India's Ratnakar Bank raises $55m from investors
India's Ratnakar Bank has raised INR3.28 billion ($54.6 million) from a consortium of investors, including CDC Group and Asia Capital & Advisors, in return for a minority stake.
The sum includes CDC's recently disclosed investment of $28 million for a 4.8% stake, which valued the bank at INR35 billion. The round brings Ratnakar's total disclosed private funding to date to more than $230 million.
Existing investors, including World Bank investment arm International Finance Corporation (IFC) and Indian PE investor Gaja Capital, are also revealed to have made fresh investments. The overall size of the stake sold by Ratnakar was not disclosed.
The funding will be used to expand Ratnakar's branch network in semi-urban and rural areas of India.
The bank was founded in 1943 and traditionally concentrated on Maharashtra, Karnataka and Goa. A new management team - led by former Bank of America executive Vishwavir Ahuja - arrived in 2010 and the lender altered its strategy to focus on lending to small and medium-sized enterprises (SMEs) across a wider geographic area.
The bank received its first round of funding from Faering Capital, Gaja and Norwest Venture Partners later the same year. In early 2013, IFC said it planned to invest INR1.3 billion ($24 million). Other backers are said to include Beacon India Private Equity, Cartica Capital, HDFC and Samara Capital.
Ratnakar has a total business size of more than $2.4 billion and serves around 500,000 customers through a network of 160 branches and 350 ATMs across 12 states. It is looking to grow its presence in Rajasthan, Madhya Pradesh and West Bengal, where the penetration of financial services is low.
The goal is to increase the client base among financially excluded groups to 1.3 million accounts. The expansion that comes as part of this is expected to triple Ratnakar's current 2,500-strong workforce by 2018. Last year, the bank bought part of RBS' India business.
The Indian banking sector is growing at a rate of 14-16% per year, but the World Bank estimates that 65% of the country's 1.2 billion people still do not have access to formal financial services.
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