MICROCAPITAL BRIEF: Grameen Koota of India Receives $9.8m in Equity from Incofin, MicroVentures, Aavishkaar Goodwell, Creation Investments; $4m in Debt Funding from Deutsche Bank Microfinance Fund

Indian non-banking financial company (NBFC) Grameen Financial Services Private Limited, also known as Grameen Koota, recently received INR 532 million (USD 9.8 million) in its third round equity funding from Beligium-based investment company Incofin, Italy-based private equity firm MicroVentures, Indian-Dutch joint venture Aavishkaar Goodwell, and US-based for-profit company Creation Investments. While Creation committed INR 375 million (USD 6.9 million) of the sum, the breakdown of the other investments has not been released. The sizes of the stakes to be taken by each investor were also kept private. Previous rounds of equity funding raised by Grameen Financial Services totaled USD 5.9 million in December 2009 and USD 3.6 million in April 2008.

The institution also recently received USD 4 million in debt funding through unsecured, redeemable, nonconvertible debentures (NCDs) from the Global Commercial Microfinance Consortium II fund managed by Deutsche Bank, an international bank based in Germany.

The managing director of Grameen Financial Services, Suresh Krishna, reportedly commented, “The newly infused funding will add to the growth of the company and help Grameen Koota achieve its target of reaching out to over 10 lakh poor and low income households. The capital will also strengthen our vision towards extending and expanding our loan operations to other neighboring states.”

As of September 2012, Grameen Financial Services reported total assets of USD 66 million, a gross loan portfolio of USD 63 million and 290,000 active borrowers. As of March 2012, it reported return on assets (ROA) of -1.02 percent and return on equity (ROE) of -5.99 percent. The institution does not accept deposits.

By Nicole Boyd, Research Associate

About Grameen Financial Services Private Limited (GFSPL)
Grameen Financial Services Private Limited (GFSPL), popularly known as Grameen Koota, was founded in India in 1999 as a project of nongovernmental organization T Muniswamappa Trust and has since become an independent non-banking finance company (NBFC). GFSPL operates in the Indian states of Maharashtra, Karnataka and Tamil Nadu and offers products such as microloans, vocational training loans, workshops and access to educational centers. As of September 2012, GFSPL reported total assets of USD 66 million, a gross loan portfolio of USD 63 million and 290,000 active borrowers. As of March 2012, it reported return on assets (ROA) of -1.02 percent and return on equity (ROE) of -5.99 percent. The institution does not accept deposits.

About MicroVentures SpA
Based in Italy, MicroVentures SpA is a private equity firm that invests in microfinance institutions (MFIs) through direct equity investments and hybrid instruments such as subordinated and convertible bonds or quasi-equity. MicroVentures SpA invests in South Asia and South America. Financial institutions that invest in MicroVentures are UBI – Banco di Brescia SpA, Fondazione Cassa di Risparmio di Trento e Rovereto, Oltre SpA, Finanziaria di Valle Camonica SpA, ISA – Istituto Atesino di Sviluppo SpA, Finance & Development Srl and ISI Holding and together own 20 percent of the entity. Two private foundations, Fondazione Maria Enrica and Fondazione Peppino Vismara own 30 percent, and the remaining 50 percent is held by individual investors. As of 2008, the fund reported total fund assets of EUR 20 million (approximately USD 27.6 million). More recent financial information is not available.

About Incofin Investment Management
Incofin Investment Management is a private Belgian company that develops and manages funds investing in microfinance institutions (MFIs) in developing countries. As of June 2011, Incofin manages six facilities with total outstanding investments of USD 425 million in approximately 39 countries.

About Aavishkaar Goodwell India Microfinance Development Company Ltd
Aavishkaar Goodwell is an Indian-Dutch joint venture that is looking to build a portfolio of USD 25 million in 30 to 40 microfinance start-ups and 8 to 10 growing microfinance institutions (MFIs). The Dutch microfinance private equity company Goodwell Microfinance Development Company is the leading investor in Aavishkaar Goodwell, along with development finance institutions and commercial banks including the Netherlands Development Finance Company (FMO in Dutch), the World Bank’s International Finance Corporation (IFC) and Germany’s Deutsche Bank. Financial data are unavailable for Aavishkaar Goodwell.

About Creation Investments Capital Management Limited Liability Corporation (LLC)
Creation Investments Capital Management 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. Creation Investments manages the Creation Social Ventures Fund I, which invests in microfinance institutions (MFIs) in Latin America and Europe. The company is headquartered in Chicago in the US state of Illinois. It does not report financial data to the Microfinance Information Exchange (MIX), the US-based nonprofit data provider and financial information on the company is not otherwise available.

About Deutsche Bank
Founded in 1870, Deutsche Bank is an international bank with assets totaling EUR 2.2 trillion (USD 2.8 trillion) as of December 2011. Headquartered in Germany, the bank has employees in approximately 70 countries around the world. Deutsche Bank operates a microcredit development fund that provides financing to microfinance institutions (MFIs) to attract further resources on a leveraged basis from local commercial banks.

Sources and Additional Resources:

Venture Captial Post. “Grameen Koota Raise Money,” http://www.ivcpost.com/articles/6926/20130306/grameen-koota.htm

The Hindu Business Line. “Grameen Koota raises $4 m subordinated debt,”  http://www.thehindubusinessline.com/industry-and-economy/banking/grameen-koota-raises-2-m-subordinated-debt/article4357002.ece

MicroCapital. October 31, 2012, “MICROCAPITAL BRIEF: Grameen Koota of India Looks to Expand into Housing Microfinance,” https://www.microcapital.org/microcapital-brief-grameen-koota-of-india-looks-to-expand-into-housing-microfinance/

MicroCapital. July 22, 2012, “MICROCAPITAL BRIEF: Indian Microfinance Institution Grameen Koota Raises $5m from responsAbility through Nonconvertible Debentures,” https://www.microcapital.org/microcapital-brief-indian-microfinance-institution-grameen-koota-raises-5m-from-responsability-through-nonconvertible-debentures/

MicroCapital Universe Profile: Grameen Financial Services Private Limited (GFSPL) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Grameen+Financial+Services+Private+Limited

MicroCapital Universe Profile: MicroVentures SpA http://microcapital.org/microfinanceuniverse/tiki-index.php?page=MicroVentures+SpA

MicroCapital Universe Profile: Aavishkaar Goodwell India Microfinance Development Company Ltd https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Aavishkaar+Goodwell+India+Microfinance+Development+Company+Ltd

MicroCapital Universe Profile: Incofin Investment Management http://microcapital.org/microfinanceuniverse/tiki-index.php?page=Incofin+Investment+Management+%28Incofin+IM%29

MicroCapital Universe Profile: Creation Investments Capital Management Limited Liability Corporation (LLC)? http://microcapital.org/microfinanceuniverse/tiki-index.php?page=Creation+Investments+Capital+Management+Limited+Liability+Corporation+%28LLC%29

MicroCapital Universe Profile: Deutsche Bank http://microcapital.org/microfinanceuniverse/tiki-index.php?page=Deutsche+Bank

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