Gray Ghost Helps Launch the Bellwether Fund, the first Microfinance Equity Fund in India

Atlanta, GA, June 17, 2005 —

Incorporated in Hyderabad, with an initial capital commitment of $5 million, the Bellwether Microfinance Fund will work to support the growth of Indian microfinance to reach greater numbers of that country's working poor.

"Gray Ghost chose to partner with HTF because we share Bellwether's mission and objectives and simply enjoy working together," said Bas Rekvelt of the Hivos-Triodos Fund.

"The fund is built on a strong relationship between the fund manager, Gray Ghost and HTF. We had been involved with each other for many years through our work with a leading MFI in India. There is mutual trust and we are prepared to take significant risk," added Rekvelt.

Though potential opportunities for commercial microfinance in India are enormous, the regulatory complexities of navigating the market have, to date, deterred many investors. However, Gray Ghost and HTF have not been dissuaded from meeting the needs of more than 300 million of the world's poor who crave the chance to move out of poverty by building financially sustainable lives.

"The striking thing about India, is that despite having the largest market for microfinance services in the world, it has few, professional MFIs of any size," said Robert Pattillo, Founder of the Gray Ghost Microfinance Fund.

"India is a difficult market to operate in and penetrate, but working together with Hivos-Triodos, one of the oldest, most experienced and sophisticated microfinance investors in the world, and with Caspian, which is staffed by some of India's most experienced microfinance experts, we have the knowledge, flexibility, and appetite for innovation to overcome the obstacles," he added.

According to Paul DiLeo, Chief Executive Officer of the Gray Ghost Microfinance Fund, one of the most valuable assets of the Bellwether Fund lies in its partnership with Caspian led by S. Viswanatha Prasad, an accomplished veteran of the Indian microfinance industry, and a founding investor in the Bellwether Fund.

"Prasad has been working in this sector for close to 10 years, so he is intimately familiar with the landscape of Indian MFIs. He led what still stands as India's largest equity issue for a microfinance institution in 2001. He knows all the institutions, all the managers, and is in an excellent position to identify and put together good human resources with sound capital vehicles to promote start-ups," said DiLeo.

While Indian MFIs face a number of human resource and regulatory hurdles that hinder private investment, Prasad views the decision taken by Gray Ghost and HTF as a catalytic approach to attract further risk capital to the Indian microfinance sector.

"Almost all microfinance institutions that cross their first stage of growth cite lack of equity as the single largest constraint they face in scaling up," said Prasad. "Many MFIs have high debt-equity ratios despite the small scale of their operations, and this is because the social entrepreneurs who start these institutions have little access to risk capital," he added.

To avoid these pitfalls, the Bellwether Fund's manager and its board of directors have formulated a three-pronged strategy. According to Prasad, the Bellwether Fund will position itself to:

1. Provide the necessary resources, both financial and strategic, to enable financially viable MFIs to scale up their operations and/or transform themselves into professional, regulated entities;
2. Utilize its extensive contacts and experiences in both the microfinance and mainstream financial sectors in India, and abroad, to carve out dynamic niches for high-potential start-up and early-stage MFIs;
3. Deliver a competitive financial return, along with a significant social return to its investors.

With this plan of action in place, the Bellwether Fund hopes to live up to its moniker as "an indicator of future trends," by leading the way in the use of private equity investments for Indian MFIs.

"Bellwether hopes to be a $20-million fund by 2008 and have a portfolio of about 25 well-performing MFIs by 2010," said Prasad, "By that time, our investees will be on their way to serving over 1.5 million poor clients."

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ABOUT THE HIVOS-TRIODOS FUND

Established in 1994, the Hivos-Triodos Fund (HTF) is one of the first funds in The Netherlands to focus on providing finance to microfinance institutions. The fund is a private-public partnership between the Human Institute for Development Cooperation (Hivos) Foundation and Triodos Bank. HTF is an investment vehicle that allows the Dutch public to participate in the development of microfinance opportunities worldwide. For more information on The Hivos-Triodos Fund and its work, visit www.triodos.com.

ABOUT THE GRAY GHOST FUND

The Gray Ghost Microfinance Fund, Inc, is a $75-million, for-profit portfolio of investments aimed at connecting private social investors with microfinance opportunities worldwide. As a fund of funds, Gray Ghost hopes to educate the investment community about the dual benefits of microfinance investing as both a means of growing individual wealth and alleviating poverty. The Gray Ghost Microfinance Fund is committed to enriching lives, both financially and spiritually, on both sides of the investment relationship. For more information on the Gray Ghost Microfinance Fund and its work, visit www.grayghostfund.com.

MEDIA CONTACT

Yvonne Johanneson-Jones
Strategic Marketing and Compliance Officer
yjones@grayghostfund.com
678.365.4715