The origins of Compartamos lie in the Mexican youth organization, Gente Nueva, founded in 1982 to improve the quality of life of Mexico’s marginalized communities through social action, and health and food programs. In 1990, to provide support to establish family microenterprises and other income-generating activities among these communities, Compartamos was launched with a village banking pilot program. In 1995, as the village banking program had expanded and began to achieve operational self-sufficiency, it was separated from the food program. Throughout the last couple of decades, Compartamos, which began its credit operations in the states of Oaxaca and Chiapas, has experienced remarkable expansion and growth while attaining and then maintaining high levels of profitability.
After achieving financial self-sufficiency in 1997, Compartamos began the process of launching a regulated financial institution – a SOFOL (Sociedad Financiera de Objeto Limitado) – with a legal charter to provide working capital loans. The regulatory category of SOFOL was born in 1993 partly as a result of NAFTA. SOFOLs are specialized financial institutions that grant working capital, mortgage, agriculture and other types of loans in Mexico.
This transformation would help the organization achieve faster and more sustainable growth, especially by allowing it to access commercial capital. In 2000, the NGO’s microfinance operations, personnel and loan portfolio were transferred to Financiera Compartamos S.A de C.V, which began life with U.S. $6 million in equity investments from the International Finance Corporation (IFC), Accion Gateway Fund, Profund, Compartamos A.C. (the founding NGO) and other Mexican private investors.
On April 19, 2007, Compartamos Banco became the first Latin American microfinance institution (MFI) to offer equity through an Initial Public Offering (IPO). Shareholders in Compartamos, including Accion, the IFC, Compartamos NGO, and private Mexican investors sold 29.9 percent of Compartamos’ stock in a secondary offering listed on the Mexican Stock Exchange. The total proceeds from this sale were U.S. $466 million, with purchases by 5,920 institutional and retail investors from Mexico, the United States, Europe and South America.
The initial impetus behind the Compartamos IPO came from a normal process of ownership evolution. A sale of a portion of total shares held would allow the shareholders to redeploy capital that was otherwise tied up. Some of the original investors in Financiera Compartamos, such as ProFund, had already exited. Other investors, notably Accion and IFC, had delayed selling shares until after the banking license was finalized to assure the banking authorities of their confidence in and commitment to the license application.
The proceeds from the IPO have since allowed Accion to significantly expand its mission of financial inclusion, creating new MFIs in Brazil, Cameroon, China, Ghana and India, and strengthening, through investment or reinvestment, other partners in India, Africa and Latin America. Accion has also used the proceeds to establish and fund its Washington, D.C.-based think tank, the Center for Financial Inclusion, and the Center's industry-wide initiatives, such as the Smart Campaign and Financial Inclusion 2020.
Today, Compartamos stands out as one of the best performing MFIs in the world and one of the largest in Latin America in number of clients, providing loans to more than two and a half million people in Mexico, Guatemala and Peru as of March 2013. It operates through a network of 536 branches in those three countries, offering microcredit, remittances and insurance products. In the view of many, Compartamos has become a world model for other microfinance institutions.
Read more about the Compartamos IPO on the Center for Financial Inclusion at Accion’s website.