MICROCAPITAL STORY: Share Microfin Seeks to Raise USD 50 Million From International Finance Corporation (IFC) and Others

SHARE Microfin, a microfinance institution (MFI) based in Hyderabad, India, has announced that it intends to raise USD 50 million in equity funding. According to the press release on VCCircle, the International Finance Corporation (IFC) is considering investing, and the MFI is currently in talks with other investors. If the transaction proceeds it will be one of the biggest Indian microfinance transactions after SKS Microfinance‘s USD 75 million deal in November last year. To read a MicroCapital story about that deal, click here. With the funding, SHARE will expand in states such as Chhattisgarh, Uttar Pradesh, Madhya Pradesh, Uttranchal, and West Bengal. No other information regarding the deal or potential investors was available at the time of this release.

According to the article, investors like Lightspeed Venture Partners, Battery Ventures, and India Value Fund are now looking at investments in the microfinance sector. Meanwhile, other Indian MFIs are looking to raise funding despite the global credit crisis. For example, Spandana Microfinance, another Hyderbard-based MFI, plans to raise Rs 300 crore (USD 63.7 million) by June.

As reported by MicroCapital, SHARE Microfin recently completed a loan assignment worth USD 8.6 million with Yes Bank that was rated A2+(SO) by ICRA (A Moody’s Investor Service Company). In 2007, also reported by MicroCapital, SHARE Microfin raised equity funding from private equity firms Legatum Capital and Aavishkaar Goodwell worth USD 27 million, which at the time was the largest equity investment to have been made in an Indian MFI.

SHARE Microfin serves more than 1.87 million members across 16 Indian states, and claims a 90 percent client growth in the past three years. The MFI has 4,259 employees spread across 766 branches as on March 2009. According to the MIX Market, the microfinance information clearinghouse, as of March 31, 2008, the MFI had a total gross loan portfolio of over USD 151.7 million, total assets of USD 189.6 million, and a debt-to-equity ratio of 5.4. As of the same date, SHARE’s ROA was 1.10 percent, and ROE was 8.33 percent. SHARE Microfin follows Grameen Bank strategy, where it gives collateral-free loans to women joint liability groups (JLGs). It has diversified its offering to individual loans for micro enterprises as well as personal loans. The MFI now also offers non credit-based services like money transfer, credit life insurance and health insurance.