MICROCAPITAL BRIEF: Bellwether Microfinance Fund, Michael & Susan Dell Foundation Sell Shares in Ujjivan of India to Lok Capital of Mauritius, Undisclosed Social Investor

Ujjivan, a microfinance institution (MFI) based in Bangalore, India, is currently experiencing a churn of investors. Bellwether Microfinance Fund, an Indian microfinance investment vehicle, sold its seven-percent stake to Lok Capital, a Mauritius-based microfinance investment vehicle that increased its stake in Ujjivan to 14 percent. According to an undisclosed source cited by Indian newspaper Business Standard, Bellwether recorded a profit of 24 percent in the sale of the stake it had held since 2005. Michael and Susan Dell Foundation (MSDF), a US-based nonprofit, is also expected to sell its six-percent stake in the MFI to an undisclosed social investor.

Samit Ghosh, the founder and managing director of Ujjivan , reportedly said: “New investors are in the process of buying stake in Ujjivan. Bellwether was in Ujjivan since the beginning. Then, it came in as a domestic investor. However, due to subsequent changes in rules, it turned a foreign investor. This was one of the reasons for the exit. As far as MSDF is concerned, its objective was to see us established. That being achieved, it is exiting.”

In addition, the International Finance Corporation, the investment arm of the World Bank Group, is expected to make an equity investment of INR 45 crore (USD 8 million) in Ujjivan.

As of June 30, 2012, Ujjivan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 146 million, a gross loan portfolio of USD 126 million, return on assets (ROA) of 0.24 percent, return on equity (ROE) of 1.06 percent and 855,000 active borrowers.

By Mihaela Grindeanu, Research Associate

About Ujjivan Financial Services: Ujjivan Financial Services is a microfinance institution (MFI) based in Bangalore, India, that offers loans and insurance products. It was founded in 2004 and focuses on low-income women in urban and semi-urban areas. Its products include business loans, educational loans, emergency loans and life insurance. As of June 30, 2012, Ujjivan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 146 million, a gross loan portfolio of USD 126 million, return on assets (ROA) of 0.24 percent, return on equity (ROE) of 1.06 percent and 855,000 active borrowers.

About Bellwether Microfinance Fund: The Bellwether Microfinance Fund is an onshore Indian venture fund that makes equity investments in microfinance institutions (MFIs). The fund invests in start-ups as well as established medium-sized nonprofit MFIs. The USD 20 million fund is independently managed by Caspian Advisors.

About Michael and Susan Dell Foundation: The US-based nonprofit Michael & Susan Dell Foundation was established in 1999 to provide grants to organizations that focus on education, childhood health and family economic stability. The foundation has committed approximately USD 700 million to nonprofit organizations working in communities in the United States, South Africa and India. As of 2010, the foundation reported total assets of USD 906 million.

Sources and Resources:

Business Standard story: “Ujjivan MFI set for major investor churn”, http://www.business-standard.com/india/news/ujjivan-mfi-set-for-major-investor-churn/483391/

MicroCapital.org story, February 6, 2012: “MICROCAPITAL BRIEF: Indian Microfinance Institution Ujjivan Financial Services Raises $25m in Equity from FMO, Wolfensohn, LOK, IFIF, Sequoia, Unitus, Elevar”, https://www.microcapital.org/microcapital-brief-indian-microfinance-institution-ujjivan-financial-services-raises-25m-in-equity-from-fmo-wolfensohn-lok-ifif-sequoia-unitus-elevar/

MicroCapital.org story, March 1, 2012: “MICROCAPITAL BRIEF: Rating Agency CRISIL Upgrades Indian Microfinance Institutions Ujjivan, Equitas, Janalakshmi”, https://www.microcapital.org/microcapital-brief-rating-agency-crisil-upgrades-indian-microfinance-institutions-ujjivan-equitas-janalakshmi/

MicroCapital Universe Profile: Ujjivan Financial Services, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ujjivan+Financial+Services

MicroCapital Universe Profile: Bellwether, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bellwether

MicroCapital Universe Profile: Michael and Susan Dell Foundation, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Michael+and+Susan+Dell+Foundation

MicroCapital Universe Profile: Lok Capital LLC, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Lok+Capital+LLC

MicroCapital Universe Profile: International Finance Corporation, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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