MICROCAPITAL BRIEF: True North Sells $25m Stake in Fincare SFB, Provider of Microfinance in India, to Motilal Oswal Private Equity

Two India-based private equity firms recently exchanged a minority stake in India’s Fincare Small Finance Bank (SFB). Motilal Oswal Private Equity (MOPE) bought the shares through its India Business Excellence Fund-III for USD 25 million from True North. Although the size of the stake has not been disclosed, True North previously held 7.25 percent of the shares of Fincare SFB and 36.5 percent of the shares of the bank’s parent company, Fincare Business Services Limited.

MOPE Managing Director Vishal Tulsyan said, “over the past decade, microfinance has established itself as an asset class with potential for high growth and profitability. Based on our assessment, a SFB is the best platform to capitalize on this opportunity.”

Based in the city of Bengaluru, Fincare was founded as a microlender in 2007 and received its SFB licence in 2017. The firm promotes financial inclusion by providing underbanked individuals – as well as micro-, small and medium-sized enterprises (MSMEs) – financial services such as savings and loans for microenterprise, housing and vehicles. The firm also provides institutional services, gold loans and non-resident Indian (NRI) banking.

As of March 2020, Fincare SFB served 2.5 million customers in 15 states and union territories, and it reported total assets of INR 71 billion (USD 971 million), a gross loan portfolio of INR 48 billion (USD 663 million) and customer deposits of INR 46 billion (USD 635 million). For the 2020 fiscal year, the firm reported return on assets of 2.4 percent and return on equity of 18 percent.

MOPE was founded in 2006 as a mid-market equity investor. As of 2021, it manages approximately USD 900 million in assets and has founded three growth capital funds and four real estate funds.

Founded in 2000, True North is a private equity firm with investments in Asia, Europe, Mexico and the Middle East. Since inception, it has raised approximately USD 700 million for five funds, investing in 35 businesses. The firm remains an active investor in 22.

By Sophie Fiala, Research Associate

Sources and Additional Resources

Mint article
https://www.livemint.com/companies/news/motilal-oswal-private-equity-invests-25-mn-in-fincare-small-finance-bank-11620037207410.html

Capital Quest article
https://thecapitalquest.com/2021/05/03/true-north-makes-a-partial-exit-as-fincare-small-finance-bank-gets-new-pe-backer/

Fincare SFB homepage
https://www.fincarebank.com/

Fincare SFB 2020 annual report
https://www.fincarebank.com/sites/default/files/2020-08/Fincare-Annual-Report-FY-2019-20-Web_Version_0.pdf

MOPE homepage
https://motilaloswalpe.com/

True North homepage
https://truenorth.co.in/

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