The fund provides loans in MXN to a financial institution engaged in providing loan to individuals and legal entities in Mexico (hereinafter “Company K”) through an Estonian affiliate company (Crowdcredit Estonia OÜ) of Crowdcredit Funding LLC.
Hearing “Mexico” may reminds you of cactuses, Mexican food like tacos, or a cheerful man playing a guitar with a sombrero. Recently, the cartoon film using the traditional event “Día de Muertos (Day of the Dead)” as a motif has hit the screen in Japan. As such, we can say that Mexico is relatively familiar to the Japanese.
Also, with respect to the economy, Mexico has a deep relationship with Japan. As of May 2018, 1,000 or more Japanese companies have entered Mexico mainly in the automobile industry. The automobile manufacturers established manufacturing bases in Mexico in droves with a view to exporting products to North America, South America, and Europe, using the network of FTAs (free trade agreement) that the country entered with 45 countries in the world. The country has recorded positive GDP growth for eight consecutive years, which is led by the growth of automobile industry. Consequently, Mexico is the second largest economy in Latin America following Brazil.
On the other hand, Mexico has worries in both diplomacy and domestic politics.
U.S. President Trump frequently talks about a possible exit from NAFTA (North American Free Trade Agreement) for the reason of Mexico’s insufficient measures to prevent illegal immigration into the United States.
The exit would substantially damage U.S. automobile manufacturers, and so the possibility of an exit is unclear. But it is necessary to pay continuous attention to the situation because Mexico’s dependence on exports to the United States is high at 81% (as of 2016).
In addition, the promotion of free trade, energy and fiscal policies implemented by the present Mexican President Nieto are highly evaluated overseas, while his support ratings have fallen since 2014 mainly because of two reasons ---his relatives are suspected of corruption and public security is getting worse. The next presidential election is scheduled for July 2018*. The change of government could promote MXN currency depreciation and cause an outflow of capital resulting from the implementation of protectionist policies.
(*In 2018, the presidential election took place in December and Andrés Manuel López Obrador (Incumbent) succeeded the post)
Company K was established as a savings credit union in 2004, and then converted its company form to an ordinary joint-stock corporation in 2016 to expand its business fields. The company has 30 business locations mainly in the state of Oaxaca, in southern Mexico, which is well known for actively celebrating the Day of the Dead.
Company K offers four types of products: (i) loan to female entrepreneur, (ii) loan to small company, (iii) loan to employee, and (iv) life insurance. Among them, the product type (i) loan to female entrepreneur accounts for 90% of revenues of the company.
Company K is designed to increase the wealth of general households by encouraging improvement in women’s economic status and the company focuses on providing loans to women managing very small or farming companies. The company has just converted to a joint-stock corporation and has almost 30,000 customers as of March 2018.
After the conversion, Company K has rapidly expanded operations and is profitable for two consecutive periods. The company makes efforts to control bad loans through the strict selection of borrowers and keeps the ratio of bad loans low at 1.5% for theFYe December 2017. Additionally, the loan collection manual has detailed provisions according to the number of days overdue. The company achieves collection rate of claims overdue of more than 97%
Furthermore, Company K is evaluated by MicroRate, the microfinance rating agency, and is highly recognized in terms of financial health and profitability. The company will keep making efforts to accumulate track records under the new organizational structure and balance profitability with social impacts.
The fund provides a loan in the MXN. Please note that multiple factors could depreciate the MXN. The factors include results of the Mexico’s presidential election, developments in the U.S. trade policies to Mexico and a fall in crude oil prices,.
(As described above, the main business of the fund is to provide a loan to Company K. But the Estonian group company is also engaged in acquiring and collecting a small number of EUR denominated short-term loans receivable made to individuals in Georgia.)
We deeply appreciate your collaboration with or interests in CROWD CREDIT.
This fund provides a loan to Mexico. For us the second fund series for Central American country following the fund targeting financial operators in Nicaragua. Mexico has exported many automobiles and industrial products to North America since the implementation of North American Free Trade Agreement in 1994. Its scale of economy has also expanded steadily. In recent years, the country also attracts attention as a travel destination from Japan because of beaches in Cancun and many ancient monuments.
The fund provides loans to Company K, a financial institution operating mainly in southern Mexico and characterized by proactively providing loans to female entrepreneurs. This fund is favorable particularly for investors who would like to give further assistance to women’s participation in society.
Company K has been profitable for two consecutive fiscal years since 2016 when it is converted into a joint-stock corporation from a savings credit union. The company has increased customers while keeping a bad debt ratio at 1.5% for the FYe December 2017. The company has its selection of borrowers stricter and improves its credit screening.
Company K mainly offers loans to female entrepreneurs with the aim of improving women’s economic status. We think that investors in sympathy with the corporate philosophy can contribute as indirect assistance to women’s participation in society by making investments in the fund.
This is the first MXN-denominated fund for us. We have offered funds making investments in currencies including EUR, USD, RUB, and GEL. Investments in the fund combined with these funds may enable you to decrease currency risks through diversification.
*Domestic situation in Mexico, diplomacy with foreign countries, including the United States, and a fall in crude oil prices could have negative effect on the MXN. Please consider exchange risks when investing in the fund.
The fund consists of two investment transactions: loan to the Mexico-based financial operator (Company K) offering financial services including loans to female entrepreneurs, and purchase of loans made to individuals by Creamfinance Georgia LLC (Georgian subsidiary of Cream Finance Holding Ltd, a financial operator making loans to individuals in Eastern Europe) via the P2P lending platform Mintos. The fund makes the investment in MXN over 25 months with the aim of achieving the expected rate of return of 7.3%.
Female entrepreneur obtaining loans from Company K
We appreciate your interest in us this time. Our corporate philosophy is giving assistance to the businesses of customers by providing loans and improving the living conditions of the customers’ families.
Our predecessor cooperative union was established in the state of Oaxaca in 2004. After conversion into a joint-stock corporation, we rapidly expanded business with a focus on the lower income bracket with difficulty in obtaining loans from major financial institutions including banks, which is called the Bottom of the Pyramid, particularly female entrepreneurs. We set the goal which will achieve the balance of services, evolution, and profitability and lead the microfinance sector, namely, “the 2022 Vision”. We plan to expand our businesses into four new regions in the next four years in addition to the existing four regions. We will allocate funds provided by you for a further leap of entrepreneurs with high business motivation in Mexico.
We will seek to build a long-term partnership wherein the two countries, Japan and Mexico, support each other via the fund.
Mexico, Oaxaca, and we welcome you. ¡Bienvenidos! (Welcome)
Isabel obtained a loan from Company K in 2013 and started the manufacturing and sales of Alebrijes (*), fork arts of Oaxaca (*Alebrijes represent wooden artworks modeling imaginary animals created in the state of Oaxaca in southern Mexico).
She lives with her two children and husband. Her husband Fernandez gives assistance to her business by carving wood for decorations.
She initially borrowed MXN 3,000 (about 16,800 yen) from Company K and now has a borrowing capacity of MXN 12,000 (about 67,200 yen) because she is evaluated as a highly skilled and diligent person.
She used the loan from Company K to open a store at home and sell goods. Loans from Company K enabled her to start her business and seek a way to improve the quality of life.
Isabel creating Alebrijes
DISCLAIMER: This website is intended to provide information regarding the certain aspects of the business of CROWD CREDIT. It is not intended to be a complete description and is not intended as an offer or solicitation with respect to the purchase or sale of any fund.
Bankers Crowdcredit Funding CO., Ltd.
802 Kayabacho 1chome Heiwa Bldg.
1-8-1 Nihonbashi Kayabacho,Chuo-ku, Tokyo Japan
Bankers Crowdcredit Funding CO., Ltd. is a financial institution specializing in lending to small and medium enterprises.