MICROCAPITAL STORY: Indian For-profit Equitas Microfinance Raises $12.5 million in Equity Capital from Bellwether Fund, Indian Financial Fund, MicroVentures SPA

Indian microlender Equitas Microfinance recently announced it successfully raised RUP 500 million (USD 12.5 million) in additional capital from existing investors Bellwether Microfinance Fund, MVA Ventures (a holding of MicroVentures SPA) and Indian Financial Fund.

MVA’s investment consists of USD 6 million in equity. Investment data on Bellwether’s and IFF’s commitments are not available.

Equitas plans to use the fresh capital to establish microlending services in untapped regions, and to augment lending services where the firm currently operates. With the latest infusion, Equitas’ total equity stands at USD 16.1 million, up from USD 3.6 million. In closing the deal, Equitas has made good on previously announced plans to raise capital from existing investors, as reported by MicroCapital in May 2008.

Equitas is a commercial microfinance institution that has enjoyed considerable growth since its inception in July 2007. In its first four months of operation, the firm opened 15 branch offices and served 25,000 predominately female clients. Currently, the firm holds the distinction of having the largest startup equity capital of RUP 135 million (USD 3 million) of any Indian MFI, and with this latest round of financing has become the fourth highest capitalized MFI in the country.

According to microfinance data provider MIX Market, as of March 2008 Equitas held total assets of USD 4.8 million, a gross loan portfolio of USD 4.2 million, and a debt-equity ratio of 66.27 percent. Data on return on assets or equity were not available. In October 2007, Indian microfinance rating agency M-CRIL gave Equitas a “4” on a scale of 1 to 8, in which “1” was the best possible rating.

Founded in 2005, The Bellwether Microfinance Fund is an Indian investment fund that holds a portfolio of debt and equity investments in microfinance institutions. In some cases, Bellwether supplements its investment activity with technical assistance to its MFI investments. As of December 2007, the Hyderabad-based firm held investments totaling USD 15.7 million allocated across 14 Indian MFIs. For a complete list of MicroCapital reports tracking Bellwether’s activity, please click here.

MicroVentures SPA is the parent company of MVA Ventures, which specializes in microfinance ventures via debt and equity investments. According to MIX Market, a microfinance data provider, the entity held eight active microfinance investments, totaling USD 12.4 million as of May 2008.

Indian Financial Fund does not report financial data to MIX Market or to other market research firms, and does not maintain an online presence. Prior to the Equitas deal, MicroCapital has not reported any investment activity by IFF in the microfinance sector.

By Ryan Benson, Research Assistant

Additional Resources:

Business Standard: Equitas Makes Fresh Capital Infusion

MicroCapital Story: For-Profit Equitas Microfinance to Raise $12.5m via Private Equity

Livemint: Equitas microfinance to raise $12.5m via PE

MIX Market: Equitas

Bellwether Fund: Home

Mix Market: Bellwether

M-CRIL: Home

VCCircle: Equitas Gets $12.5M Fund Infusion From Three Funds

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