US-based investors Warburg Pincus and Creation Investments recently placed INR 520 crore (USD 72 million) in equity in Fusion Microfinance, a provider of group loans and financial literacy training to women in rural areas of northern and central India. As part of the funding round, the following investors sold their stakes in the firm: Incofin Investment Management, a private company in Belgium; the Nordic Microfinance Initiative (NMI), a public-private partnership based in Norway; the government-owned Small Industries Development Bank of India; and the government-owned Belgian Investment Company for Developing Countries, which is also known by its Dutch acronym BIO. Although Warburg Pincus has been identified as leading the funding round, the prices and sizes of the stakes changing hands have not been released. During 2010, Fusion’s first year of operation, Incofin purchased a 40-percent stake in the microlender through its Rural Impulse Fund (RIF) II.
Aditya Bhandari, Incofin’s co-regional director for India, said Fusion has made “an everlasting and invaluable social impact at the base of the pyramid.” Narendra Ostawal, managing director of Warburg Pincus, reportedly is looking for Fusion to grow through acquisitions.
As of 2018, Fusion Microfinance serves 1.3 million customers via approximately 500 branches in 18 states. It has an outstanding loan portfolio of INR 22 billion (USD 306 million). The organization does not accept deposits.
Headquartered in New York City, Warburg Pincus was founded in 1966 and has invested in approximately 40 countries. It reports USD 47 billion in private equity assets under management as of 2017. The firm’s investment in Fusion is its first in India’s microfinance sector.
The mission of Creation Investments is to alleviate global poverty by making direct, for-profit investments in organizations that engage in economic development. Headquartered in the city of Chicago, it manages four financial inclusion funds with a total of USD 540 million in assets under management as of December 2018. These funds hold a total of 32 investments in the Americas and Eurasia.
As of 2018, Incofin manages assets valued at USD 1 billion through the following funds: Incofin CVSO, agRIF, the BIO account, Fairtrade Access Fund, Fonds pour l’inclusion financière en République Démocratique Congo (FPM), Impulse Microfinance Investment Fund, Invest in Visions, RIF I, RIF II, VDK Loan Portfolio and Volksvermogen.
Established in 2001, BIO aims to support a “strong private sector in developing countries, to enable them to gain access to growth and sustainable development within the framework of the [UN’s] Sustainable Development Goals.” As of 2017, it has total assets of EUR 887 million (USD 1.0 billion).
NMI was founded in 2008 and offers technical assistance and currency hedging services as well as managing three microfinance investment vehicles (MIVs). The MIVs hold assets valued at a total of USD 200 million and report returns of approximately 10 percent per year since inception. They have investments in nine other funds and 10 microbanks. The aggregate client base of these microbanks is 95-percent female.
Founded in 1990, the Small Industries Development Bank of India reports total advances of INR 953 billion (USD 13 billion) and a net worth of INR 140 billion (USD 2.0 billion) as of the end of the 2018 fiscal year.
By Michelle Fleming, Research Associate
Sources and Additional Resources
Direct contact with Creation Investments
LiveMint article
https://www.livemint.com/Companies/GHX3epwxAEvSrfhH1uj41M/Warburg-Pincus-leads-520-crore-funding-in-Fusion-Microfinan.html
Incofin press release
http://www.incofin.com/incofin-sells-remaining-stake-in-fusion-microfinance-leader-in-microfinance-in-india/
Fusion Microfinance homepage
https://fusionmicrofinance.com
Warburg Pincus homepage
https://www.warburgpincus.com
Creation Investments homepage
https://creationinvestments.com/
NMI homepage
https://nmimicro.no/
BIO homepage
http://bio-invest.be/
SIDBI homepage
https://sidbi.in/
MIX profile Fusion
https://www.themix.org/mixmarket/profiles/fusion
MICROCAPITAL BRIEF: Incofin Raises $6.5m from KfW for Fairtrade Access Fund, DRC-focused FPM
https://www.microcapital.org/microcapital-brief-incofin-raises-6-5m-kfw-fairtrade-access-fund-drc-focused-fpm/
Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/.
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