MICROCAPITAL BRIEF: Lok Capital, Creation Investments Invest Total of $13m in Indian Microfinance Institution Equitas Holdings

Two institutional investors, Lok Capital LLC (Lok Capital), a Mauritius-based investment vehicle, and Creation Investments Capital Management Limited Liability Corporation (LLC) (Creation Investments), a US-based alternative investment management company, reportedly have invested a cumulative sum of INR 800 million (USD 13.7 million) in Equitas Holdings Private Limited (Equitas), a Chennai-based microfinance institution (MFI). Lok Capital contributed INR 470 million (USD 8 million) of the total, and Creation Investments disbursed the remaining INR 330 million (USD 5.6 million). This investment will increase total equity in Equitas to INR 4.8 billion (USD 82 million).

Equitas offers credit to the underbanked population in seven states and union territories in India: Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Puducherry, Rajasthan and Tamil Nadu. As of March 31, 2014, Equitas had total assets of INR 25.9 billion (USD 442.9 million) and had achieved INR 741.5 million (USD 12.7 million) in profit after tax for the quarter.

The mission of Creation Investments Capital Management LLC is to alleviate global poverty by making direct, for-profit investments in organizations that engage in economic development. Lok Capital is a venture capital fund, which places equity and equity-linked investments in social enterprises in India such as microfinance institutions (MFIs). Lok Capital makes its investments through two funds, Lok Capital I and II. Lok Capital I was launched in 2006 with USD 22 million in investments. Lok Capital II was closed in 2012 with USD 65 million. Creation Investments manages Social Ventures Fund I, which it established in 2010 with USD 31.8 million in committed capital, and Social Ventures Fund II, which achieved its first close in 2013 with assets of USD 75 million.

By Alíz Crowley, Research Associate

About Equitas Holdings Private Limited

Equitas is a non-deposit-taking microfinance institution (MFI) that was created in December 2007 and is located in Chennai, India. 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. Equitas is active in seven states and union territories in India, including Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Puducherry, Rajasthan and Tamil Nadu. Equitas aims to achieve sufficient returns on investment in order to attract private capital. Equitas Micro Finance is a unit of Equitas, which also controls Equitas Vehicle Finance and Equitas Housing Finance. As of 31 March 2014, Equitas had total assets of INR 25.9 billion (USD 442.9 million) and achieved INR 741.5 million (USD 12.7 million) profit after tax in the first quarter of 2014.

About Lok Capital Limited Liability Corporation (LLC)

The Lok Capital Initiative was founded in 2000 with support from the US-based nonprofit Rockefeller Foundation. Its goal is to “…promote inclusive growth by supporting the development of social enterprises to deliver basic services to serve the BoP [base of the pyramid] segment in a scalable, affordable and commercially viable manner.” The initiative is comprised of Lok Capital, a Mauritius-based venture capital fund that places equity and equity-linked investments in microfinance institutions (MFIs) and social enterprises in the education, healthcare and “livelihoods” sectors; and the Lok Foundation, a nonprofit entity that provides “specialized funding and long-term technical assistance for financial and social inclusion.” Lok Capital makes its investments through two funds, Lok Capital I and II. Lok Capital I was launched in 2006 with USD 22 million in investments from Accion, The Commonwealth Development Corporation (CDC), Développement international Desjardins, Netherlands Development Finance Company (also known by its Dutch acronym FMO), International Finance Corporation (IFC), Kreditanstalt für Wiederaufbau (KfW) and responsibility Investments. The fund’s investments generally range in size from USD 500,000 to USD 3 million. Lok Capital II was closed in 2012 with USD 65 million. Its investors included previous Lok investors IFC, CDC, KfW, FMO and responsAbility along with new investors Proparco and ASN Novib.

About Creation Investments Capital Management Limited Liability Corporation (LLC)

Creation Investments Capital Management Limited Liability Corporation (LLC) is an alternative investment management company whose mission is to alleviate global poverty by making direct, for-profit investments in organizations that engage in economic development. The company is headquartered in Chicago in the US state of Illinois. Creation Investments manages Social Ventures Fund I, which it established in 2010 with USD 31.8 million in committed capital, which was disbursed to five MFIs in Latin America and Central and Eastern Europe. Creation Investments’ Social Ventures Fund II, which achieved its first close in 2013, holds assets of USD 75 million.

Sources and Additional Resources:

[1] Two FIIs pick up stake in Equitas

MicroCapital, May 9, 2014 Lok Capital Sextuples Investment With Partial Exit from Indian “Socio-commercial” Outsourcing Firm Fural Shores

MicroCapital, June 16, 2013 Creation Investments Social Ventures Fund II Completes Closingwith $75m, Disburses Equity Investments in Grupo Finclusion of Mexico; Sonata, Grameen Koota of India

MicroCapital, November 1, 2012 Equitas of India Receives $9.3m from MicroVentures, India Financial Inclusion Funds

MicroCapital Universe Profile: Equitas Holdings Private Limited

MicroCapital Universe Profile: Lok Capital Limited Liability Corporation

MicroCapital Universe Profile: Creation Investments Capital Management Limited Liability Corporation

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