Suryoday Microfinance Pvt Ltd (Suryoday), a Pune-based MFI, has raised Rs 17. 5 crore in a financing round led by Lok Capital along with existing investor Aavishkaar Goodwell. This is a Series B or second round of funding for the company. As part of the current transaction, Lok Capital has committed to make a further infusion of Rs 3.5 crore in a second trache, resulting in a total primary issuance of Rs 21 crore. Previously Aavishkaar Goodwell had invested Rs 6 crore as part of the company’s Series A capital raise in March 2009.
Suryoday commenced its micro-credit operations in Pune in May 2009. The microfinance institution will use the money to increase its loan book and open more branches across Maharashtra as its immediate growth plan, Karthik Desai, VP, Lok Capital, told VCCircle. Suryoday currently has over 50,000 borrowers across Maharashtra and Tamil Nadu with a network of 25 branches. As part of its expansion plan for July–September 2010, the company will open branches in Bhubaneswar, Trichy; Mumbai, Barshi, Pandharpur, Kolhapur and Sangli in Maharashtra, taking its branch network to about 28, with a cumulative loan disbursement crossing Rs 54 crores to over 50,000 customers.
The MFI is led by a team of three ex-bankers - Baskar Babu, Ganesh Rao and V. L. Ramakrishnan - with combined experience at institutions like HDFC Bank, GE Finance, Cholamandalam-DBS and Development Credit Bank.
The MFI will also look to spread out to other neighboring states in the medium term. Desai added that the unique thing about Suryoday is the fact that the company has an independent audit professional per branch to monitor loan activities. Without disclosing the valuation figures for the latest around, Desai said that entering an MFI which has a small portfolio, niche focus and a strategy, serving the underserved market makes for an attractive investment, unlike large MFIs which command high valuations. Suryoday serves the underserved market of Pune, Maharashtra and Tamil Nadu at present with the focus skewed towards empowering the economically challenged woman.
On the Series B investment by Lok and Aavishkaar in Suryoday, R Baskar Babu, Co-Founder & CEO, said “We are pleased to partner with our existing investor Aavishkaar again and Lok Capital for the first time. These partnerships will help us achieve our dream of creating a world class financial services company for the economically challenged women.”
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.