Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW), a German state-owned development bank, has invested USD 3.28 million in equity in Invest India Micro Pension Services (IIMPS), a New Delhi-based regulator of micro-pension and long-term micro-savings products for poor people, in order to expand pension services to the working poor [1]. This transaction is part of a Series-B funding round for IIMPS, in which the company raised a total of USD 3.75 million from KfW and the Michael & Susan Dell Foundation, a US-based organization whose mission is to help children who live in urban poverty. IIMPS also received a private investment of an undisclosed amount by economist Swaminathan Anklesaria Aiyar. With the investment, KfW holds a 30 percent equity stake in IIMPS. Unitus Capital, a Bangalore-based financial consulting firm, acted as the financial advisor for the transaction, while HSA Advocates, an Indian full-service law firm, acted as the legal advisor.
IIMPS will use the funding from KfW to enhance the impact of its model by educating and enabling 5 million low-income households about saving for retirement over the next 3 years. Gautam Bhardwaj, Managing Director of IIMPS, commented that “KfW brings immense value in terms of global perspective and experience… [and] the equity investment from KfW and the Dell Family Foundation will help further strengthen financial literacy and client protection mechanisms as we surge ahead on building a mass-market for non-credit financial and risk management solutions for vulnerable households across the country. [1]”
IIMPS was founded in 2006 and currently is providing micro-saving services to low income informal sector workers, which will act as a pension in their old age [2]. IIMPS provides these products through a partnership with “national and regional banks, microfinance institutions, employers, self-help groups, NGOs, cooperatives, worker associations and unions” [2]. The services are utilized by clients through IIMPS product partners using secure bank accounts, prepaid cards or mobile wallets [2].
In 2012, KfW reported assets of EUR 518 billion (USD 681 billion). Financial information for IIMPS is unavailable.
By Anesa Kratovac, Research Associate
About Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW)
KfW Entwicklungsbank (KfW) is a state-owned development bank in Germany. KfW has three goals: to reduce poverty, to make globalization “fair” and to conserve natural resources. KfW Entwicklungsbank collaborates with local financial institutions in approximately 60 countries, including microbanks, commercial banks, village savings banks, non-governmental organizations and regional microfinance funds. As of 2012, KfW Entwicklungsbank has a portfolio of EUR 2.15 billion (USD 2.57 billion)and total assets of EUR 518 billion(USD 681 billion).
About Invest India Micro Pension Services (IIMPS)
Invest India Micro Pension Services (IIMPS) is a social enterprise that aims entirely to enable low income informal sector workers to accumulate micro-savings for their old age. Its Micro Pension® model is a technology-led initiative that delivers a variety of non-credit financial services, such as pension products developed by its promoters, to the working poor at an unspecified, affordable transaction cost. IIMPS mainly delivers services in partnership with banks, microfinance institutions (MFIs), NGOs, unions, among other institutions. To use its services, clients transmit periodic micro-savings to IIMPS product with micro-payment instruments that include bank accounts, prepaid cards or mobile wallets. Currently, IIMPS is assisting approximately 400,000 urban and rural low-income individuals in over 100 districts of 14 States of India. Assets for the organization have not been reported.
About Unitus Capital (UC)
Unitus Capital is a financial advisory firm based in Bangalore, India, that specializes in capital market services for microfinance institutions (MFIs) and other social enterprises in Asia. With offices in Australia, China, Singapore and the UK, UC is an affiliate of US-based NGO Unitus Labs. UC invests in Asia in sectors spanning microfinance, renewable energy, health care, education, agriculture and affordable housing. Between 2008 and 2013, Unitus Capital reports having raised USD 800 million for 40 clients across Asia, impacting 32 million poor people.
Additional Sources and Resources:
[1] MicroPension Press Release, July 29, 2013, “KfW picks up 30% equity stake in Invest India Micro Pension Services: The deal marks the first direct equity investment by German development bank KfW in India”
[2] Invest India Micro Pension Services (IIMPS) Website, http://www.micropensions.com/
MicroCapital.org Article, July 12, 2013, “MICROCAPITAL BRIEF: Germany’s Kreditanstalt fur Wiederaufbau (KfW) Loans $130m to Small Industries Development Bank of India (SIDBI) for Micro-, Small and Medium-Sized Enterprise (MSME),” https://www.microcapital.org/microcapital-brief-germanys-kreditanstalt-fur-wiederaufbau-kfw-loans-130m-to-small-industries-development-bank-of-india-sidbi-for-micro-small-and-medium-sized-enterprise-msme/
MicroCapital.org Article, May 9, 2009, “MICROCAPITAL STORY: European Development Finance Institutions Part 2: KfW Entwicklungsbank Remains One of the Largest Global Investors in Microfinance,” https://www.microcapital.org/microcapital-story-european-development-finance-institutions-part-2-kfw-entwicklungsbank-remains-one-of-the-largest-global-investors-in-microfinance/
MicroCapital Universe Profile: Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=KfW+Entwicklungsbank+%28KfW%29
MicroCapital Universe Profile: Invest India Micro Pension Services (IIMPS), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Invest+India+Micro+Pension+Services+%28IIMPS%29
MicroCapital Universe Profile: Unitus Capital (UC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Unitus+Capital
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