Indian microfinance institution (MFI) Ujjivan Financial Services has raised INR 127.9 crore (USD 25 million) in its fifth round of equity financing. The additional capital will allow Ujjivan to increase its loan book from its current INR 600 crore (USD 117 million) to around INR 1,600 crore (USD 313 million), given the Reserve Bank of India’s requirement for MFIs to maintain a 15-percent capital adequacy ratio.
While existing investors including Lok Capital, India Financial Inclusion Fund, Sequoia Capital, Mauritius Unitus Corporation and Elevar Equity have participated in this round of funding, the majority of the new funds came from two institutions that are investing in Ujjivan for the first time: INR 326 million (USD 6.37 million) from the Netherlands Development Finance Company (FMO in Dutch) and INR 400 million (USD 7.82 million) from Wolfensohn Capital Partners (WCP) Mauritius Holdings III. FMO, a public-private development bank, supports financial institutions and countries through “loans, participations, guarantees and other investment promotion activities.” WCP Maurituis Holdings III is an affiliate of Wolfensohn Capital Partners, a US-based private investment fund that specializes in growth equity investments in emerging markets.
Sanjiv Kapur, managing director of Wolfensohn India Advisors, said, “This is the first investment for Wolfensohn in the Indian microfinance sector, endorsing our faith in the sector and in Ujjivan’s financial inclusion model.”
Mohit Bhatnagar, managing director of Sequoia Capital, Ujjivan’s largest stakeholder, said, “India continues to be a preferred investment destination for [foreign institutional investors,] and it is heartening to see that fundamentally strong organisations in the microfinance sector are a key focus.”
As of September 30, 2011, Ujjivan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 129 million, a gross loan portfolio of USD 121 million, return on assets (ROA) of -1.86 percent and 744,000 active borrowers.
By Kristha Abores, Research Associate
About Ujjivan Financial Services:
Ujjivan Financial Services is a microfinance institution (MFI) based in Bangalore, India, that offers loans and insurance products. It was founded in 2004 and focuses on low-income women in urban and semi-urban areas. Its products include business loans, educational loans, emergency loans and life insurance. As of September 30, 2011, Ujjivan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 129 million, a gross loan portfolio of USD 121 million, return on assets (ROA) of -1.86 percent and 744,000 active borrowers.
About Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden N.V. (Netherlands Development Finance Company, FMO):
The Netherlands Development Finance Company (FMO in Dutch) is a public-private development bank which supports financial institutions and countries through “loans, participations, guarantees and other investment promotion activities.” It was founded in 1970 by the “Dutch government, private sector, employers and employee organizations.” It has access to government funds and therefore can take higher risks with its investments including long-term finance. It also specializes in local-currency finance. In 2010, FMO distributed approximately EUR 2.5 million (USD 3.3 million) in loans.
About Wolfensohn Capital Partners:
Wolfensohn Capital Partners is a New York-based private investment fund that specializes in growth equity investments in emerging markets. Founded in 2005 by James D Wolfensohn, who served as president of the World Bank from 1995 to 2005, it seeks to provide financial returns to its clients while supporting sustainability and poverty alleviation. Financial information on the organization is not available.
Sources and Additional Resources:
[1] “Ujjivan raises Rs.127.9 Crores (USD 25.5 Mn.) equity ,” http://www.ujjivan.com/news_ujjivan_raises_127_crores_equity.htm
MicroCapital.org article, September 16, 2011, “MICROCAPITAL BRIEF: Indian Microfinance Institution (MFI) Ujjivan Looking to Raise $138m from Private, Public Sector Banks,” https://www.microcapital.org/microcapital-brief-indian-microfinance-institution-mfi-ujjivan-looking-to-raise-138m-from-private-public-sector-banks/
MicroCapital.org article, January 10, 2011, “MICROCAPITAL BRIEF: Ujjivan Financial Services Raises $8.8m of Debt Capital Through Non-Convertible Debenture (NCD) Issuance to Developing World Market’s Member Company DWM (Cyprus) Limited,” https://www.microcapital.org/microcapital-brief-ujjivan-financial-service…
MicroCapital Universe Profile: Ujjivan Financial Services, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ujj…
MicroCapital Universe Profile: Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden N.V. (Netherlands Development Finance Company, FMO), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Nederlandse+Financierings-Maatschappijvoor+Ontwikkelingslanden+N.V.+%28Netherlands+Development+Finance+Company%2C+FMO%29…
MicroCapital Universe Profile: Wolfensohn Capital Partners (WCP), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Wolfensohn+Capital+Partners
MicroCapital Universe Profile: Lok Capital LLC, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Lok+Capital+LLC…
MicroCapital Universe Profile: The India Financial Inclusion Fund (IFIF), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=India+Financial+Inclusion+Fund+%28IFIF%29…
MicroCapital Universe Profile: Sequoia Capital, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Seq…
MicroCapital Universe Profile: Unitus Equity Fund I, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Uni…
MicroCapital Universe Profile: Elevar Equity Advisors, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ele…
MicroCapital Universe Profile: Reserve Bank of India, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Reserve+Bank+of+India+%28RBI%29…
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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