India’s Satin Creditcare raises new VC funding, Lok Capital exits
Satin Creditcare Network, a New Delhi-based microfinance institution (MFI) has raised INR410 million ($7.49 million) from three venture capital firms’ three funds. The transaction facilitates the exit of Lok Capital, an early investor in the company.
The new VC participants are MicroVest II, ShoreCap II and Danish Microfinance Partners K/S, with MicroVest also purchasing Lok's entire stake in Satin. The venture capital firm owned less than 15% of the holding company, having invested $1.25 million since 2008.
"The exit of Lok Capital is the first complete exit of this scale in the Indian microfinance sector and underlines the buoyancy and growth potential of the sector despite having gone through testing times recently," the MFI said in a statement, LiveMint reported.
India's microfinance industry is still recovering from the fallout of a spate of suicides by recipients of microfinance loans in the state of Andara Pradesh. Blame for the tragedies was apportioned to debt collectors employed by MFIs who allegedly used intimidation tactics to collect payments.
The government responded with legislation intended to curb over-aggressive debt collecting tactics, but it also created hurdles for MFIs in recouping the money they had advanced to customers. It has taken time for investors to regain confidence in the sector, particularly in Andara Pradesh, which is where the bulk of India's MFI activity is focused.
Satin has microfinance operations spread across nine states in northern India with 158 branches. Assets under management stand at INR6 billion, compared to INR400 million when Lok first invested.
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