In MicroCapital: Who Is Responsible in a Microfinance Equity Exit?
Now that three years have passed since CGAP and the Center for Financial Inclusion (CFI) at Accion published "The Art of the Responsible Exit in Microfinance Equity Sales," this subject deserves a re-visit and perhaps expansion of the paper's general principles into industry guidelines.
As the financial inclusion and impact investment industries mature and grow, so does the issue of how investors committed to advancing financial inclusion can "exit responsibly" from the institutions in which they invest equity. Sometimes an exit will raise no debate, such as when the sale is to another mission-led investor with clear intentions to continue the work of the exiting stakeholder. However, there is increasing concern about mission drift as investments mature, exits become more common and the pool of well-capitalized social investors remains small. What, if anything, does an exiting investor owe to an investee or its clients to ensure the new investor is the right "fit" for helping the investee meet its social goals?
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