MICROCAPITAL STORY: India’s Ujjivan Increases Equity With Investments By Unitus Equity Fund, Bellwether Microfinance Fund, Michael and Susan Dell Foundation, Sequoia Capital, Lok Capital, India Financial Inclusion Fund and SIDBI

Ujjivan Financial Services, a Bangalore-based microfinance institution (MFI), has completed the fourth round of equity infusion by raising Rs 940 million (USD 18.7 million) making it the fourth highest capitalised MFI in India with total paid up capital and reserves standing at over Rs 1.08 billion (USD 21.5 million) The increase in capital was largely invested by existing shareholders including Unitus Equity Fund (UEF) managed by Elevar Equity L.L.C., Bellwether Microfinance Fund, Michael & Susan Dell Foundation, A.W. Holdings and individual investors including promoter & CEO Samit Ghosh. The five new investors in this private placement transaction will include: Sequoia Capital, Lok Capital, Unitus Equity Fund II, India Financial Inclusion Fund and SIDBI.

A unique feature of this deal was that this is the first time a microfinance institution has been able to offer a market determined exit to individual investors and this was done in collaboration with Bellwether Microfinance Fund and UEF. This increase in equity will place it below only SKS Microfinance Private Limited, SHARE Microfin and Spandana Sphoorty Financial Limited in India for the amount of equity held by an MFI. New investors Sequoia Capital and SIDBI are also investors in SKS Microfinance.

Ujjivan, an MFI created in 2004, has a mission to provide financial services to the economically active poor and to enable them to lead a better life. Its goals are to have customers free of poverty in five years and serve 500,000 customers in six years. It currently has over 56 thousand active borrowers, 100 percent of which are women, with the average loan balance per borrower at USD 161. It reported total assets of USD 10.2 million at the end of March, 2008 with a debt to equity ratio of 332.11 percent and a return on equity of -47.44 percent. Its equity prior to this latest round of investment stood at USD 2.36 million.

By Lori Curtis, Research Assistant

Additional Sources:

Bellwether Microfinance Fund: “Home

Business Standard: “Ujjivan raises Rs 94 cr in 4th round funding

Michael and Susan Dell Foundation: “Home

MicroCapital Story: “Microfinance Institutions SKS, Ujjivan and Bandhan Report Growth as Indian Inflation Rises to All Time Highs

MicroCapital Story: “Unitus Equity Fund, Bellwether Microfinance Fund and the Dell Foundation Make Microfinance Investment in Indian Ujjivan Financial Services

MIX Market: “Ujjivan Profile” “Comparative Analysis of Equity in MFIs in India

Ujjivan Financial Services: “Ujjivan Raises Rs. 94 Crores of Equity Capital

Unitus Equity Fund: “Home

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