MICROCAPITAL STORY: Bhartiya Samruddhi Finance Ltd, a Unit of BASIX Group, Raises USD 9.87m in Capital

A recent press release from Intellectual Capital Advisory Services (Intellecap) reports that Bhartiya Samruddhi Finance Ltd (BSFL), a microfinance institution (MFI) based in Hyderabad, India, has received USD 9.87 million in Series-B funding from several investors including Lok Capital LLC, Aavishkaar Goodwell India Microfinance Development Company and Small Industries Development Bank of India (SIDBI). Intellecap, a finance consultancy firm, was BSFL’s advisor on the deal. BSFL’s old investors, including IFC, Shorecap International Ltd, and ICICI Bank, commenced their exit by making a secondary sale of USD 4 million to the new investors. According to Aavishkaar Goodwell, USD 500 million in private equity over the next five years is necessary to facilitate the growth of MFIs in India. BSFL was set up in 1997 by Bhartiya Samruddhi Investments and Consulting Services (BASICS), the holding company of the BASIX group. BASICS currently owns 49.5 percent of BSFL, with investors holding the remaining amount. According to Mr. Vijay Mahajan, the Chairman and CEO of BSFL, “This is a big milestone for us as investors have reposed faith in the BASIX integrated livelihood promotion model over cookie-cutter micro-credit. We are all set to now address our goal of reaching 10 million poor households by 2014.” Donald Peck, the co-founder of Lok Capital, remarked, “We are delighted to be able to support the further growth of BSFL as it embarks on the next stage of roll-out of its unique agriculture and skills focused business models.”

BSFL is the flagship company and chief microfinance program of the BASIX group, a leading livelihood support organization in India. The MIX reports that BSFL, a non-bank financial institution registered with the Reserve Bank of India, holds a gross loan portfolio of USD 56,057,212 and serves 305,438 borrowers. In an unaudited balance sheet for the year 2008, BSFL reported total assets of USD 40.64 million and a profit before tax of USD 1.33 million. In terms of outreach, BSFL reports a presence in 10,714 villages in 74 districts in nine states of India: Andhra Pradesh, Karnataka, Orissa, Maharashtra, Madhya Pradesh, Jharkhand, Rajasthan, Chattisgarh and West Bengal. Over the past twelve years, BSFL claims to have granted 1,065,776 loans worth USD 232.3 million. Currently, BSFL reports that it has over 486,143 active loans. Apart from microcredit, BSFL also supplements its microcredit program by offering livelihood support including institutional development services to cotton producers and dairy farmers as well as agricultural and business development services to a third of its customers. Other microfinance institutions in the BASIX group include Sarvodaya Nano Finance Ltd, also a non-bank microfinance institution, and the Krishna Bhima Samruddhi Local Area Bank. MicroCapital recently reported that BASIX joined UTI Asset Management, an Indian mutual fund, and Invest India Micro Pension Services (IIMP) to offer a micropension scheme.

Mr. Vineet Rai plays a major role in two companies involved in this deal, Intellecap and Aavishkaar Goodwell. Mr. Rai founded both Intellecap and Aavishkaar India Micro Venture Capital Fund, which claims to be the first for-profit micro-equity fund in the world. Intellecap claims to have negotiated the sale of USD 100 million in capital for development programs in Europe and Asia. Aavishkaar Goodwell, the company involved in the deal with BSFL, is a joint venture between Aavishkaar India and the Goodwell Microfinance Development Company, a unit of the Dutch social investment company Goodwill Investments. According to the MIX, Aavishkaar Goodwell, which is incorporated in Mauritius, reports total fund assets of USD 11.2 million, the entirety of which is devoted to investment in microfinance. Aavishkaar Goodwell reports that it is in the process of building a portfolio of USD 25 million in microfinance start-ups.

Lok Capital LLC, a limited life fund based in Mauritius, reports a fund term of 10 years and, according to the MIX, holds total fund assets of USD 22 million. Of this, USD 7.6 million is dedicated to microfinance investments. The average size of investments ranges from USD 0.5 million to USD 2 million. Lok Capital claims such investors as IFC, CDC, KfW, FMO, ACCION International. MFIs supported by Lok Capital include Spandana, Janalakshmi, Satin, Arohan, Ujjivan, Jagannatha, all of which are located in India.

SIDBI was founded following a 1990 Act by the Indian Parliament to target small scale industries for which the investment in plant and machinery does not exceed USD 201,000. In 2001, SIDBI was listed among the top 30 development banks in the world by “The Banker”, a London publication. In a balance sheet for the year 2008, SIDBI reports an annual income of USD 329.75 million, USD 260.1 million in expenses, and total profit before taxes of USD 67.64 million.

Additional Resources:

BSFL
BASIX Home
“Intellecap Secures $9.87m Series B Funding for Bhartiya Samruddhi Finance Limited”, Published by Intellecap
Lok Capital LLC
Intellecap
Aavishkaar Goodwell
SIDBI
BSFL 2008 Unaudited Balance Sheet
SIDBI 2008 Balance Sheet
MIX Market: BSFL
MIX Market: Lok Capital
MIX Market: Aavishkaar Goodwell