July 12, 2010 / 9:32 AM / 7 years ago

Mumbai MFI Swadhaar FinServe raises Rs 27.5 cr round

By Team VCC (www.VCCircle.com)

As at March 31st, Swadhaar had a gross loan portfolio of Rs 19.5Cr and presently reaches out to over 30,000 households.

Investments in the urban focused microfinance institutions (MFIs) seem to be gathering steam. Mumbai-based Swadhaar FinServe Pvt Ltd has raised Rs 27.5 crore in equity funding as it looks to expand its operations. The round included investment from new investor MicroVest and the existing investors, including the promoters.

The existing investors in the MFI, all of who participated in this round, include ACCION International, an Indian family trust, Unitus Equity Fund (managed by Elevar Equity) and Michael & Susan Dell Foundation.

Grameen Capital India acted as the sole advisor to Swadhaar for this transaction.

Recent reports have also suggested that International Finance Corporation (IFC), the private investment arm of the World Bank, is also investing Rs 10 crore in equity in Swadhaar.

Swadhaar‟s board is chaired by ICICI Venture chairperson Lalita Gupte. The MFI currently offers two loan products specifically for urban clients, both men and women with loan tenures range from 3 – 24 months including prepayment options.

As at March 31st, 2010 Swadhaar had a gross loan portfolio of Rs. 19.5 crore and presently reaches out to over 30,000 households in Mumbai, other areas of Maharashtra and Gujarat.

Led by former banker Veena Mankar, Swadhaar hopes to emerge as a national player operating across multiple locations targeting a loan outstanding of over Rs 870 crore by March 2016 and an outreach of about 600,000 clients.

The current equity raise will help the company‟s expansion in underserved urban areas whilst also investing in IT infrastructure and product development. As of March 2010, it has 27 outlets across Mumbai, Baroda and Pune. It plans to expand its operations into the low income states such as Rajasthan and Madhya Pradesh.

Several other urban focused MFIs have also raised significant equity rounds this year. In April, CLSA Capital Partners invested $24 million for a minority stake in the form of fresh issue of shares in Chennai-based Equitas Micro Finance India.

Sequoia Capital had picked up a 10% stake for $10 million earlier this year from Kalpathi Investments in a secondary deal in Equitas.

Tree Line, one of the largest hedge funds in Asia, led a $10 million equity round in Bangalore-based Janalakshmi Financial Services in March.

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