MICROCAPITAL STORY: Fund-raising Continues In India - Kerala’s ESAF Microfinance And Investments Raises $2.5 Million Through Sale Of Minority Stake To Opportunity International Australia's Subsidiary, Dia Vikas Capital

It was recently reported by Ruchika Sharma in VC Circle, a specialist South Asian journal on venture capital, that a South India based MFI, ESAF Microfinance and Investments (EMFIL) has raised Rupees 12 crore (approximately USD 2.5 million). According to the MIX Market portal, a database which provides financial and other information on MFIs across the globe, EMFIL was established in 1992 and is a regulated non-bank financial institution which is modeled along the lines of Grameen Bank. It is stated in EMFIL’s profile on the MIX Market that the MFI’s total assets as at 31 March 2008 is USD 21, 838,532 and it has active 145,712 borrowers. EMFIL’s total equity is reported to be USD 1,169,903 and it has a profit margin of 3.03%. Its return on assets is said to be 0.71 percent and return on equity is 16.74 percent. The services offered by EMFIL include microcredit, microinsurance, funds transfers and micro-energy loans. Kerala-based EMFIL raised the amount by selling 20 percent of its stake to Dia Vikas Capital Private Limited, a 100% subsidiary of Opportunity International Australia. No further information about the transaction is currently available in the public domain.

Founded in 1979 by Australian entrepreneur David Bussau and former president of Bristol Myers International Corporation Al Whittaker, Opportunity International is an international non-profit organisation that focuses on microfinance and enterprise development in various parts of the world. Current information on its website shows that the organization is serving 1,243,906 active loan clients (85 percent women) and 815,705 micro insurance policy holders across the globe. The annual income and expenditure for 2008 is stated to be UK Sterling 4.4 million (approximately USD 7.3 million). The organization’s annual financial review for 2009 is expected to be published shortly.

Opportunity International Australia is a fundraising partner of Opportunity International that focuses on the expansion of the microfinance sector in India, Indonesia and the Philippines. According to information on its website, Opportunity International Australia has existing partnership arrangements with 26 MFIs. The organization raises and distributes funds from private contributions, government grants and capital markets to expand their MFI partners. In addition, Opportunity International Australia also carries out advocacy work and provides enterprise development services to help their MFI partners develop their microcredit businesses. In addition to providing direct funds through grants and equity investments, Opportunity International Australia supports their MFI partners by brokering and guaranteeing capital, to fund larger numbers of clients.

According to a press release on the Opportunity International Australia website and a report on the website of the Australian Council For International Development, the Australian-based microfinance organisation has developed a partnership network across India to provide funds in support of microfinance programmes for Indian micro-entrepreneurs. The CEO of Opportunity International Australia, Rob Dunn, was quoted as saying that the organization intends to provide enough capital to sustain millions of families across India. In 2007, the organization raised USD 30 million in seed funding and spent a significant amount of time conducting due diligence on numerous Indian MFIs.

No financial information about Dia Vikas Private Limited is currently available in the public domain. The Delhi-based company is stated to be a subsidiary of Opportunity International Australia. Ms. K.C. Ranjani is the Chief Executive Officer of Dia Vikas Capital Private Limited, a social venture capital fund supporting microfinance and livelihood institutions in India. Before joining Dia Vikas as its CEO, Ms. Ranjani spent a year at the India-based MFI consultancy firm, MicroSave, as the Senior Microfinance Specialist. Prior to that she was a development banker with the Small Industries Development Bank of India (SIDBI) where she was involved in the establishment of the SIDBI Foundation for Micro Credit. Ms. Ranjani is also the Director for Opportunity International Australia’s India programme which was started in November 2007 to engage existing and start-up Indian MFIs and partner with livelihood providers to assist communities in poverty-stricken areas.

MFIs in India have been raising funds in varying amounts since the beginning of the year. As reported in a previous MicroCapital story, Hyderabad-based SKS Microfinance recently announced its plans to raise Rs. 500 Crore (approximately USD 104 million) in rated debt products in order to satisfy customer loan demands. Included in the total amount is the recent one-year, 10 percent USD 16 million bond issue reported in a recent MicroCapital story. Those bonds were listed on the Bombay Stock Exchange and fully subscribed by Standard Chartered Bank.

Additional Resources:

MicroCapital Story: SKS Microfinance Raises Rs. 75 Crore (USD 15.8 million) Debt and Lists Bonds on Bombay Stock Exchange

MicroCapital Story: Indian SKS Microfinance Issues Bonds and Commercial Notes, and Announces a $963.6m Borrowing Plan to Finance Rapid Growth

MicroCapital Story: Equitas Micro Finance Gets Transaction Securitized and Rated by CRISIL, Structured and Arranged by the Institute for Financial Management and Research

MicroCapital Story: SKS Microfinance, Share Microfin, and Equitas Microfinance Collaborate with Yes Bank to Securitize a Series of Micro-loans in India that Cumulatively Amount to USD 38.3 million.

Report: CDC Invests $30 million in Two Microfinance Funds

Report: Share Microfin set to raise Rs 250 crore through PE route

Microfinance Gateway: MFI Financing Strategies and the Transition to Private Capital

Microfinance Gateway: Foreign Capital Investment in Microfinance: Balancing Social and Financial Returns

Microfinance Gateway: Positioning Microfinance Institutions for the Capital Markets