MICROCAPITAL BRIEF: Swadhaar FinServe Private Limited to Receive $5.9m in Equity from ACCION International, Unitus Equity Fund, Michael and Susan Dell Foundation, MicroVest, an Indian Family Trust and Swadhaar’s Promoter Group

Swadhaar FinServe Private Limited, a Mumbai-based microfinance institution (MFI) with total assets of USD 2.1 million as of 2008, recently announced that it will receive INR 27.5 crore (equivalent to USD 5.9 million) in equity from several different investor organizations and private investors. Grameen Capital India, which aims to enable MFIs to develop wider access to capital markets, will supervise the transaction, which will include the following organizations: ACCION International, a United States-based nonprofit; Unitus Equity Fund, a private equity fund supported by nonprofit Unitus and managed by Elevar Equity; Michael and Susan Dell Foundation, a United States-based nonprofit that provides grants to socially-oriented organizations; MicroVest, a United States-based investment group; an Indian family trust; and Swadhaar’s promoter group [1]. There is no breakdown available of the specific investments from each investor. According to Swadhaar’s press release on the transaction, “The current equity raise will help the company’s expansion in underserved urban areas whilst also investing in information technology (IT) infrastructure and product development” [1].

By Julia Korn, Research Associate

About Swadhaar FinServe Private Limited:

Based in Mumbai, Swadhaar FinServe Private Limited is a subsidiary non-banking financial company of Swadhaar FinAccess that caters to the urban poor in India. According to the MIX Market, the clearinghouse for microfinance sector information, as of 2008 the child company had a gross loan portfolio of USD 1.1 million, 8,200 active borrowers, and total assets of USD 2.1 million.

About The Michael and Susan Dell Foundation:

The Michael and Susan Dell Foundation was established in 1999 to provide grants to organizations that focus on education, childhood health, and family economic stability. As of March 2008 it had total assets of USD 1.3 billion.

About ACCION International:

ACCION International is a private, U.S.- based nonprofit organization with the mission of giving people the financial tools necessary for poverty alleviation, such as microenterprise loans, business training and other financial services. ACCION was founded in 1961 and issued its first microloan in 1973 in Brazil. ACCION’s partner microfinance institutions today are providing loans as low as USD 50 to poor men and women entrepreneurs in 23 countries in Latin America, Asia, Africa and the United States. In the last decade, ACCION partners have disbursed 28.5 million loans totaling USD 23.4 billion; 97 percent of the loans have reportedly been repaid.

About Grameen Capital India:

Grameen Capital India is a “social business” based in Mumbai that promotes microfinance as an asset class and aims to enable microfinance institutions (MFIs) to develop wider access to capital markets. It is a collaboration between Grameen Foundation USA, IFMR Trust and Citigroup. Its key action points are: “Developing access to capital markets, initially in India, through securitization and other appropriate financial vehicles; structuring and arranging credit enhancements/ first loss guarantees to support the investment grade rating of the senior securities and working closely with the rating agencies to achieve required ratings at the most optimal cost; and advising MFIs on the standards of governance, accounting, reporting, and transparency necessary to satisfy commercial financing sources.” Financial information is unavailable for Grameen Capital India.

About Unitus Equity Fund:

Founded in 2006, Unitus Equity Fund is a private equity fund that makes equity investments in financial institutions (MFIs). The fund is supported by nonprofit Unitus and managed by Elevar Equity. The fund invests in India and Latin America. As of March 2009 the fund had assets of USD 23.6 million, all of which WAS were allocated to MFIs.

About MicroVest:

Launched in 2004 with total assets of USD 15 million as of 2010, MicroVest is a family of funds that invest in microfinance institutions in emerging markets. MicroVest is headquartered in Washington, DC, and was founded by CARE, Mennonite Economic Development Associates (MEDA) and the Seed Capital Development Fund, three non-profit organizations.

Sources and Additional Resources:

[1] Submitted to MicroCapital by Swadhaar. Swadhaar FinServe Private Limited Press Release. “Urban focused MFI, Swadhaar FinServe Pvt. Ltd., headquartered in Mumbai, raises Rs. 27.5 crore equity for expansion” on July 8, 2010.

MicroCapital Universe. Swadhaar FinServe Private Limited. https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Swa

MicroCapital Universe. Grameen Capital India. https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Gra

MicroCapital Universe. ACCION International. https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ACC

MicroCapital Universe. The Michael and Susan Dell Foundation. https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Mic

MicroCapital Universe. Unitus Equity Fund. https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Uni

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