MICROCAPITAL BRIEF: Equitas of India Receives $9.3m from MicroVentures, India Financial Inclusion Funds

Equitas Holdings, a microfinance institution (MFI) based in Chennai, India, raised INR 500 million (USD 9.26 million) from MicroVentures India and India Financial Inclusion Fund, two funds dedicated to supporting the Indian microfinance industry.This is in addition to the INR 900 million (USD 16.7 million) it recently received as equity from the private investment arm of the World Bank Group, the International Finance Corporation (IFC), as was reported by MicroCapital earlier this month [2]. The amount invested by each of the funds has not been released. Spark Capital, a fund management firm based in the US city of Boston, was the financial advisor for this deal. The new funds will be used to expand Equitas Holdings’ subsidiaries, Equitas HF and Equitas VF, which are dedicated to providing financing for housing and used commercial vehicles, respectively. Equitas HF and Equitas VF, which both have been operating since June 2011, will increase their branch networks and outreach.

Launched in December 2007, Equitas Holdings has 350 branches across nine states in India. Its objective is to offer affordable credit in a transparent manner to the underbanked population of India, as well as to achieve sufficient returns on investment in order to attract further capital. As of 2011, Equitas reports to the US-based nonprofit Microfinance Information Exchange (MIX) assets of USD 155 million, a gross loan portfolio of USD 142 million, 1.2 million active borrowers, return on assets of 2.1 percent and return on equity of 7.22 percent. Equitas does not take deposits.

MicroVentures SpA, based in Italy, is a private equity firm that invests in microfinance institutions (MFIs) through direct equity investments and hybrid instruments such as subordinated and convertible bonds and quasi-equity. MicroVentures’ network includes the holding company MicroVentures, MicroVentures Investments of Luxembourg and MicroVentures Investments of India. Financial data is limited to shareholders.

Based in Mauritius, the India Financial Inclusion Fund focuses on equity investments in Indian providers of financial services to poor people such as microlenders and low-cost housing providers as well as microfinance technology companies. The USD 90 million fund was started in August 2008 and is advised by Caspian Advisors Private Limited, an Indian investment management company that specializes in microfinance investment funds.

By Sarah Benali, Research Associate

About Equitas Holdings                                                                                                                  Equitas is a microfinance institution (MFI) that was created in December 2007 and is located in Chennai, India. The company provides microcredit to low-income households in India. Through its subsidiaries, Equitas HF and Equitas VF, it offers housing finance and vehicle loans, respectively. The objective of the company is to make credit available at a reasonable cost and in a transparent manner to the underbanked population of India, as well as achieve sufficient returns on investment in order to attract further capital. As of 2011, Equitas reports to the US-based nonprofit Microfinance Information Exchange (MIX) assets of USD 155 million, a gross loan portfolio of USD 142 million, 1.2 million active borrowers, return on assets of 2.1 percent and return on equity of 7.22 percent.

About India Financial Inclusion Fund                                                                                                The India Financial Inclusion Fund (IFIF) is based in Mauritius and focuses on equity investments in Indian microfinance institutions (MFIs) and related firms such as low-cost housing providers and microfinance technology companies. The fund is advised by Caspian Advisors Private Limited, an Indian investment management company that specializes in microfinance investment funds. IFIF also provides technical advice and risk capital. The USD 90 million fund was launched in August 2008.

About Microventures SpA
Based in Italy, MicroVentures SpA is a private equity firm that invests in microfinance institutions (MFIs) in South Asia and South America through direct equity investments and through hybrid instruments such as subordinated and convertible bonds and quasi-equity. MicroVentures has three groups of investors; financial institutions, which own a total of 20 percent of the entity; private foundations, which own 30 percent; and individual investors, which own 50 percent. The financial institutions are UBI – Banco di Brescia SpA, Fondazione Cassa di Risparmio di Trento e Rovereto, Oltre SpA, Finanziaria di Valle Camonica SpA, ISA – Istituto Atesino di Sviluppo SpA, Finance & Development Srl and ISI Holding. The two private foundations are Fondazione Maria Enrica and Fondazione Peppino Vismara. The MicroVentures network includes MicroVentures, the holding company, as well as MicroVentures Investments of Luxembourg and MicroVentures Investments of India. As of 2008, the year of its latest report, the fund reported total fund assets of EUR 20 million (approximately USD 27.6 million).

About International Finance Corporation
A member of the World Bank Group, the International Finance Corporation (IFC) offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2011, IFC has 182 member countries, total assets of USD 68.5 billion and USD 12.2 billion mobilized to 518 projects.

Sources and Additional Resources

[1] TheHinduBusinessLine.com Story: “Equitas Holdings raises Rs 140 crore from IFC,” October 2012, http://www.thehindubusinessline.com/industry-and-economy/economy/equitas-holdings-raises-rs-140-crore-from-ifc/article4008722.ece

[2] MicroCapital.org story: “MICROCAPITAL BRIEF: International Finance Corporation (IFC) to Invest $18m in Equitas Microfinance India, Private Equity Funds Looking to Invest in Indian Microfinance Insitutions,” October 19, 2012, https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-to-invest-18m-in-equitas-microfinance-india-private-equity-funds-looking-to-invest-in-indian-microfinance-institutions/

[3] MicroCapital.org story: “MICROCAPITAL BRIEF: MicroVentures Lends $680,000 to Indian Microfinance Institution (MFI) Swadhaar Finserve,” November 1, 2010, https://www.microcapital.org/microcapital-brief-microventures-lends-680000-to-indian-microfinance-institution-mfi-swadhaar-finserve/

[4] MicroCapital.org story: “MICROCAPITAL BRIEF: MicroVentures Reports Investments in Equitas Microfinance of India and Sahayata Microfinance of India, Caritas del Peru and Fondesurco of Peru,” May 8, 2009, https://www.microcapital.org/microcapital-story-microventures-reports-investments-in-equitas-microfinance-of-india-and-sahayata-microfinance-of-india-caritas-del-peru-and-fondesurco-of-peru/

MicroCapital Universe Profile: Equitas Micro Finance India Private Limited https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Equitas+Micro+Finance+India+Private+Limited

MicroCapital Universe Profile: India Financial Inclusion Fund  https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=India+Financial+Inclusion+Fund+%28IFIF%29

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

MicroCapital Universe Profile: MicroVentures  https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=MicroVentures+SpA

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/

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