inception FIF – Fully Invested Fund

13. Aggregate Growth: 2003-2005 Round 2 MIV Survey 14 MIVs Sampled 900 $826 800 700 $650 600 35% Avg. Growth $457 500 $441 Million US$ 400 $268 300 200 76% Avg. Growth $144 100 10 12 MIVs 14 MIVs 0 2003 2004 2005 Total Microfinance Portfolio Total Assets Round 2 Microfinance Investment Vehicles

16. MIV Microfinance Portfolio Geographic Investment Analysis Round 2 MIVs 14 MIVs Asia 12% Eastern Europe Latin America 17% & Caribbean 56% Africa 8% Other Regions & World Wide 7% Africa Eastern Europe Asia Latin America and the Caribbean Other Regions/World Wide

17. MFI Growth - Sample of 31 Leading MFIs in Latin America (five year average growth 40%)

18. Funding Composition – Latin America Sample

20. Shift from Concessionary to “Hard” Funding 2500 $1.5 Billion Capital Markets 2000 1500 MIV Total Asset Value 1000 Concessionary Funding 500 0 1990 1995 2000 2005

21. MIV Growth by Funding Source $32B 40000 30000 20000 10000 0 1985 1990 1995 2000 2005 2007 2010 Concessionary Public Commercial

22. Information Needs • The information needs to be credible, objective and verified • Show a track record and historical performance – Asad Mahmood, Duetsche Bank • Detail on fund managers capability and background – Maya Chorengel – Dignity Fund • Risk – return relationship (returns put into context) • Peer group data, benchmarks, default study • Comparison data that allows apple to apple comparison – assigning categories (Morningstar) • Above all Risk, Return, Liquidity • Liquidity – how fast and at what price can money be withdrawn • Investors don’t need a rating, but they need reliable data

23. Research Report Prototype Commercial Fund Rating Approaches & Methodologies MIV Survey Findings • MIV Investor information needs • Portfolio Composition • Microfinance nuances • Social performance issues Investor Interview Feedback Report Content • Ownership, Board and Management • Investment Style and Approach • Asset Review • Financial Analysis • Risk Elements • Capital Funding and Liquidity • Social Performance • Financial Statement Comparison • Key Indicators

24. The Infrastructure of Mainstream Financial Markets* 1. Common terminology 2. Transparency 3. Adherence to standard accounting practices 4. Regulation by third parties 5. Investment rating services 6. Fund comparison data 7. Insurance 8. Liquidity through secondary markets *Blended Value Investing: Capital Opportunities for Social and Environmental Impact. World Economic Forum, March 2006.