Affirma backs India's Belstar Microfinance

Incorporated in 1988 and registered as a non-banking finance company (NBFC) in 2001, Belstar was acquired by non-profit Hand in Hand India (HIH) in 2008 as a microfinance institution (MFI). It was tasked with providing financial assistance to entrepreneurs that came through HIH’s Self Help Group program, which is intended to drive female empowerment and job creation.

Belstar raised INR175 million from the International Finance Corporation (IFC) in 2009 and $900,000 from the Norwegian Microfinance Initiative in 2010. Muthoot Finance, India’s top gold loan provider, made it a subsidiary in 2016, committing INR554 million in 2016 for a 57.16% stake and taking out the foreign investors.

Further capital injections followed. By the time Maj Invest joined a $28 million round in 2018, Muthoot Finance owned 74% of Belstar, according to AVCJ Research’s records. This fell to 71% on completion of the round, with Maj Invest taking 11%.

Belstar has 650 branches across 19 states. As of March 2021, total assets were INR34.7 billion, up from INR25.2 billion 12 months earlier. Total income rose from INR5 billion to INR5.5 billion, while net profit fell from INR989.9 million to INR466.5 million, mainly due to increasing finance, impairment, and employee benefit costs.

Kalpanaa Sankar, a managing director of Belstar, said in a statement that the investment, which comes as India continues to grapple with the coronavirus pandemic, validates the market opportunity in microfinance and Belstar’s potential to capitalize on the opportunity.

Vijay Nallan Chakravarthi, a managing director at Affirma, said the private equity firm was impressed by Belstar’s “ability to manage book quality despite multiple external shocks.” He added that Affirma wants to help management turn Belstar into “a leading tech-enabled rural lender.”

InteQuant Advisors was the sole financial adviser on the transaction.

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• Topics
• South Asia
• Expansion
• Financials
• India
• NBFCs
• Growth capital
• Financial Services
• Affirma Capital