International Finance Corporation (IFC), the private investment arm of the World Bank, is investing Rs 10 crore in equity in Swadhaar FinServe Pvt Ltd, a Mumbai-based urban-focussed microfinance institution (MFI). IFC may pick up to 20% stake in Swadhaar with this investment, VCCircle has learnt.
It will take the final decision on the proposed investment at its meeting scheduled on July 5 this year. The investment follows IFC’s recent announcement of capital infusion in Delhi-based MFI Satin Creditcare Network Ltd.
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.
IFC will join two other existing private equity investors in Swadhaar that include Accion Gateway Fund LLC and Mauritius-based Unitus Equity Fund. As of March 2010, Accion Gateway and Unitus Equity Fund hold 22.57% and 12.50% stake, respectively, in Swadhaar.
Apart from the PE investors, Swadhaar also raised capital from the Indian Family Trust and Michael & Susan Dell Foundation, which together hold 43.09% stake in the MFI. Michael & Susan Dell Foundation is currently the single largest shareholder in Swadhaar.
Swadhaar started operations as a non-banking financial company in 2008 and provides both individual and group loans to its customers, according to the information available on the company website. 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.
IFC, which focuses investments on environmentally and socially responsible sectors in emerging markets, has been very active in recent times. In May, the fund announced four equity investments in India, one each in microfinance, healthcare, risk management and industrial & consumer products. The companies which may get IFC funding include Satin Creditcare Network Ltd, Max Healthcare Institute Ltd, National Collateral Management Services Ltd and Craftsman Automation Pvt Ltd.
