MICROCAPITAL BRIEF: TPG Leads $150m Funding Round for Indian Microfinance Institution Janalakshmi

US-based private equity firm TPG has led a funding round in which Indian microfinance institution Janalakshmi Financial Services (JFS) raised USD 150 million. Simultaneous secondary transactions, sales of shares by existing investors, totalled USD 60 million. TPG was joined by other previous JFS investors including an investment fund managed by Morgan Stanley Private Equity Asia, Havells India, Vallabh Bhansali and unspecified first-time new investors.

JFS will use the funds to acquire more customers, expand its range of product offerings as well as furthering the institution’s transition to comply with the Reserve Bank of India’s (RBI) rules for converting to a small finance bank. JFS received approval in-principal from the RBI to convert to a small finance bank in September 2015. In India, small finance banks may accept deposits and lend to small-scale farmers and other micro- and small enterprises not typically served by other banks.

Founded in 2000 by former Citibank executive Ramesh Ramanathan, JFS holds assets of approximately USD 1.65 billion as of April 2016. Its core product is loans provided to groups of five to 25 women. Its other products include loans to individuals who have successfully repaid group loans; loans to micro-, small and medium-sized enterprises; pre-paid cash cards, micro-pensions, savings products and insurance. As of March 2015, JFS reported to the US-based nonprofit Microfinance Information Exchange (MIX) return on assets of 2.25 percent, return on equity of 10.57 percent, a gross loan portfolio of USD 605 million and 2 million active borrowers.

By Imke Herholdt, Research Associate

About Janalakshmi Financial Services (JFS)
Founded in 2000 by a former Citibank executive Ramesh Ramanathan as a non-banking microfinance institution, India’s JFS operates under a two-tier structure: non-profit Jana Foundation holds the firm’s shares while for-profit JFS raises capital from investors as a financial services institution. Its products include group loans, individual loans, loans to micro-, small and medium-sized enterprises, pre-paid cash cards, micro-pensions, savings products and insurance. In September 2015, JFS received in-principal approval from the Reserve Bank of India (RBI) to convert to a small finance bank. As of April 2016, JFS operates in approximately 184 cities in India and manages assets of
approximately USD 1.65 billion. As of March 2015, JFS reported to the US-based nonprofit Microfinance Information Exchange (MIX) a return on assets of 2.25 percent, return on equity of 10.57 percent, a gross loan portfolio of USD 605 million and 2 million active borrowers.

About TPG
TPG is a global private investment firm that was founded in 1992 and is based in the US city of Fort Worth, Texas. As of April 2016 it has offices in Austin, Beijing, Dallas, Fort Worth, Houston, Hong Kong, Istanbul, London, Luxembourg, Melbourne, Moscow, New York, San Francisco, Sao Paulo, Singapore and Tokyo. As of April 2016, TPG has USD 70 billion invested in a range of asset classes including private equity, venture capital, real estate and credit.

About Morgan Stanley Private Equity Asia
Morgan Stanley Private Equity Asia, part of the Morgan Stanley global
network, has been investing in the Asian region of the past 20 years. By
April 2016 is had invested approximately USD 3.3 billion in the Asian
region. Office are located in Hong Kong, Shanghai, Mumbai, Seoul, Tokyo,
New York. Morgan Stanley reported total assets of USD 788.45 billion as of December 2015.

About Havells India
Havells India is the flagship company of QRG Enterprises Limited. It
specialises in retailing electrical goods in India and has a market capitalisation of USD 3 billion at April 2016.

About Vallabh Bhansali
Mr. Bhansali is the co-founder and Chairman of Indian-based Enam Financial Consultants Private Limited.

Sources and Additional Resources
[1] The PE Hub Network: TPG leads $210 mln investment in Indian
microfinance company
[2] Dallas Business Journal: TPG leads $210M funding round for Indian
finance company
[3] The Economic Times: TPG leads $210-million funding in Janalakshmi Financial Services
[4] Janalakshmi.com
[5]Microfinance Information Exchange: Janalakshmi
[6] MicroCapital Universe Profile: Janalakshmi Financial Services (JFS)
[7] TPG.com
[8] Bloomberg: Executive Profile Vallabh Bhansali
[9] Market Watch: Morgan Stanley

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