First Finance 3
With a loan of EUR 200,000 First Finance will be able to finance 14 families in south east of Cambodia to either purchase land for residential purposes and/or renovating their existing houses.
- Local partner investment
- 5 new jobs
- 50 people reached
About the issuer
- Borrower First Finance Plc
- Country Cambodia
- Head office Phnom Penh, Cambodia
- Website https://www.firstfinance.biz/
- Date of incorporation 26th June 2008
- Amount: EUR 200,000
- Maturity: 48 months, semi-annually and linearly amortizing
- Interest rate: 4% p.a.
- # of employees: 123
First Finance (“FF”) is a Cambodia-based mortgage provider for low- and middle-income borrowers. FF operates under a non-deposit taking microfinance license from the National Bank of Cambodia (NBC). The company is owned by several national and international (impact) investors, among which Norfund and Insitor. Amongst its lenders are Oikocredit, Symbiotics, BlueOrchard and Triple Jump.
First Finance’s mission is to build economic stability of low-income Cambodian families by increasing access to home ownership. The company positions itself as “housing solutions partner”, not only providing finance but also providing legal advice, construction planning, and home purchase decision-making services.
First Finance focuses on low- and middle-income salaried employees or self-employed business owners. Its customers are predominantly employed as office or factory workers and civil servants.
The company is active in 85 (out of 165) districts and in 17 provinces (out of 25), through 9 branches, mostly in urban areas. First Finance reaches its clients through referral programs, direct marketing campaigns, public workshops on financing a home, partnerships and online media. First Finance also manages a call-center to provide consultation on property issues to existing and new clients.
The main products of the company are:
- (First) home loans (mortgages)
- Home improvement loans (loans for constucting a house on existsing land or to renovate an existing house)
- Residential Land loans (loans for the purcahse of land for residential purpsose)
- Home equity loans (loans for consumptive or productive use based on the value of an existing home)
Use of Proceeds
First Finance is expected to use the proceed raised to finance 14 families in Kampot (south east of Cambodia) to either purchase land for residential purpose (residential land product) and/or renovating their existing houses (home improvement loan product). On average, these home improvement loans are EUR 14,000. Both products can be offered for up to 20 years, though average loan tenor is 10 years.
The company’s mission is to build the economic stability of low-income Cambodian families by increasing access to home ownership through the provision of finance.
To help low-middle income families in Cambodia to live in dignity, security, happiness, and stability through home ownership.
First Finance expects to impact clients as below:
- Members of 14 families (average household size of 4 members) can directly benefit from the project as they can now have access to better shelter.
- Indirect impact includes community members (ie, contractor) can also benefits from the home renovation/improvement by the clients.
- With better shelter, the children can also have stable access to education as they do not have to worry about their constant moving of their shelter.
The Cambodian Government’s rapid response to the Covid-19 crisis has contributed to a relatively low exposure of its citizens to the virus. Cambodia has 273 confirmed cases and no deaths as of August 14. However, the Cambodian economy is hurt by the Government restrictions implemented. After two decades of strong performance, Cambodia’s economic growth is expected to drop to 2.3% in 2020. Cambodia’s economy is expected to rebound to 5.7% in 2021, assuming that the pandemic ends and economic activity normalizes. The sectors hardest hit are tourism, garment making, construction and transport.
Naturally, First Finance’s business is also hurt by the economic downturn. Fortunately, the company’s exposure to the four industries which are impacted the most, is limited to approximately 18.2% of the total portfolio outstanding. The company has taken various measures to deal with the situation, including necessary health & safety measures for its staff. From a business point of view measures include less disbursements of new loans and a stricter acceptance policy for new customers. The company has also updated its 2020 budget with realistic assumptions for growth and portfolio quality.
- about 23% of First Finance customers have requested to restructure their loans and the company has agreed to restructuring for about 14% of the portfolio outstanding.
- Portfolio at risk (30 days) has risen to 3.4% from 2.2% prior to the crisis
- Liquidity is good given that collection rates are still above 95% and that prepayment have not completely dried up
- As of early June First Finance transitions back to “business as usual” including working from the office again
Additional information on COMPANY:
Sothany Chun - Chief Executive Officer
Sothany spent her last 14 years in financial sector, mainly targeitng low income people. Her experiences include Financial management, Markeitng, Communciation, Sale strategy and Operations. Sothany has a Bachelor’s Degree in Management - Accounting, and a Master’s in Organizational Development - MFI Management.
Sakada Heng - Head of Credit
Mr. Sakada Heng is the longest standing First Finance team member, starting as the Credit Admin Officer in 2009 Sakada progressed through a number of roles, to become head of Credit in 2019. Sakada has completed two Bachelor’s degrees, one in Accounting/Finance and one in French language. He completed a Master’s in Risk Management - Insurance, Finance and Banking.
Bunhieng Chheng - Head of Sales
Mr Bunhieng Chheng has full range of experiences in microfinance operations as he worked his way up to current role from the most junior role in the MFI during the last 15 years. He holds bachelor degree in Accounting and Finance.
Voleak Veth - Head of Finance
Ms. Voleak Veth has over nine years of experience in accounting and finance. Voleak has worked in accounting, insurance and the general business. She joined First Finance in 2012. Voleak has completed a Bachelor’s degree in Finance and Banking, a Master’s in Business Administration and is currently pursuing her ACCA qualification.
Vandy Saing - Head of Marketing
Mr. Vandy Saing has over 13 year experiences in micro-finance institution including marketing communication, branding, and product development. He obtained his Bachelor’s Degree in Management Information System from the National University of Management in 2002.
Sineth Chrek - Head of IT
Mr. Sineth Chrek has more than 11 years of experience in infrastructure design and implementation, IT security implementation, MIS administration, IT strategy and project implementation in the field of microfinance and banking. He earned a Bachelor’s Degree in Information Technology from a university in Phnom Penh.
Namkea Hour - Head of Internal Audit
Mr Namkea Hour has more than 10 years experiences in audit including internal audit in manufacturing company and financial institution and being an auditor of the audit firm. He is a Bachelor holder in Finance and Banking and is currently pursuing a professional qualification as Certified Internal Auditor at Institute of Internal Audit (IIA).
Mengse Sean - Head of HR & Admin
Mr. Mengse Sean has had a dynamic career, filled with professional advancement. His areas of expertise include Learning & Development and Human Resources management, including recruitment, HR policy development, personnel admin and compensation and benefits. He holds a master degree in Management.
Highlights or Awards:
- In 2012, First Finance won an ASEAN Business Award in the category of Growth (for SMEs).
- In 2017, FF was selected as semi-finalist for the European Microfinance Award. The theme of the award is Microfinance for housing.
|Company name||First Finance 3|
Impact of this project
- With this investment 5 jobs are created
- With this investment 50 people are reached
About the risks
What are the risks of investing money?
Our local partners cover the risk of currency exchange rates and loan defaults. They do this by maintaining financial reserves for this purpose . In addition, there is an option to claim their equity if needed. While these measures are intended to minimize the risk to funders, our local partners face risks of their own that could effect their ability to secure a loan. These include: - bankruptcy - currency exchange rates - fraud - operational risks - political and regulatory changes - natural disasters or epidemics.
If you invest direct in a company, hence not via a local partner, risks of default are not covered. As the risk that comes with direct lendings is generally higher than an investment through a local partner, the interest rate is also higher.
There is also some operational risk at Lendahand. An example might be that Lendahand is unable to find shareholders to finance their activities. In such a case, Lendahand will handle outstanding loans at the best of its ability. At the same time, our ability to legally address non-payment from local partners becomes understandably difficult.
How does Lendahand minimize the risks?
Local partners must adhere to our mission and work with us to provide loans that are affordable. This insures that local entrepreneurs have access to financing that allows them to grow their business. A local partner must also have a track record. In other words, they must have proven themselves as a meso-credit provider for SMEs. This means (for instance) that the partner must have a solid credit portfolio, along with enough buffers and equity to compensate for unexpected downturns. We also check the organizational structure of the partner and how robust their (internal) procedures are. Finally, the loans that a local partner receives via Lendahand must be in proportion to the partner's total balance sheet. A healthy balance between effectuating influence and independence is crucial. If you would like to receive more information on the financial indicators we employ, please contact us via firstname.lastname@example.org.
When currency exchange risks become too high for a local partner, Lendahand will urge the local partner to cover these risks. In some scenario's the local partner is contractually obliged to comply with these demands.
Lendahand will always conduct due diligence when a Company requests for a direct loan. To provide more insights on risks, an independent partie comes in to perform brief analysis on direct loans. The results can be downloaded on the project detail page of the direct loan. However, this analysis serves primarily as a tool for your own opinion and conclusion. Pay attention to the fact this analysis is not an investing advice.
Does Lendahand provide guarantee on the loans?
Normally we don't. Local partners take care of the repayment, even if (some) entrepreneurs are unable to do so themselves. If the local partner is for some reason unable to repay then there is a chance of partial or full loss of your money. For this reason Lendahand only selects financially solid partners based on strict criteria.
Also, for most direct loans no guarantee is provided. For these investments currency risks are covered however.
Sometimes - and only for some direct investments in Africa - our partner Sida, part of the Swedish government, will provide a guarantee with a maximum of 50%. If this is the case, it will be indicated explicitly.
Does Lendahand have a license or exemption?
Yes. The Dutch Authority Financial Markets (AFM) has provided Hands-on B.V. (with trade name 'Lendahand') in September 2016 with an investment firm license in accordance with article 2:96 of the Financial Markets Supervision Act (Wft). Placing orders on Lendahand's website is therefore an AFM regulated activity. Lendahand also meets its minimum capital requirements of EUR 125,000 following its license as required by De Nederlandsche Bank (DNB).
Lendahand uses an exemption from an approved prospectus that is available up to EUR 5 Million per year.
How safe are my personal details?
We adhere to strict safety requirements with regards to private and payment details. All sensitive data is sent through an encrypted connection (https). Also, data is stored (encrypted) in a secured facility provided by AWS: the world largest hosting service. Customer documents can only be retrieved by a secured connection and multi-factor authentication.
What happens if the local currency devaluates?
Our local partners and Companies bear the exchange rate risks. We settle the loan, redemptions, and interest payments in euro.
Does Lendahand use a third foundation fund?
What happens with my money if Lendahand goes bankrupt?
If Hands-On BV (containing the brand name Lendahand) would go bankrupt trades between Lendahand and payment service provider Intersolve EGI would cease immediately. Intersolve will then transfer the funds in your personal wallet to your bank account (Note: if at this time the project you have invested in has been fully funded and the money has thus been transferred to the local partner, these funds will not be transferred back to your bank account). Intersolve will then in consultation with a trustee handle all repayments between the investors and investees up until the final repayment of the last project has taken place.
Additionally, Lendahand is part of the investor compensation scheme (ICS). This scheme aims to compensate individuals and small businesses who have trusted money and or financial instruments (such as notes or options) to a licensed bank, investment firm or a financial institution in case the financial firm is unable to meet its obligations arising from claims related to the investment service (in other words, if Hands-On BV is not keeping track of the acquired notes by investors in the Wge depot correctly). The ICS guarantees an amount of up to EUR 20,000 per individual. For more information, go to www.toezicht.dnb.nl/en/2/50-202210
Why is my money going via Intersolve EGI?
What happens when a local partner goes bankrupt?
About First Finance
|Equity / total assets||25.00%|
|Write-off ratio last 12 months||1.10%|
|% investment amount in arrears (>90 days)||2.70%|