PE investors commit $96m to Indian microfinance player
A consortium of private equity firms, including CX Partners, CDC Group, NewQuest Capital Partners and Bajaj Holdings, have invested INR6 billion ($96.2 million) in Indian microfinance institution (MFI) Ujjivan Financial Services.
Existing investors International Finance Corporation (IFC) and Elevar Equity also took part in the round.
AVCJ Research records show that is that this is the company's sixth round of funding. Ujjivan previously raised INR1.28 billion from Wolfensohn Capital Partners, Dutch development finance company FMO, Lok Capital, Sequoia Capital, Unitus Investment Management, Caspian Advisors and Elevar, in early 2012.
Ujjivan, which started operations in Bangalore in 2005, is one of the largest MFIs in India with gross managed assets of more than INR31 billion. It operates on both a joint liability group lending and individual lending model, and has a network of 423 branches across the country, serving over two million urban and semi-urban poor customers in 22 states.
According to a release, Ujjivan plans to use the new capital to expand its loan book across products and geographies.
"This equity transaction is a strong indicator of the increasing interest of foreign and domestic investors and development finance institutions in microfinance institutions," Samit Ghosh, the company's managing director and CEO, said in a statement.
There have been several investments in Indian MFIs in the past 12 months. Most recently, AIF Partners and Accion committed $1 million to Aye Finance, a lender that serves profitable micro, small, and medium-sized enterprises (MSMEs). In March of last year, state-backed Belgian Investment Company for Developing Countries (BIO) led a INR300 million Series B round for Annapurna Microfinance.
Prior to the latest Ujjivan deal, the largest PE investment in the space was Janalakshmi Financial Services' INR3.25 billion ($52.8 million) Series D round in 2013, which was led by Morgan Stanley Private Equity Asia.
Last year also saw LeapFrog Investments - a specialist microfinance investor backed by George Soros and J.P. Morgan Chase - reach a $400 million close on its second fund targeting MFI investments in emerging Asia and Africa.
Avendus Capital acted as financial advisor to Ujjivan.
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