Matrix Partners India, a Mumbai-based investment firm, is investing INR 1 billion (USD 22.5 million) in Bhartiya Samruddhi Finance Limited (BSFL), an Indian microfinance institution that is a member of the BASIX (Bhartiya Samruddhi Investment & Consulting Service) Group. Two existing investors, Europe-based Hivos-Triodos Fonds and dedicated microfinance institution (MFI) investor Lok Capital LLC, are contributing a further INR 127 million (USD 2.9 million) and INR 55 million (USD 1.2 million) respectively.
This is the third equity infusion in BSFL. The company raised INR 210 million (USD 4.7 million) in 2001 and INR 550 million (USD 12.4 million) in 2009. Investors in the third round paid nearly double the premium of that paid in the second round while investors in the first round had bought their shares at par value. In the second round, investors paid a premium of INR 63 (USD 1.4) on INR 10 shares (USD 0.2). With the latest equity infusion, managers and employees will hold 33 percent, Matrix 18 percent and the International Finance Corporation (IFC) 11 percent with the remaining equity spread amongst other investors.
Of the INR 1.2 billion (USD 26.5 million), around INR 120 million (USD 2.7 million) will be used to repay long-term debts of the holding company, BASIX Group, to the Ford Foundation and the Swiss Development Foundation. Sajeev Viswanathan, managing director and CEO of BSFL, said that the equity raised will help them reduce the interest rate charged to their clients by at least 100 basis points.
As of March 31, 2009, BSFL had a gross loan portfolio worth over USD 73.6 million and 498,681 active clients.
By: Christine Chang, Research Associate
About Bhartiya Samruddhi Finance Limited (BSFL):
Bhartiya Samruddhi Finance Ltd. (BSFL) is a regulated non-banking finance company (NBFC) based in Hyderabad, India, and founded in 1997. It is part of the BASIX Group that provides financial services, agricultural/business development services and institutional development services. As of March 31, 2009, BSFL had a gross loan portfolio worth over USD 73.6 million, total assets of USD 111.1 million, return on assets of 1.8 percent, return on equity of 15.6 percent and 498,681 active clients.
About Matrix Partners India:
Matrix Partners India is an investment firm with INR 15 billion (USD 337 million) under management. The firm invests in companies targeting the Indian domestic market with a sector independent investment strategy. The firm invests up to INR 1.25 billion (USD 28 million) in a company depending on its stage of development. Matrix Partners has a global network of funds investing in the US, China and India with USD 2 billion under management.
About Hivos-Triodos Fonds (HTF):
The Hivos-Triodos Fonds (HTF) is a microfinance investment vehicle, which mobilizes capital for microfinance institutions (MFIs). HTF was created in 1994 through a joint partnership between Triodos Bank, a private bank of the Netherlands investing in social investment, and the Humanist Institute for Development Cooperation (Hivos), a non-government organization (NGO) also based in the Netherlands.
About Lok Capital LLC:
Lok Capital LLC is a microfinance investment vehicle, which mobilizes capital for microfinance institutions (MFIs). Lok Capital LLC is a limited-life limited-liability company based in Mauritius that provides equity and equity-linked investments to microfinance institutions (MFIs) in India. The fund was launched in 2006 with USD 22 million. Investors include ACCION International, Commonwealth Development Corporation (CDC), Developpement International Desjardins, Netherlands Development Company (FMO), International Finance Corporation (IFC), KfW, and responsAbility. The average investment size ranges from USD 500,000 to USD 3 million. The Lok Foundation was created along with Lok Capital LLC to provide specialized technical assistance to Indian MFIs.
Additional Resources:
The Economic Times website: Matrix invests Rs 100 cr in Basix, April 6, 2010: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/finance/Matrix-invests-Rs-100-cr-in-Basix/articleshow/5764785.cms
MicroCapital Universe: Bhartiya Samruddhi Finance Ltd (BSFL): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bhartiya+Samruddhi+Finance+Ltd
MicroCapital Universe: Matrix Partners India: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Matrix+Partners+India
MicroCapital Universe: Hivos-Triodos Fonds (HTF): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Hivos-Triodos+Fund+%28HTF%29
MicroCapital Universe: Lok Capital LLC: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Lok+Capital+LLC
MicroCapital Brief: Bhartiya Samruddhi Finance Ltd to Raise USD 20-25 Million in Equity Capital, November 23, 2009: https://www.microcapital.org/microcapitalorg-brief-bhartiya-samruddhi-finance-ltd-to-raise-usd-20-25-million-in-equity-capital/
MicroCapital Story: Bhartiya Samruddhi Finance Ltd, a Unit of BASIX Group, Raises USD 9.87m in Capital, May 3, 2009: https://www.microcapital.org/microcapital-story-bhartiya-samruddhi-finance-ltd-a-unit-of-basix-group-raises-usd-987m-in-capital/
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