MICROCAPITAL BRIEF: India’s Ujjivan Financial Services Raises $7.85m from Mutual Funds for On-Lending To Micro-, Small, Medium-Sized Enterprises (MSMEs)

 Ujjivan Financial Services Private Limited, a microfinance institution (MFI) based in Bangalore, India, recently announced that it has raised INR 500 million (approximately USD 7.85 million) from United Trust of India (UTI), a mutual fund company based in Mumbai, India, through the issuance of secured, non-convertible debentures (NCDs).

The debt instruments were arranged by the IFMR Capital, an affiliate of the nonprofit Chennai-based Institute for Financial Management and Research (IFMR) that facilitates funding for organizations that serve low-income individuals in India.

Samit Ghosh, the managing director of Ujjivan, said that “this transaction is a big milestone for both the sector and for Ujjivan, it represents remarkable investor confidence in the sector”[1]. Kshama Fernandes, the chief executive officer of IFMR Capital, added that, “UTI Asset Management company subscribing to the NCDs issued by Ujjivan is a significant breakthrough for the sector in terms of bringing back a valuable class of investor to the sector and is another step forward for Ujjivan & IFMR Capital in our financial inclusion journey”[1].

As of March 2015, Ujjivan reported total assets of INR 39.8 billion (approximately USD 613.4 million), a gross loan portfolio of INR 32.7 billion (approximately USD 495.2 million), return on equity (ROE) of 13.7 percent and 2.2 million active borrowers. The MFI does not accept deposits. As of March 2014, UTI Asset Management company reported total assets of approximately INR 13.9 billion (approximately USD 210 million) and a net annual profit of approximately INR 1.7 billion (approximately USD 25.7 million). As of 2013, IFMR reported total assets of INR 1.8 billion (USD 34 million).

 

By Victor Mugo, Research  Associate

 

About Ujjivan Financial Services Private Limited

Ujjivan Financial Services Private Limited 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 March 2015, Ujjivan reported total assets of INR 39.8 billion (approximately USD 613.4 million), a gross loan portfolio of  INR 32.7 (approximately USD 495.2 million), return on equity (ROE) of 13.7 percent and 2.2 million active borrowers. The MFI does not accept deposits.

 

About United Trust of India (UTI)

United Trust of India (UTI) is a mutual fund company that is based in Mumbai, India. As part of its facilitation of investment in the domestic capital markets of India, UTI acts as a credit portfolio manager with some of its products compliant with Shariah, the Islamic legal system. As of March 2014, UTI Asset Management company reported total assets of approximately INR 13.9 billion (approximately USD 210 million) and a net annual profit of approximately INR 1.7 billion (approximately USD 25.7 million.

About IFMR Capital

IFMR Capital, a subsidiary of IFMR Trust, is an Indian non-banking financial company that aims to provide liquidity and debt capital to the microfinance industry and other sectors that offer products and services for low-income households. IFMR Trust is an affiliate of the Institute for Financial Management and Research (IFMR), a non-profit research and educational institution based in . As of 2013, IFMR reported assets of INR 1.8 billion (USD 34 million).

Sources and additional information

[1] The Times of India: Ujjivan raises Rs 50 crore through commercial papers


http://timesofindia.indiatimes.com/business/india-business/Ujjivan-raises-Rs-50-crore-through-commercial-papers/articleshow/48284935.cms

[2] MicroCapital Universe profile: IFMR Capital

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=IFMR+Capital

[3] MicroCapital Universe profile: Ujjivan Financial Services

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

[4] MicroCapital Universe profile: United Trust of India (UTI)

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=unit+trust+of+india

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