MICROCAPITAL BRIEF: India’s Equitas Micro Finance Restructures Microfinance Business Under Singhivi Investment and Finance

Earlier this year, Equitas Micro Finance India Private Limited (Equitas) demerged its microfinance business. Following the demerger, Equitas will operate both as a non-bank financial company (NBFC) and as an investment company. Singhivi Investment and Finance Private Limited (SIFPL) will own and operate Equitas’ microfinance portfolio. SIFPL is a wholly-owned subsidiary of Equitas, which previously has provided vehicle and housing financing.

Equitas will transfer INR 500 million (USD 10.1 million) in non-convertible debentures (NCDs) listed on the Bombay Stock Exchange to SIFPL through the demerger. These NCDs will be subordinate bonds eligible for inclusion as SIFPL’s Tier II capital.

Founded in 2007, Equitas raised INR 450 million (USD 9.1 million) from Canaan Partners in August 2010 in addition to INR 1.1 billion (USD 22 million) from CLSA Capital Partners. US-based Sequoia Capital purchased a 10-percent stake in Equitas from Kalpathi Investments in 2010.

As of December 2010, Equitas reports to the US-based data provider Microfinance Information Exchange (MIX) assets of USD 216 million, a gross loan portfolio of USD 179 million, 1.3 million active borrowers, return on assets of 3.63 percent and return on equity of 10.8 percent.

By Courtney Snelling, Research Associate

About Equitas Micro FinanceIndia: Equitas is a microfinance institution (MFI) that was created in December 2007 and is located in Chennai, India. The company provides microcredit to low-income households in India through its subsidiary Singhivi Investment and Finance Private Limited (SIFPL). The objective of the company is to make credit available at a reasonable cost and in a transparent manner to the underbanked population of India, as well as achieve sufficient returns on investment in order to attract external capital. As of 2010, Equitas reports to the Microfinance Information Exchange (MIX) assets of USD 216 million, a gross loan portfolio of USD 179 million, 1.3 million active borrowers, return on assets of 3.63 percent and return on equity of 10.8 percent.

About Singhivi Investment and Finance Private Limited (SIFPL): Singhivi Investment and Finance Private Limited (SIFPL) provides vehicle financing and housing financing in India. In 2012, SIFPL began managing the microcredit portfolio of Equitas Micro Finance India, of which SIFPL is a wholly-owned subsidiary. As of 2010, Equitas reports to the US-based data provider Microfinance Information Exchange (MIX) assets of USD 216 million, a gross loan portfolio of USD 179 million, 1.3 million active borrowers, return on assets of 3.63 percent and return on equity of 10.8 percent. Currently SIFPL financials have not been reported to the Microfinance Information Exchange (MIX).

About Canaan Partners: Founded in 1987, Canaan Partners is a venture capital firm based in the US that invests in entrepreneurs and connects them with networks, insights and operational guidance. The firm has USD 3.5 billion in assets under management. The firm specializes in supporting high-performance technology and healthcare companies. The firm has launched nine investment vehicles and has completed 135 exits.

About CLSA Capital Partners: CLSA Capital Partners is the alternative asset management arm of CLSA Asia-Pacific Markets, an Asia-based independent brokerage and investment group. CLSA Capital Partners has over USD 2.5 billion in funds under management and offices in Hong Kong, Singapore, Tokyo, Shanghai, Beijing and Mumbai.

About Sequoia: Sequoia Capital is a venture capital firm that provides funding for seed stage, early stage and growth stage companies. The firm is headquartered in Menlo Park, California, USA, and has offices in China, India and Israel. Sequoia has provided funding of USD 100,000 to USD 100 million to approximately 700 companies.

About Kalpathi Investments: The Kalpathi family founded Kalpathi Investments (KI) to assist entrepreneurs in creating or advancing businesses that take advantage of globalization. Kalpathi’s financials have not been reported to the Microfinance Information Exchange (MIX) and are not otherwise available.

Sources and Additional Resources:

DealCurry.com, “Equitas Microfinance Demerges Its Microfinance Biz” January 23, 2012. Charmi Gutka. http://dealcurry.com/20120123-Equitas-Microfinance-Demerges-Its-Microfinance-Biz.htm

MicroCapital Story, February 9, 2011: “MICROCAPITAL BRIEF: Equitas Microfinance of India to Reduce Loan Portfolio to $187m by March 2011”, https://www.microcapital.org/microcapital-brief-equitas-microfinance-of-i…

MicroCapital Universe Profile: Equitas Microfinance, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Equ

MicroCapital Universe Profile: Singhivi Investment and Finance Private Limited (SIFPL), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Singhivi+Investment+and+Finance+Private+Limited

MicroCapital Universe Profile: Canaan Partners, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Canaan+Partners

MicroCapital Universe Profile: CLSA Capital Partners, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CLSA+Capital+Partners

MicroCapital Universe Profile: Sequoia Capital, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Seq…

MicroCapital Universe Profile: Kalpathi Investments, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Kalpathi+Investments

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