MICROCAPITAL BRIEF: Pahal Raises Equity, Debt from Huruma Fund, Magallanes Impacto, Northern Arc to Expand Microfinance for Women Farmers in India

Spain-based Gawa Capital recently disbursed EUR 6 million (USD 6.5 million) from the Huruma Fund, a public-private partnership also based in Spain, to purchase a minority stake of undisclosed size in Pahal Financial Services, a microfinance institution based in the city of Ahmedabad, India. Among the goals of the investment are to help Pahal roll out an agriculture-specific loan product as well as build an environmental performance monitoring system.

Pahal also borrowed approximately USD 1.75 million each from India’s Northern Arc Capital and Magallanes Impacto, a fund managed by Spain’s Magallanes Value Investors and advised by Gawa.

Tomás Ribé, the Director of Investments at Gawa Capital, stated that Pahal has a “strong impact of financing on smallholder farmers and producer organizations through a sound entity with a huge growth potential.”

Established in 2011, Pahal provides low-income families with joint and individual loans as well as health and life insurance, all intended to help “bring qualitative change in their standard of living and their status in society.” Pahal’s loans are intended for use for enterprise, housing upgrades, agriculture, raising livestock, education, consumption and vehicles. As of 2022, Pahal has 210 branches, 350,000 customers – nearly all women – and total assets of INR 10 billion (USD 130 million). Its other investors include Base of Pyramid Asia and Dia Vikas Capital.

The goal of Huruma is to improve financial access for small-scale farmers in Africa, Asia, Latin America and the Caribbean. The fund is led by Spain’s Compañia Española de Financiación del Desarrollo (COFIDES), a government-backed development finance institution. Gawa Capital serves as the fund’s investment advisor. Huruma has a volume of EUR 120 million (USD 140 million), of which three quarters is from private investors. As of April 2022, it has deployed EUR 45 million (USD 50 million) in debt and equity investments.

By Hasnat Aslam, Research Associate

Sources and Additional Resources

COFIDES press release
https://cofides.es/en/noticias/notas-de-prensa/huruma-fund-invests-6-million-euro-pahal-and-acquires-minority-stake

Live Mint article
https://www.livemint.com/brand-stories/pahal-financial-services-raises-usd-10-million-in-equity-and-debt-capital-11649850414083.html

Pahal homepage
https://www.pahalfinance.com/

Pahal financials
https://www.pahalfinance.com/investors-information/investors/

Huruma homepage
https://fondohuruma.com/

Magallanes Value Investors homepage
https://magallanesvalue.com/

Northern Arc Capital homepage
https://www.northernarc.com/

Gawa homepage
https://www.gawacapital.com/

Previous MicroCapital story about Huruma
https://www.microcapital.org/microcapital-brief-microserfin-to-boost-farm-microinsurance-microloans-in-panama-with-2-3m-in-debt-finance-from-huruma-fund/

Previous MicroCapital Story about Pahal
https://www.microcapital.org/microcapital-brief-pahal-financial-services-borrowing-3-5m-from-grameen-credit-agricole-foundation-for-microfinance-for-women-in-india/