Overview of Advans SA

Institutional background

Advans SA SICAR (Advans SA) is a Venture Capital Investment Company,  created in August 2005 by Horus Development Finance together with several development financial institutions: Agence Française de Développement (AFD), the European Investment Bank (EIB), the Netherlands Development Finance Company (FMO), the International Finance Corporation (IFC), KfW Entwicklungsbank (KfW) and CDC Group plc (CDC). In 2010, Fonds d'Investissement et de Soutien aux Entreprises en Afrique (FISEA), a company fully owned by AFD, joined the group of initial shareholders by participating to the capital increase carried out by Advans SA and by acquiring AFD's shares in Advans SA.

Advans SA is incorporated in Luxembourg as an investment company in risk capital (SICAR) and supervised by the Commission de Supervision du Secteur Financier (CSSF), Luxembourg's financial supervision authority. Its total committed share capital amounts to 43.6 million Euros.

Mission and strategy

Advans SA's mission is to build a network of financial institutions, also known as Microfinance Institutions (MFIs) or microbanks, in developing and emerging countries. The institutions of the Advans network offer simple yet effective financial services such as loans and deposits to micro small and middle-sized enterprises (MSME) which have limited or no access to formal banking services.

Advans SA's strategy is to invest as lead shareholder in the microfinance institutions it creates, along with other shareholders with similar interests and vision. Advans SA provides these MFIs with financial resources and services, mainly equitybut also loans and guarantees. As an investor, Advans SA has a double bottom line objective: contributing to economic development and poverty alleviation while offering a decent financial return to its shareholders. Technical know-how is provided by the fund's manager and technical partner, Horus Development Finance (Horus), a French consulting firm specialized in microfinance in emerging and developing countries. Co-investors in Advans' affiliates are chosen based on their ability to bring strategic and operational benefits as well as financial support. This ownership model increases the quality of governance and helps achieve financial sustainability as well as social impact of the MFIs.

Over the next 3 years, Advans SA's aim is to pursue the expansion of its network, creating new MFIs in Africa, Asia and the Middle-East, but also investing equity in existing MFI which need a strong lead shareholder. MFIs of the Advans Network share common values and best practices and benefit from synergies gained through the Advans network.

Impact of micro, small and medium sized enterprises

MSMEs are one of the main sources of economic development in emerging and developing countries. These enterprises of less than 50 employees represent the large majority of business activities (often over 95%) even if their contribution to GDP remains limited (below 50%). Usually the biggest employer in these countries, they play a vital role in terms of  income generation in countries with high unemployment and poverty.

Yet two important factors hinder the emergence and expansion of these small businesses: (i) access to adequate know-how and technology; and (ii) access to a regular supply of financial services on acceptable conditions. Advans SA was created in 2005 to help overcome this second constraint.