TIAA-CREF puts $100m into microfinance
GLOBAL - US educational retirement savings group TIAA-CREF has earmarked $100m (€78.8m) to invest in so-called microfinance initiatives.
As part of its new Global Microfinance Investment Program (GMIP) under Scott Budde, it's taken a $43m private equity stake in microfinance company Procredit Holding. The Economist magazine defines microfinance as "financial services for poor people in developing countries".
TIAA-CREF said it was the largest equity investment in microfinance by a major US-based asset management company.
"We subscribe to the view that microfinance investing can contribute to a double bottom line," said TIAA-CREF's chief investment officer Ed Grzybowski.
"GMIP, and this investment in ProCredit, gives us an opportunity to seek competitive returns through socially responsible investments that we believe have a low correlation to traditional equity and fixed income markets."
GMIP, part of TIAA-CREF's new Social and Community Investing Department, is expected to invest $100m over the next four years in a range of investment structures, asset classes and risk levels through MFI's.
Budde said the initiative was in response to plan participants' wishes. He said: "Our recent participant survey showed significant interest in proactive social investing and a desire to promote human rights and economic development.
"We believe GMIP and investments in microfinance institutions like ProCredit are an important step in that direction."
"In TIAA-CREF, we have found a strong private partner, who shares our long-term commitment to having a development impact with commercially-oriented microfinance banks," said CP Zeitinger, chairman of ProCredit's supervisory board.
"The capital provided by TIAA-CREF will help us to expand in Africa, Latin America and Eastern Europe, providing responsible banking services to many more low income families and small businesses. ProCredit is a fast growing, profitable institution and we had many options for raising capital but felt that TIAA-CREF was the best capital source."
TIAA-CREF has more than $380bn in combined assets under management.