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SNS goes micro in Emerging Markets

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NETHERLANDS - The asset management arm of Dutch bank assurance group, SNS Reaal is launching a €100m institutional investment fund for microcredit.

Theo Brouwers, director of SNS Asset Management (SNS AM), said that firm is in talks with a number of institutional investors to participate in the SNS Institutional Microfinance Fund, to be launched on April 1 with a target size of €100m.

According to Brouwers, the fund serves "an express social purpose, by making fairly long-term investments in small businesses at the lower end of emerging economies in Asia, South and Central America and Eastern Europe."

SNS AM will work closely with the American investment manager Developing World Markets and fund manager Triple Jump will be responsible for part of the selection, the firm said.

Investors' money will be taken in the form of loans, but also as equity shareholdings and hybrid forms, such as convertible loans or subordinated loans with warrants.

Despite a potential social purpose, Brouwers is adamant that institutional investors' main reason for investing in microfinance is a focus on maximum returns: "The funds that we are talking to are not jumping to get their names in the newspapers to prove how socially responsible they are. The main reason for institutional investors is realising maximum returns."

The fund is for larger investors such as pension funds and insurers who are willing to invest more than €250,000 into the fund, the firm said.

Late last year, IPE reported that giant pension fund ABP has considerable investments in microcredit, and it appeared that also other institutional investors were considering investing in the emerging markets.

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