MICROCAPITAL BRIEF: Lok Capital, Michael and Susan Dell Foundation, Bellwether Microfinance Fund Exit Janalakshmi Financial Services of India

Lok Capital, a Mauritius-based venture capital fund; the Michael and Susan Dell Foundation, a US-based philanthropic organization that seeks to improve the lives of poor urban residents in India, South Africa and the US; and the Bellwether Microfinance Fund, an Indian investor of equity and in start-up and medium-sized businesses, reportedly have exited their private equity investments in Janalakshmi Financial Services (JFS), a Bangalore-based microfinance institution (MFI). After the MFI raised INR 3.5 billion (USD 57.2 million) during August 2014, the organizations were satisfied to exit JFS now that it has, according to a statement attributed to Vishal Mehta, the co-founder of Lok Capital, “achieved the desired scale.” While all three organizations have been investors in JFS since it was established in 2007, the buying and selling prices of the stakes they owned have not been released [1][2].

Investors in the current round of private equity funding include Morgan Stanley Private Equity Asia, a private equity investment of US-based Morgan Stanley; Tata Capital Growth Fund, the private equity investment arm of India-based Tata Capital; and QRG Enterprises, an Indian holding company. Other investors in JFS as of August 2014 include Citi Venture Capital, the private equity investment arm of US-based Citigroup; India Financial Inclusion Fund, a Mauritius-based equity investor; and Vallabh Bhanshali, an Indian venture capitalist.

As of 2013, Lok reported USD 87 million under management [3]. As of 2012, the Michael and Susan Dell Foundation reported total assets of USD 804 million. More recent financial information on the foundation is not available. As of 2012, Bellwether, which is managed by India-based Caspian Advisors, reported USD 20 million under management.

As of 2014, JFS reported total assets of USD 420 million, a gross loan portfolio of USD 342 million and 1.4 million active borrowers. As of 2013, JFS reported return on assets of 1.97 percent and return on equity of 8.64 percent. The MFI does not accept deposits.

By Benjamin Krupp, Research Associate

About Janalakshmi Financial Services (JFS)

Janalakshmi Financial Services (JFS) is a microfinance institution (MFI) located in India. It is focused primarily on offering loans and microinsurance in urban areas. As of 2014, JFS reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 420 million, a gross loan portfolio of USD 342 million and 1.4 million active borrowers. As of 2013, JFS reported return on assets of 1.97 percent and return on equity of 8.64 percent. The MFI does not accept deposits.

About Lok Capital

The Lok Capital Initiative was founded in 2000 with support from the US-based nonprofit Rockefeller Foundation. Its goal is to “…promote inclusive growth by supporting the development of social enterprises to deliver basic services to serve the BoP [base of the pyramid] segment in a scalable, affordable and commercially viable manner.” The initiative is comprised of Lok Capital, a Mauritius-based venture capital fund that places equity and equity-linked investments in microfinance institutions (MFIs) and social enterprises in the education, healthcare and “livelihoods” sectors; and the Lok Foundation, a nonprofit entity that provides “specialized funding and long-term technical assistance for financial and social inclusion.” Lok Capital makes its investments through two funds, Lok Capital I and II. Lok Capital I was launched in 2006 with USD 22 million in investments from Accion, The Commonwealth Development Corporation (CDC), Développement international Desjardins, Netherlands Development Finance Company (also known by its Dutch acronym FMO), International Finance Corporation (IFC), Kreditanstalt für Wiederaufbau (KfW) and responsAbility Social Investments. The fund’s investments generally range in size from USD 500,000 to USD 3 million. Lok Capital II was closed in 2012 with USD 65 million. Its investors included previous Lok investors IFC, CDC, KfW, FMO and responsAbility along with new investors Proparco and ASN Novib. As of 2013, Lok reported USD 87 million under management.

About Michael and Susan Dell Foundation

The US-based nonprofit Michael & Susan Dell Foundation was established in 1999 to aims to improve global education, childhood health and family economic stability. The foundation has committed approximately USD 700 million to nonprofit organizations working in communities in India, South Africa and the United States. As of 2012, the foundation reported total assets of USD 804 million.

About Bellwether Microfinance Fund

The Bellwether Microfinance Fund is an onshore Indian venture fund that makes equity investments in microfinance institutions (MFIs). The fund invests in start-ups as well as established medium-sized nonprofit MFIs. The USD 20 million fund is independently managed by Caspian Advisors.

Sources and Additional Resources

[1] The Economic Times: Lok Capital May Exit Janalakshmi Financial Services

[2] Business Standard: Janalakshmi Raises Rs 325 Crore Through the PE Route

[3] Lok Capital: Social Performance Management Report 2012-2013

MicroCapital, August 14, 2014: Janalakshmi Financial Services to Buy $90m in Products, Services From International Business Machines (IBM)

MicroCapital, August 13, 2014: India’s Janalakshmi Financial Services Projected to Raise $98m in Private Equity Funding During 2014

MicroCapital, September 6, 2012: Bellwether Microfinance Fund, Michael & Susan Dell Foundation Sell Shares in Ujjivan of India to Lok Capital of Mauritius, Undisclosed Social Investor

MicroCapital, May 7, 2012: Lok Capital to Exit Indian Microfinance Institution Janalakshmi

MicroCapital Universe Profile: Janalakshmi Financial Services (JFS)

MicroCapital Universe Profile: Lok Capital

MicroCapital Universe Profile: Michael and Susan Dell Foundation

MicroCapital Universe Profile: Bellwether Microfinance Fund