In its second round of fundraising, Grama Vidiyal Micro Finance Limited, a microfinance institution (MFI) based in Tamil Nadu, India, raised USD 4.25 million from MicroVest, Unitus Equity Fund, and the Amar Foundation.
Grama Vidiyal (GV) was founded in 1992 by Activists for Social Alternatives (ASA), a non-profit organization working with marginalized communities in Tamil Nadu. In 1997, GV became an independent organization, offering microfinance services based on the Grameen model – providing collateral free credit to poor women organized in small groups at the village level. Grama Vidiyal Microfinance Ltd. (GVMFL), a private limited liability company, was formed to allow GV to transform from a Public Charitable Trust to a Non-Banking Financial Company (NBFC). A part of the funds raised will be used to meet the enhanced capital adequacy requirements set by the Reserve Bank of India (RBI) to obtain an NBFC license.
According to the MIX Market, the microfinance information clearinghouse, GV had 224,000 active borrowers, a gross loan portfolio of USD 28.7 million, total assets of USD 30.8 million, a debt-to-equity ratio of 5.45, an ROA of 1.63 percent, and an ROE of 15.3 percent as of March 2008. In the past year, they have expanded to reach 400,000 women with a loan portfolio of over USD 40 million. GV plans to use the increased capital to expand beyond its work in six districts to operate in all districts of Tamil Nadu. Read more in this MicroCapital story.
MicroVest Capital is a private microfinance investment firm – founded by CARE, MEDA, and the Seed Capital Development Fund – that provides financial capital to MFIs. MicroVest’s first fund, MicroVest I LP, had placed more than USD 80 million in debt and equity investments with 37 MFIs in 16 countries through February 2009. The investment in GV came from MicroVest II, MicroVest’s newly launched equity fund, which invests in Tier 1 MFIs. No information was provided on the exact amount contributed by each investor, nor the valuation of the equity holdings.
The Unitus Equity Fund (UEF) is a private equity fund established in 2006 by Unitus, Inc., an international non-profit organization, in order to encourage the development of a commercial equity market. Unitus Inc. and the UEF, which is managed by Elevar Equity LLC, are separate legal entities. Established with USD 23.6 million, the UEF offers commercial debt and equity to MFIs. Unitus Capital was established in 2008 by Unitus, Inc. to provide financial advisory services for MFIs and other social enterprises. Unitus Capital was the advisor for the GV equity raise.
The AMAR Foundation is a non-profit private foundation founded in 1987 by Vinod and Neeru Khosla. The foundation provides support to a variety of organizations that focus on education and microfinance. Vinod Khosla is a venture capitalist who was one of the co-founders of Sun Microsystems and a general partner at venture capital firm Kleiner, Perkins, Caufield & Buyers. Vinod Khosla and Unitus both contributed capital – totaling USD 3.7 million – during GV’s first round of fundraising in May 2008. Read more in this MicroCapital story.
By Jaclyn Berfond, Research Assistant
Unitus Capital: Grama Vidiyal Equity Raise (Jun ’09)