Sambandh Finserve Pvt. Ltd has raised $2.5 million (Rs 17.2 crore) in equity funding from Singapore-based Base of Pyramid Asia (BOPA) Pte Ltd, the Indian microlender's chief executive Deepak Kindo said on Wednesday.
BOPA invests in small microlenders in Asia and this is its first investment in India. It had earlier invested in Vietnam, Cambodia, Timor Leste (East Timor), Myanmar and Kazakhstan.
Sambandh will use the funds to expand operations in areas where it operates -- 20 districts across Odisha, Chhattisgarh and Jharkhand -- as well as foray into new regions. It will also use the funds to bring in new technologies to streamline its operations.
The microlender, which started operations in 2006, provides financial products and services to low-income and indigenous communities.
As on March 2018, Sambandh had 48 branches, 140,000 customers, and assets under management of Rs 235.5 crore.
Sambandh had raised its first round of funds from social impact investor Dia Vikas Capital Pvt. Ltd in 2010, according to VCCEdge, the data research platform of VCCircle. Two years later, Small Industries Development Bank of India had come in as an investor.
Both the investors are still with Sambandh and did not participate in the current round, said Kindo, who is also the company's managing director. The two investors had, however, invested in March, Kindo added, without disclosing the amount.
Microfinance sector
The microfinance industry, which is cash-dependent, had suffered a jolt when the central government abruptly banned high-value banknotes in November 2016. But it has recovered since then.
The gross loan portfolio of the microlenders grew 50% from a year earlier to Rs 48,094 crore at the end of March 2018, according to a report by Microfinance Institutions Network.
Many Indian microlenders have raised private equity and venture capital money over the years. The segment has also seen some merger and acquisition activity.
In November last year, Centrum Group had agreed to acquire FirstRand Bank’s India microfinance business. In the following month, IndusInd Bank closed the acquisition of Bharat Financial in a stock deal.
Spandana Sphoorty Financial Ltd, which was one of the worst hit by an Andhra Pradesh ordinance rolled out in 2010 to regulate micro-lending, has filed its draft prospectus with the Securities and Exchange Board of India to float an initial public offering.