The EIF has invested EUR 1 million into PerMicro, the first Italian financial institution specialised in micro-credit, and acquired 20.4% of their shares. PerMicro expects that this investment will attract further resources amounting up to a total of EUR 3 million which will be made available in support of micro-businesses and micro-entrepreneurs in Italy.
This agreement is EIF’s first signature under the European Parliament Preparatory Action (EPPA), the European Parliament EUR 4 million pilot programme put in place to foster the development of microfinance on a sustainable basis across the EU. The signature is also EIF’s first direct equity investment into a non-bank Microfinance Institution (MFI).
With the resources made available by EIF, PerMicro will offer micro-loans of up to EUR 25.000 to micro-entrepreneurs starting-up or developing existing businesses, including self-employment.
Richard Pelly, Chief Executive of EIF stated: “We are pleased to cooperate with PerMicro and are convinced that this operation will enhance access to finance for micro-entrepreneurs in Italy, especially for those who have had limited access to the traditional banking system in the past. This agreement reaffirms our support to the microfinance sector in Europe and our efforts to boost economic growth and employment”.
Corrado Ferretti, President of PerMicro added: “EIF investment in PerMicro provides a huge opportunity for us to demonstrate the added value of our project and our work. This operation confirms, once again, the great importance of microfinance and the primary role that it can play in enhancing growth by giving the opportunity to anyone to improve one’s own social condition.”
The agreement between EIF and PerMicro was signed in the context of PerMicro’s capital increase of EUR 4 million, subscribed by the current shareholders. PerMicro’s shareholding structure is now composed of the following founding shareholders: EIF, Oltre Venture, Fondazione Paideia, UBI Banca, Fondazione CRT e PhiTrust, along with further private shareholders.
PerMicro is a young non-bank MFI aiming at developing microfinance in Italy, cooperating with NGOs and other associations with a social focus targeting people that have difficulties in accessing the traditional banking system. A large portion of PerMicro’s business targets immigrant resident groups in Italy.
EIF was founded in 1994 to support Europe's small and medium-sized businesses (SMEs) by enhancing their access to finance. EIF designs and develops venture capital and guarantees instruments which specifically target this market segment.
The EIF total net commitments to private equity funds amounted to over EUR 4.6bn by Sept 2010. With investments in over 300 funds, the EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. The EIF commitment in guarantees totalled over EUR 13.6bn in over 160 operations, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.
EIF has been involved in the microfinance sector since 2000, providing funding (equity and loans), guarantees and technical assistance to a broad range of financial intermediaries, from small non-bank financial institutions to well established banks, to support the sustainability and expansion of their micro-credit activity.
With its activities, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.
PerMicro is a young non-banking financial institution entirely specialised in microfinance, created in Turin in 2007 and operating at national level. PerMicro business targets micro-entrepreneurs, the immigrants’ community in Italy, NGOs, public and private bodies aiming at developing projects of social credit. At 31 December 2010, PerMicro granted 995 micro-loans totalling EUR 5 million.
The aim of the European Parliament Preparatory Action (EPPA) is to foster the development of micro-credit in Europe on a sustainable basis, complementing other EIF and European Commission’s initiatives in the microfinance sector: PROGRESS microfinance and JASMINE technical assistance.
The budget allocated to EPPA is EUR 4 million and will be used to provide seed funding and other financial support to selected non-bank MFIs in the EU focusing on social cohesion. It is intended to help small non-bank MFIs to reach a meaningful size and scalability in their operations, thereby also improving access to finance for such micro-borrowers who typically have very limited or no access to traditional financial services.