MICROCAPITAL STORY: Caspian Advisors-Managed India Financial Inclusion Fund (IFIF) Raises Additional $20m for Investment in Microfinance Institutions

The India Financial Inclusion Fund (IFIF), an off-shore equity fund, has raised USD 20 million in capital, taking its total fund size to USD 58 million. IFIF focuses on equity investments in Indian companies that are “directly or indirectly associated with bringing about the inclusion of the poor within the formal financial system.”

Set up in Mauritius in August 2008, IFIF invests in high-growth microfinance institutions, such as Ujjivan and Equitas, and microfinance enablers, such as A Little World, the developer of India’s first domestic payment system with specific focus on reaching the ‘bottom of the pyramid’.

IFIF is managed by Caspian Advisors, an investment management and advisory services company which manages funds in the financial inclusion space. Caspian was established in Hyderabad, India in 2004 and currently manages two funds – the IFIF and the Bellwether Microfinance Fund, a USD 20 million Indian microfinance venture fund created in May 2005.

Although no specific information was provided on the source of the IFIF’s new capital, a list of investors in the fund was released. These investors include responsAbility, a social investment firm that has invested over USD 434 million in microfinance, the Netherlands Development Finance Company (FMO) which has invested over USD 422 million in microfinance, Gray Ghost Microfinance Fund, a fund of funds which currently has a microfinance portfolio of USD 75 million, and its sister fund the Global Microfinance Equity Fund (GMEF), as well as an unnamed US institutional investor. Read more about FMO’s investments in microfinance this MicroCapital story. More information about a new fund that ResponsAbility is managing can be found in a recent MicroCapital article.

CDC Group, a UK government-backed private equity emerging markets fund of fund, is one of IFIF’s anchor investors, as described in this MicroCapital story.

S Viswanatha Prasad, managing director of Caspian, described the new investment as follows, “We’re delighted to welcome our new investors into India Financial Inclusion Fund. Caspian’s track record and the resilience demonstrated by MFIs and their clients have been instrumental in the fund being able to attract additional capital in these difficult market conditions.”

The additional capital brings IFIF a step closer to their target capital of USD 100 million.

By Jaclyn Berfond

Additional Resources:

AltAssets: “Indian microfinance fund raises a further $20m”

Reuters: “India financial inclusion fund raises additional $20 mln” by Shrija Agrawal

VCC Circle: “CDC Invests $30 Million in Two Microfinance Funds” by Madhav A. Chanchani

Caspian Advisors: Homepage

The MIX Market: Homepage

MicroCapital Story: CDC Group Invests $30m in Microfinance Funds: India Financial Inclusion Fund and Catalyst Microfinance Investors

MicroCapital Story: Microfinance Investor Netherlands Development Finance Company (FMO) to Establish $125m Fund to Support Small and Medium-sized Enterprises (SMEs) in India

MicroCapital Story: World Bank Sees Microfinance as Strong Asset Class in Midst of Financial Crisis According to the New York Times; A Target $600m Fund Managed by BlueOrchard, ResponsAbility, and Cyrano Management Will Be Launched to Support MFIs