Varanasi-based Utkarsh Micro Finance Pvt Ltd has received Rs 25 crore in series B funding, led by Norwegian Microfinance Initiative, according to a company statement.
Under this deal, Norwegian Microfinance is leading the round with Rs 15.8 crore while Dutch social investment firm Goodwell Investments and Aavishkaar India are investing Rs 6 crore and the World Bank-backed IFC will invest Rs 3.2 crore, Utkarsh’s finance & accounts head Abhisheka Kumar told VCCircle.
According to Kumar, the fund raised will be utilised to set up 20 branches in Bihar. Currently, the MFI has six branches in the state.
Utkarsh Micro Finance Pvt Ltd is an MFI based in Varanasi and it provides loans to women that amounts between Rs 6,000 and Rs 15,000. The microfinance firm has operations across 13 districts of Uttar Pradesh and Bihar and has 56 branches, over 57,000 active clients, a loan portfolio of Rs 41 crore and disbursed Rs 110 crore so far.
The microfinance company has portfolios worth Rs 41 crore as on September 2011 and plans to take it to Rs 93 crore by March 2012, Kumar added.
“We are very pleased to invest in Utkarsh and be a part of the important work that the company is doing towards financial inclusion in the northern India. NMI was particularly attracted by Utkarsh’s commitment to serving the poor in areas of India characterised by high population, high incidence of poverty and very low financial inclusion,” said Henning Haugerudbraten, investment director of the NMI Frontier Fund.
Intellecap was the sole advisor for this transaction.
“The investment of Rs 25 crore is going to boost our growth plans. It has come at the right time as the sector has started growing once again. It is also noteworthy that our existing investors are participating in this round, thus strongly indicating their confidence in the sector and in Utkarsh,” Govind Singh, MD and CEO of Utkarsh commented on the developments.
The Norwegian Microfinance Initiative (NMI) is a new and innovative strategic partnership between the Norwegian public and private sectors. NMI invests in microfinance institutions (MFIs) in developing countries and provides professional assistance and technical support to these institutions. NMI aims to empower the poor and create jobs, wealth, and economic & social sustainability by investing in and supporting MFIs.
Since the Andhra Pradesh ordinance came out in October 2010, there have been a slowdown in fresh inflow of funds into the MFI space. But lately there has been some pick up with deals in firms such as Janalakshmi Financial Services, Bandhan Financial Services, Ujjivan Financial Services and Svasti Microfinance among others.
Most recently, private equity major Citi Venture Capital International led the Rs 65 crore third-round funding in Bangalore-based Janalakshmi. Janalakshmi, founded by former Citigroup banker Ramesh Ramanathan, exclusively focuses on extending micro loans in urban areas.
Prior to the regulatory change in Andhra Pradesh- by far the biggest market for MFIs in India-- 2010 had witnessed the highest number of investments in MFIs in terms of deal volume – a total of 20 deals worth over $135 million according to VCCedge, the financial research platform of VCCircle. Although 2008 saw the highest deal value in the sector, it was primarily due to SKS Microfinance raising $112 million across two rounds of funding.
Incidentally, SKS Microfinance, India’s largest and only listed micro-lending company, plans to raise Rs 900 crore through qualified institutional placements.
