Zeitinger’s big microdeal

It was the equivalent of little more than a rounding error in the international bond league tables.

It was the equivalent of little more than a rounding error in the international bond league tables.

Yet Internationale Projekt Consult’s issue of E6 million ($7.4 million) in fixed-income securities last month should benefit many more -- and more grateful -- borrowers than the usual bond deal. IPC founder and owner Claus-Peter Zeitinger explains that the proceeds will go to finance the burgeoning lending activities of ten microfinance banks in Eastern Europe, five in Latin America and three in Africa.

IPC, along with several development banks, including the World Bank’s International Finance Corp., Germany’s Kreditanstalt für Wiederaufbau and the Dutch DOEN Foundation, share control of the 18 microbanks.

At the end of last year, the microlenders had E595 million in loans extended to 295,000 borrowers, for an average of slightly more than E2,000 per credit. Zeitinger expects volume to hit E1 billion by the end of this year.

Active in Germany’s student protests in 1968 -- “I tried to start a revolution . . . and listen to good music,” jokes Zeitinger -- he earned a Ph.D. in economics from the University of Frankfurt in 1977. He founded IPC in 1980 to provide economic consulting services to developing countries.

“I started with Dm7,000 [$4,000] in cash, an old Volkswagen and a clear ambition not to enter one of those bank towers in Frankfurt,” says Zeitinger, 57, who spent most of the 1980s learning microbanking by assisting in the creation of a network of municipal banks in Peru. After the collapse of Communism, he helped found Bosnia’s first microbank in 1997.

Zeitinger hopes to sell his bonds to retail investors who share his goal of aiding development rather than maximizing profits. “Over the years you become more realistic, but you don’t give up your dreams,” he says. “I don’t care about being rich. I want to be part of society, and I want to be respected in society.”

Nevertheless, Zeitinger can afford to put E5 million of his money into IPC. He and his wife own the company, and it earns more than E2 million a year, he says. The microbanks aim to produce a return on equity of 10 to 15 percent. Zeitinger notes, “We are living proof you can do commercial microlending.”

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