MICROCAPITAL BRIEF: UK’s CDC Group Makes $16m Equity Investment as Part of $36m Package for Equitas

The CDC Group, a development finance institution owned by the UK government’s Department for International Development, has made an equity investment of USD 16 million in Equitas Holdings Private Limited (Equitas), a microfinance company based in Chennai, India [1]. CDC’s investment is part of a financing package worth the equivalent of USD 36 million that will be extended to Equitas with participation from Dutch development bank Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden (FMO) and other investors, which have not been named. These investments are intended to help the three subsidiaries of Equitas – Equitas Micro Finance, Equitas Vehicle Finance and Equitas Housing Finance – grow their collective customer base and loan portfolio and extend their network from the existing 350 branches to 825 by 2018. FMO is participating by loaning INR 580 million (USD 9.33 million) to Equitas Vehicle Finance to support loans for commercial vehicles and to start lending to small- and medium sized enterprises (SMEs) [2].

As of March 2013, Equitas and its three subsidiaries reported consolidated total assets of INR 18.5 billion (USD 301 million).

As of 2012, CDC’s investment portfolio was worth GBP 2.25 billion (USD 3.68 billion) [3]. CDC was formerly known as the Commonwealth Development Corporation.

In 2012, FMO reported total assets of EUR 5.6 billion (USD 7.3 billion).

By Nisha Koul, Research Associate

About Equitas Holdings Private Limited (Equitas): Equitas is a microfinance company that was created in December 2007 and is located in Chennai, India. 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 capital. Equitas Micro Finance is a unit of Equitas, which also controls Equitas Vehicle Finance and Equitas Housing Finance. As of March 2013, Equitas and its three subsidiaries reported consolidated total assets of INR 18.5 billion (USD 301 million).

About Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden N.V. (FMO): Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO) is a Dutch development bank that was founded in 1970. It supports financial institutions and governments through loans, guarantees and other investment promotion activities including local-currency investments. FMO is owned by the Dutch government, which holds a 51 percent stake, alongside commercial banks, trade unions, employers’ associations and individual investors. In 2012, FMO reported total assets of EUR 5.6 billion (USD 7.3 billion).

About CDC Group: The CDC Group is a development finance institution owned by the UK government’s Department for International Development. Established in 1948 as the Colonial Development Corporation, it later was renamed the Commonwealth Development Corporation and eventually CDC Group. The organization’s public mission is to foster growth in sustainable businesses and to help raise living standards in developing countries. In 2012, CDC announced its new strategy to provide debt and direct investment to businesses, and to act as “fund-of-funds” investor with new investments being made only in Africa and South Asia. At the end of 2012, CDC’s investment portfolio was worth GBP 2.25 billion (USD 3.68 billion).

Sources and Additional Resources:

[1] CDC News, “CDC backs Indian microfinance company Equitas with US$16 million direct investment,” http://www.cdcgroup.com/Media/News/CDC-backs-Indian-microfinance-company-Equitas-with-US16-million-direct-investment/

[2] FMO, Project Details, http://www.fmo.nl/project-details/19613

[3] CDC, Key Facts, http://www.cdcgroup.com/Who-we-are/Key-Facts/

FMO News, “FMO invests in Equitas in India,” http://www.fmo.nl/k/n114/news/view/14002/179/fmo-invests-in-equitas-in-india.html

MicroCapital Story, September 18, 2013, “Standard Chartered Bank (SCB) Loans $11m to India’s Equitas Microfinance, Satin Credit Care,” https://www.microcapital.org/microcapital-brief-standard-chartered-bank-scb-loans-11m-equitas-microfinance-satin-credit-care/

MicroCapital Story, April 29, 2013, “Equitas, Ujjivan of India Each Borrow $10m from International Finance Corporation (IFC),” https://www.microcapital.org/microcapital-brief-equitas-ujjivan-of-india-each-borrow-10m-from-international-finance-corporation-ifc/

MicroCapital Story, November 1, 2012, “Equitas of India Receives $9.3m from MicroVentures, India Financial Inclusion Funds,” https://www.microcapital.org/microcapital-brief-equitas-of-india-receives-9-3m-from-microventures-india-financial-inclusion-funds-2/

MicroCapital Universe Profile, Equitas Holdings Private Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Equitas+Holdings+Private+Limited

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

MicroCapital Universe Profile, FMO, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Netherlands+Development+Finance+Company+%28FMO%29

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