ADB and BlueOrchard sign $50m risk-sharing agreement to expand microfinance

BlueOrchard is the first impact investing asset manager to partner with ADB’s Microfinance Program.

The Asian Development Bank (ADB) and leading impact investment management firm BlueOrchard Finance Ltd have signed a $50 million risk-sharing agreement to expand microfinance coverage in ADB’s developing member countries (DMCs).

BlueOrchard is the first impact investing asset manager to partner with ADB’s Microfinance Program. Under the program, the company’s flagship fund, the BlueOrchard Microfinance Fund, will invest in selected microfinance institutions (MFIs) and banks. ADB will share the default risk of these investee entities to help expand the fund’s risk appetite and deployed capital into DMCs and encourage a greater flow of private sector funds to deepen financial inclusion.

“Loans provided by microfinance institutions are a lifeline to underserved clients such as low-income households and small businesses, including those which are owned or led by women, to help them withstand and rebound from the hardships imposed by the COVID-19 pandemic,” said ADB Director General for Private Sector Operations Suzanne Gaboury.

“This partnership will strengthen microfinance as a tool to build economic resilience, reduce gender disparities, and support recovery across our region,” added ADB Microfinance Program Lead Anshukant Taneja.

“We are honoured to be the first impact investing firm to partner with ADB’s microfinance program and look forward to working together to promote financial inclusion across Asia,” said BlueOrchard Chief Executive Officer Philipp Mueller.

The agreement will focus on expanding ADB and BlueOrchard’s microfinance coverage and facilitate entry to new markets and segments, including financing for climate change adaptation and resilience building. Over the next 4 years, more than 150,000 borrowers and microenterprises across India, Indonesia, the Philippines, and other developing countries are expected to receive financing under this partnership.

The risk-sharing arrangement will help MFIs access funding for on-lending activities amid liquidity and funding challenges. This will expand financial inclusion, helping drive the achievement of Sustainable Development Goals, such as reducing poverty and gender inequality and improving access to clean water and sanitation.   

BlueOrchard, headquartered in Switzerland and with regional offices in Asia, Latin America, and Africa, was founded in 2001 as the first global commercial manager of microfinance investments. It has invested over $8 billion in more than 90 countries and provided access to financial services for 216 million people. The company is a member of the Schroders Group. 

Launched in 2010, ADB’s Microfinance Program has supported $1.8 billion in loans and helped mobilize $881 million in cofinancing. It has provided access to microloans for more than 8 million borrowers, 98% of whom are women. Microfinance has helped improve livelihoods, reduce poverty, promote gender equity, and promote the growth of microenterprises and employment.