MICROCAPITAL.ORG STORY: Lok Capital Invests US $1.5 M in Asirvad Microfinance Private Ltd of India

Venture fund Lok Capital LLC has closed a US $1.5 million investment deal with Indian Chennai-based Asirvad Microfinance Private Ltd, giving it a 24% stake in the company [1]. Launched in 2001 with support from the Rockefeller Foundation, Maritius-based Lok Capital Group comprises Lok Capital LLC, a venture fund which invests in commercially-oriented microfinance institutions in India; Lok Advisory Services (LAS), an Indian-based team which advices the Fund; and the Lok Foundation, a not-for-profit entity providing grant financing to MFIs that receive investments from Lok Capital LLC [2]. Lok Capital LLC investors include the IFC, CDC Group, KfW, FMO, Accion International, responsAbility and Développement international Desjardins. The fund has a total of US $22 million in committed capital and an average investment size ranges from US $0.5 million to US $2 million [3].

Asirvad Microfinance Private Ltd, founded in 2007 with the mission of organizing groups of poor women and providing them with innovative financial services to eradicate poverty, currently operates out of 19 branches in 7 districts in the Indian state of Tamil Nadu. Among its financial products are the income generation program loan, micro enterprise loan and housing loan [4]. To date, Asirvad Microfinance has 65,121 members, up from 6,092 members a year and a half ago [5] and a portfolio outstanding of 20.9 Crores, worth US $4.35 million [4].

With the recent investment from Lok Capital LLC, Asirvad´s non-executive Chairman, Mr. Raja Vaidyanathan, projects total lending to reach US $15.6 million by March 2010. He announced that Asirvad´s goal is “to empower at least one million low income families by 2015 supporting their viable income generating activities”[6] and that “Lok´s experience in the Indian MFI space will go a long way in guiding Asirvad to adopt best in class practices in all areas of management” [1].

Venky Natarajan, Managing Director of Delhi-based Lok Advisory Services, adds, “We are very happy to have added Asirvad to our portfolio. In addition to national [Indian-based] MFIs like Spandana, Basix and Ujjivan whom we have invested in, Lok is committed to finding and supporting high performing regional MFIs and working with their management teams to take these social enterprises to new levels of professionalism and success” [1]. Asirvad is the eigth MFI to be added to Lok´s portolio.

At the end of the 10 year fund term, Lok Capital believes that Asirvad and the other MFIs in which they have invested will be capable of growing quality assets at 30% per annum. Should this rate be achieved, Lok projects that a currently untapped market of several million of India´s poor could have access to financial services [2].

By Stefanie Rubin

Bibliography

[1] Microfinance Focus: http://www.microfinancefocus.com/news/2009/09/10/lok-capital-picks-up-24-stake-in-asirvad-microfinance/

[2] Lok Capital: http://www.lokcapital.com/about-lok.html

[3] Lok Capital: http://www.lokcapital.com/lok-capital-llc.html

[4] Asirvad Microfinance (P) Ltd.:http://www.asirvadmicrofinance.co.in/home.asp

[5] Asirvad Microfinance Private Limited Operational Information As At 28th February, 2009: http://www.asirvadmicrofinance.co.in/pdf/Operational_Information.pdf

[6] India Microfinance: http://www.indiamicrofinance.com/microfinance/microfinance-institutions-india/lok-capital-llc-invests-rs-7-crore-1-75-mn-in-ashirvad-microfinance.html