Approach.

Investment Approach

Equator partners with strong management teams to make equity investments in financial institutions with demonstrable opportunity to significantly enhance value and deliver superior social returns.  Our team is proactive and assumes engaged roles in the corporate governance of the companies in which we invest, to achieve greater scale and efficiency in microlending or small business banking portfolios and services.

We have a track record of success investing with:

  • High growth early stage regulated institutions focused on extending financial access to micro-businesses and small business owners traditionally not served by conventional banks
  • Regulated banks capable of transformation to serve the micro-entrepreneur and small business customer effectively
  • High performing institutions currently serving the micro- entrepreneur and small business customer and wanting to expand their products and services or geographically to address their clients’ full range of needs.

Investment Criteria

Equator is actively investing equity on behalf of ShoreCap II in institutions with the following characteristics:

  • Types of Institutions: small business banks, regulated microfinance institutions and other regulated non-bank financial service companies striving to profitably meet the credit needs of micro entrepreneurs and small businesses in underserved markets
  • Investment Size: typically between $3 and $12 million for an ownership position of 5%-25% of a financial institution
  • Geographic Reach: Institutions located in emerging market economies in Asia and Africa are eligible for investment
  • Profitability: We aim to invest in fully profitable institutions
  • Local Management and Ownership: We seek financial institutions with a strong, experienced management team and a committed set of local investors
  • Responsible investment: Equator will evaluate sustainable social and environmental development practices, effective governance, and client protection practices during our investment process. Equator promotes forward thinking institutions that espouse responsible and ethical banking practices.

Our contribution

Equator has a professional staff of experienced bankers, investment managers and technical experts, all of whom work together to serve the interests of portfolio companies. The team’s capabilities include:

  • Prior executive management experience in development banking institutions
  • Proven track record of successfully working and investing in developing markets and emerging economies
  • Deep understanding of opportunities, needs, challenges and constraints across the entire spectrum of microfinance and small business banking services
  • An unwavering commitment to the double bottom line of development impact and long-term capital appreciation.

Value Proposition

Through our strategic partner, CapitalPlus Exchange (CapPlus), subsidized assistance in the following areas can be arranged:

  • SME diagnostics: assessing the financial institution's stage of development in 35 drivers of success in SME banking
  • Credit: products, processes, policies, portfolio management, operations and credit scoring
  • Markets: research, segmentation and sizing
  • Customer relationship management: client acquisition, retention, sales, marketing and cross-selling
  • Risk management
  • Information technology: diagnostics, system upgrades, implementations and conversions
  • Human resources: leadership, staff development, performance management, employee engagement and human resources administration
  • Governance

Learn more about CapitalPlus Exchange at capplus.org.