Several private equity (PE) funds reportedly have taken stakes totaling INR 325 crore (USD 50.9 million) in Janalakshmi Financial Services (JFS), an Indian microfinance institution (MFI) that focuses on disbursing loans to clients in urban areas. Investors include the PE fund of Tata Capital, an Indian multinational conglomerate; the PE Asia Fund of Morgan Stanley, a US-based multinational financial services corporation; and QRG Enterprises, a holding company of Havells India, an electrical goods company. Other buyers of stakes in the firm include Citi Venture Capital, a US-based private equity firm; India Financial Inclusion Fund, a microfinance equity fund that invests in Indian MFIs; and Mr Vallabh Bhanshali, an investment banker. The amount of stake each entity purchased is unavailable. JFS allegedly is selling its stake in an effort to expand its loan portfolio, which it plans to double from INR 1100 crore (USD 172 million) to INR 2200 crore (USD 345 million) by year-end 2013. The MFI’s other business expansion plans include increasing its customer base and raising additional debt of INR 1800 crore (USD 282 million) from banks [1]. JFS has not disclosed its plans for the additional debt it hopes to raise.
Edelweiss Financial Services Limited, an Indian financial services company, and Unitus Capital, an Indian financial advisory firm, acted as advisors for this transaction.
As of year-end 2012, JFS reported to the Microfinance Information Exchange (MIX), a US-based nonprofit data provider, total assets of USD 196 million, a gross loan portfolio of USD 177 million disbursed to 696,000 active borrowers, return on assets (ROA) of 1.9 percent and return on equity (ROE) of 8.64 percent. JFS does not accept deposits. Tata Group’s total revenue for year-end of 2012 is USD 100 billion. As of 2012, as reported by the US-based investment research firm, Morningstar, Morgan Stanley had revenues of USD 26.1 million and total assets of USD 781 million. Return on assets (ROA) for 2011 was 0.27 percent and its return on equity (ROE) for 2012 was -.05 percent.
By Adrija Vaiciulionis, Research Associate
About Janalakshmi Financial Services:
Janalakshmi Financial Services (JFS) is a microfinance institution (MFI) located in India. Its primary focus is on offering loans, savings and microinsurance in 47 cities. As of year-end 2012, JFS reported to the Microfinance Information Exchange (MIX) total assets of USD 196 million, a gross loan portfolio of USD 177 million owed by 696,000 active borrowers, return on assets (ROA) of 1.9 percent and return on equity (ROE) of 8.64 percent. JFS does not accept deposits.
About Morgan Stanley:
Morgan Stanley (MS) is a global financial services firm headquartered in the US city of New York. Morgan Stanley operates in 36 countries around the world, with approximately 600 offices and 60,000 employees. The firm was established on September 16, 1935. The main areas of the firm are global wealth management, institutional securities and asset management. As of 2012, as reported by the US-based investment research firm Morningstar, MS had revenues of USD 26.1 million and total assets of USD 781 million. Return on assets (ROA) for 2011 was 0.27 percent and its return on equity (ROE) for 2012 was -.05 percent.
About Tata Group:
Tata Group is a multinational information technology company located in Mumbai, India. It is used to establish and finance research and educational and cultural institutions in India. It emphasizes social welfare and environment-related projects. Seven business sectors compose Tata Group: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. As of 2012, Tata Group reported total assets of USD 77.7 billion, total revenue of USD 100 billion, and sales of USD 98.1 billion. Tata Group entered the Private Equity sector in 2007.
Sources and Additional Resources:
[1] Athrey, Vineetha “Janalakshmi Financial Services Raises Rs 325cr; Aims to Cut Debt”, moneycontrol.com, Aug. 17 2013.http://www.moneycontrol.com/news/cnbc-tv18-comments/janalakshmi-fin-services-raises-rs-325cr-aims-to-cut-debt_937164.html
Janalakshmi Financial Services “Janalakshmi Closes Series D Equity Raise of INR 3.25 Billion”,microfinancegateway.org, Aug.15 2013.
http://www.microfinancegateway.org/p/site/m/template.rc/1.1.19644/
Sabarinath M and Archana Rai “Private Equity Funds to Buy Stake in Janalakshmi Financial Services for Rs 350 Crore”, The Economic Times, Aug. 8 2013. http://articles.economictimes.indiatimes.com/2013-08-08/news/41201945_1_janalakshmi-financial-services-treeline-asia-master-fund-tata-capital
MicroCapital article, August 8, 2013, “MICROCAPITAL BRIEF: Standard Chartered Bank (SCB) Loans $13m to Indian MFIs Janalakshmi Financial Services Private Limited, Ujjivan Financial Services Limited,” https://www.microcapital.org/microcapital-brief-standard-chartered-bank-scb-loans-13m-to-indian-mfis-janalakshmi-financial-services-private-limited-ujjivan-financial-services-private-limited/#more-25260
MicroCaptial article, July 26, 2012, “MICROCAPITAL BRIEF: Indian Janalakshmi Financial Services Offers JanaOne ‘One-Stop’ Shopping to Long-Term Customers,”https://www.microcapital.org/microcapital-brief-indian-janalakshmi-financial-services-offers-janaone-one-stop-shopping-to-long-term-customers/
MicroCapital article, June 25, 2011, “MICROCAPITAL BRIEF: Indian Microfinance Institution (MFI) Janalakshmi Raises $14m in Equity Led by Citi Venture Capital International (CVCI),”https://www.microcapital.org/microcapital-brief-indian-janalakshmi-financial-services-offers-janaone-one-stop-shopping-to-long-term-customers/
MicroCapital article, September 15, 2010, “MICROCAPITAL BRIEF: India’s Axis Bank and Microfinance Institution Janalakshmi Agree to Expand Access to Financial Services for Country’s Urban Poor,”https://www.microcapital.org/microcapital-brief-indias-axis-bank-and-microfinance-institution-janalakshmi-agree-to-expand-access-to-financial-services-for-country%E2%80%99s-urban-poor/
MicroCapital Universe Profile: Janalakshmi Financial Services
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Janalakshmi+Financial+Services+%28JFS%29
MicroCapital Universe Profile: Citi Venture Capital International
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Citi+Venture+Capital+International+%28CVCI%29
MicroCapital Universe Profile: Morgan Stanley
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Morgan+Stanley
MicroCapital Universe Profile: Unitus Capital
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Unitus+Capital
MicroCapital Universe Profile: Tata Group
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Tata+Group
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