International Finance Foreign Investment
The International Finance Corporation (IFC) has decided to make an equity investment of around Rs 150 crore in Chennai-based microfinance company Equitas Holdings Pvt. Ltd. and Bangalore-based Ujjivan Financial Services.
This shall help both microfinance institutions (MFIs) to support their geographical and business expansion and meet capital adequacy requirements for the next three to five years.
Of the total, Rs 100 crore is to go in Equitas, founded by P N Vasudevan, who was involved in consumer financing for a little over 20 years in Cholamandalam Finance.
Apart from Vasudevan, other shareholders include the Small Industries Development are the Bank of India (Sidbi), Sequoia Capital, Bellwether, Aavishkaar Goodwell, IFIF, Microventures, CLSA, Canaan, Aquarius and Helion.
Equitas Microfinance has a borrower base of 1.2 million across five states, including the low income ones of Rajasthan and Madhya Pradesh.
According to the corporation, IFC's investment will also help the company diversify sources of funding by providing comfort to potential lenders and investors.
Similarly, IFC is planning to invest Rs 50 crore in Ujjivan Financial Services Ltd., a microfinance company that lends to urban and semi-urban poor, especially salaried and self-employed women.
The funds are for a project that will expand and carry out Ujjivan's strategic and operational changes in order to cope with the changed regulatory and business environment, and meet its regulatory capital adequacy requirements for the next 3-5 years.
Recently, Ujjivan Financial raised $25.5 million by diluting a minority stake in its latest round of PE funding. Earlier in January, Ujjivan raised Rs 29 crore by placing NCDs with US-based Developing World Markets.
With close to 3,800 employees, Ujjivan has about 1.1 million members and a loan portfolio equivalent to $140 million.
Private equity investors in Ujjivan Financial Services include Unitus Equity Fund (UEF), Bellwether Microfinance Fund, Michael & Susan Dell Foundation, A W Holdings, Sequoia Capital, Lok Capital, Elevar Equity, India Financial Inclusion Fund and Sidbi.
International Finance Corporation (IFC) promotes sustainable private sector investment in developing countries.IFC is a member of the World Bank Group and is headquartered in Washington, D.C., United States.
Equitas Holdings Pvt. Ltd. is a premier financial services organisation providing individual and corporate professionals with customized financial solutions.