Compartamos to seek further expansion abroad, but cautiously

Thursday, March 31, 2011

Following its announcement of the acquisition of a Peruvian microlender, Mexico microfinance group Compartamos continues to seek opportunities for international growth in Latin America, executives said during a conference call.

Earlier this week, and after years of speculation, Compartamos said it would spend about US$63mn to acquire an 82.7% stake in Peru's Financiera CREAR.

During the conference call, Compartamos director for new business Javier Fernández Cueto called the prospect of expanding into Colombia, Brazil and Central America "interesting."

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"However, just as we've been cautious and prudent about how to go about our first international excursion, it's pretty much the same criteria that we will be following in the future," he said.

In the past, Compartamos executives have noted a particular interest in expanding organically into Guatemala. Fernández noted that a Latin American expansion is complicated given the status of the microfinance market in the region.

"I think it would be a stretch to say that it's a mature M&A market," he said, noting that the field is "still quite limited" as far as M&A options.


With regard to the CREAR acquisition, executives said they expect to bring Compartamos' successful CreditoMujer product - group lending to women - to bear on the Peruvian market.

Compartamos has estimated that the potential market size for those loans is 1.2mn women. During the conference call, Fernández noted that 70% of the Peruvian population lives in cities, which are heavily served by the country's highly developed microfinance industry.

"[The microfinance sector] hasn't yet gone and tapped the other 30% in the rural settings in Peru," he said. "We're expecting to have this 1.2mn for CreditoMujer because of that."