The microlender Arohan Financial Services recently filed with the Securities Exchange Board of India in preparation for an initial public offering (IPO) through which it seeks to raise INR
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MICROCAPITAL BRIEF: Grameen Koota of India Looks to Expand into Housing Microfinance
Grameen Koota, a India-based microfinance division of Grameen Financial Services Private Limited (GFSPL), plans to expand into housing microfinance in areas of rural India that have limited microfinance institution (MFI) penetration.
MICROCAPITAL BRIEF: Intellecap’s IntelleCash Microfinance Network Purchases 56% Stake in Arohan Financial Services of India
IntelleCash Microfinance Network, a subsidiary of the India-based social-sector advisory firm Intellectual Capital Advisory Services (Intellecap), reportedly has purchased a 56-percent stake in Arohan Financial Services, an Indian microfinance institution (MFI), for INR 520 million (USD 10 million).
MICROCAPITAL BRIEF: Indian Microfinance Institution Bhartiya Samruddhi Finance Limited (BSFL) Raises $150m from Institutional Investors, Commercial Banks
Bhartiya Samruddhi Finance Limited (BSFL), an Indian microfinance institution (MFI) and member of the BASIX Group of companies, has reportedly raised INR 7 billion (USD 150 million) in debt and equity commitments from institutional investors and commercial banks, in what has been described as a “lifeline” by BASIX chairman Vijay Mahajan.
MICROCAPITAL BRIEF: Indian Microfinance Funds Seek to Expand Focus Beyond Microcredit
According to a recent article on VCCircle.com, an Indian online news platform, Indian microfinance fund managers are diversifying their investment base to include more areas of social investing, such as microinsurance, micro housing finance, healthcare, mobile payments and rural supply chains.
KNOW A MICROFINANCE FUND: Kinnevik, Locfund, Lok Capital LLC, Legatum Ventures
The following microfinance investment funds are profiled in this brief:
MICROCAPITAL BRIEF: Grameen Koota, India-Based Microfinance Institution (MFI), Receives Rs 27.5 Crore ($5.88m) in Equity Capital
Grameen Koota, an India-based microfinance institution (MFI) that is a division of Grameen Financial Services Private Limited, has raised equity capital worth INR 27.5 crore, the equivalent of over USD 5.88 million [1,2].
The funds were raised through investments from four funds: Italy’s MicroVentures SpA, Luxmbourg’s MicroVentures Investments (an affiliate of MicroVentures SpA), Belgium’s Incofin, and Aavishkaar Goodwell, an “Indian-Dutch joint venture” [3,4,5]. This is Grameen Koota’s second round of equity funding, after receiving an equity investment in 2008 of INR 9.2 crore, the equivalent at the time of over USD 2.3 million, from Aavishkaar Goodwell [6]. According to Suresh Krishna, the Managing Director of Grameen Koota, this investment will be used to increase the MFI’s number of borrowers in the Indian states of Karnataka and Maharashtra, to expand lending to the states of Andhra Pradesh, Tamil Nadu, and Madhya Pradesh, and to “invest in technology development” [1,7].
MICROCAPITAL.ORG BRIEF: Bhartiya Samruddhi Finance Ltd to Raise USD 20-25 Million in Equity Capital
The India-based microfinance institution (MFI), Bhartiya Samruddhi Finance Ltd, which is part of BASIX, a group of companies that participate in microfinance and other services to the poor, is planning to raise USD 20 to 25 million in equity capital in the next two to three weeks [1,2,3]. This comes after Bhartiya Samruddhi raised USD 9.87 million in equity capital in April of 2009 [1]. This investment was covered by Microcapital and investors included Lok Capital LLC, Aavishkaar Goodwell India Microfinance Development Company, and Small Industries Development Bank of India (SIDBI) [4]. S Ramachandran, Bhartiya Samruddhi’s Chief Financial Officer, has stated that the MFI is “in talks with mainstream [private equity] players” [1]. He has also stated that the MFI may turn to raising debt after this round of equity capital, and may raise even more equity in June [1]. Intellectual Capital Advisory Services (Intellecap), “a social-sector advisory firm” that advised the last round of equity capital for Bhartiya Samruddhi, will advise the coming round as well [1,5].
MICROCAPITAL.ORG STORY: Is The Microfinance Sector Losing Its Appeal To Investors As A Result Of High Valuations?
In a report by the Hindu Business Line entitled ‘Microfinance sector losing sheen due to high valuations’ [1], reporter Mr Sagar Bhadra observes that the microfinance sector, which he stated accounted for 40 percent of all private equity transactions in India in the last 18 months, ‘seems to have lost its charm’. Valuations in the sector have ‘skyrocketed’ with the consequence that ‘investors now fear a bubble and are approaching the sector cautiously’. Some market participants feel that investments in the sector is likely to decrease as investors become more selective, particularly when funding start-up MFI, according to Mr Anurag Agrawal, Senior Vice-President of Intellecap [2], a social investment advisory firm. Mr Agrawal added that the secondary market for MFI investments will start to pick up as existing investors start looking for exits.
MICROCAPITAL STORY: Indian Venture Capital/ Private Equity Funds Turn to Investing in Microfinance Institutions in India
Venture Capital/ Private Equity funds in India are now looking at investments in Indian microfinance institutions (MFIs), reports The Times of India, an Indian daily owned by The Times Group [1]. The release quotes undisclosed industry observers as predicting that around INR 1000 crore (approx USD 200 million) will be invested by VC/ PE funds in the Indian microfinance space in 2009 alone. Presence of a good management structure coupled with the business scalability demonstrated by several MFIs has been indicated as some of the ‘essential elements’ favoring VC/ PE funding [1]. In addition, the social angle to the business, scope for high growth and opportunity for exit for investors are also projected as factors favorable to potential investors [1].
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.”
MICROCAPITAL STORY: Thirty-Five Organizations Sign Client Protection Principles to Ensure Fair Treatment and Financial Protection of Low-Income Microfinance Clients
In late October, 35 microfinance institutions (MFIs) and investment funds signed the Client Protection Principles (CPP), a list of pro-consumer principles and mandates that aims to become an industry-wide standard for ensuring the fair treatment and financial protection of low-income microfinance clients. The CPP are part of a larger campaign launched in September of 2008 at the annual meeting of the Clinton Global Initiative, a conglomeration of governments and public and private organizations dedicated to sustainable development, with the goal of incorporating at least half of the world’s 500 largest MFIs within the next three years. According to Consultative Group to Assist the Poor (CGAP), there is little evidence of client abuse in the microfinance sector.
NEWS WIRE: Microfinance Investor Institutions Signed on to the Client Protection Principles
NEWS WIRE: India: Stringent Norms May Strengthen Microfinance Sector
Source: Business Standard.
MICROCAPITAL STORY: Microfinance Brokerage Sites Rangde.org and dhanaX.com Launch in India Following Kiva.org
Two new microlending sites, Rangde.org and dhanaX.com were launched this year to facilitate loans between social investors and low income borrowers in India. Initiated by U.S.-based kiva.org in 2005, micro-lending websites allow individual lenders to invest in individual borrowers via associated microfinance institutions (MFIs) that disperse the loans. These sites appear to be similar to “peer to peer” (p2p) lending sites such as US-based prosper.com, but in reality, are connecting individual borrowers and lenders through a third party (the MFI). Though Rangde and dhanaX also act as microfinance brokers, they are distinct from Kiva because they only allow investments by people with Indian bank accounts. MicroCapital has done extensive coverage on the development of kiva.org including coverage of Kiva’s launch, growth, and operations as a non-governmental organization (NGO).
MICROCAPITAL STORY: 3RD Annual Srijan Microfinance Competition
The Srijan Microfinance Business Plan Competition will host its third annual entrepreneurial challenge. The name Srijan means “creation” in English and the competition aims at developing innovative solutions to the resource and infrastructure problems that currently limit MFI’s. In addition, the event hopes to capitalize on the entrepreneurial spirit of participants to further the efficiency of sustainable development methodologies and act as a forum for business, finance, and investor opportunities.
MICROCAPITAL SPECIAL FEATURE: 2007 Equity Investments in Small and Medium Sized Microbanks, Part 3 of 3
December 10, MicroCapital.org featured Part 2 of a series on 2007 Equity Investments in Small and Medium Sized Microbanks. Previously, detailed information was provided on institutions with less than USD 100 million in assets. Here, in Part 3, we provide detailed financial and outreach information on microbanks with total assets greater than USD 100 million and less than USD 200 million. The institutions are presented in ascending order based on asset size.
MICROCAPITAL STORY: Microfinance Investor Netherlands Development Finance Company (FMO) to Establish $125m Fund to Support Small and Medium-sized Enterprises (SMEs) in India
The Netherlands Development Finance Company (FMO), a development bank founded by the Dutch government and business community in 1970, plans to establish a USD 125 million fund in India which will finance family-owned small and medium-sized enterprises (SMEs). The proposed Banyan Tree Fund will receive a USD 25 million contribution from FMO. The bank is in talks with Indian investors and other international development finance institutions to fund the balance amount.