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Asian Development Bank invests in PE-backed Annapurna Finance
Photo Credit: VCCircle

Rural-focussed microfinance institution Annapurna Finance Pvt. Ltd said on Monday that it has raised Rs 137 crore ($19.1 million at current exchange rates) in equity funding from multilateral lender Asian Development Bank (ADB) to grow its loan book.

VCCircle was the first to report that Bhubaneswar-based Annapurna was set to close an investment from ADB.

Annapurna, which counts Oman India Joint Investment Fund (OIJIF) and SIDBI Venture Capital among its backers, said it will use the fresh capital to expand its microfinance portfolio by extending microcredit to women members of Joint Liability Groups (JLGs).

As of 31 March 2018, the firm had a gross loan portfolio of Rs 1,954 crore which grew 58% on an annual basis, according to a report by industry body MicroFinance Institutions Network.

Annapurna has a presence across 277 districts in 14 states through a network of nearly 500 branches. It has more than 1.4 million clients, with women making up the majority. About 85% of its borrowers are from rural India.

“We are at a juncture, where the business model has been proven and is also scaling well,” said Annapurna’s managing director Gobinda Chandra Pattanaik. “This transaction will help us in growing our presence in new asset classes like MSME and affordable housing.”

Unitus Capital served as the exclusive financial advisor for the transaction.

ADB typically provides debt finance, but the Manila-based financial institution has been planning to deploy more capital via equity investments in India — a country it considers its “biggest market”.

Besides the fresh equity funding by ADB, Annapurna’s existing investors OIJIF, Oikocredit and Bamboo Finance bought additional shares worth Rs 75 crore from the company’s early-stage investors Incofin Investment and SIDBI Venture Capital’s Samriddhi fund through a secondary round.

Incofin had logged a partial exit in 2017 when Annapurna had raised Rs 61 crore ($9.5 million) from Bamboo Capital Partners and existing investors.

Last March, Annapurna director Dibyajyoti Pattnaik had told VCCircle that the company was looking to raise an institutional round to fund loan growth and provide an exit to investors such as Incofin and SIDBI Venture Capital.

In June last year, mid-market private equity firm Oman India Joint Investment Fund (OIJIF) invested Rs 155 crore ($23 million) in the company.

The infusion was part of OIJIF’s commitment to invest Rs 200 crore in Annapurna Finance over an extended period.

In 2017, the company had raised Rs 61 crore ($9.5 million) from Bamboo Capital Partners and existing investors Belgian Investment Company for Developing Countries (BIO) and The Netherlands-based Oikocredit.

Annapurna had previously raised equity funding from SIDBI, SIDBI Venture Capital, and DCB Bank.

Formerly known as Annapurna Microfinance, it is primarily engaged in providing microloans to women borrowers for livelihood purposes. Over the last few quarters, the company has also diversified its portfolio in MSME finance and the affordable housing segments. It has opened 60 branches which are exclusively providing services for these two segments.

Asian Development Bank

The development bank has 67 member nations, of which 48 are from the Asia-Pacific. Since its inception in 1966 till 2017, ADB’s operations totalled $32.2 billion, including $11.9 billion in co-financing.

ADB’s total private-sector exposure stands at nearly $3 billion including debt and equity.

VCCircle had reported last year that ADB was set to invest in the funds of two India-related private equity firms — Multiples Alternate Asset Management and Creador. 

In January last year, ADB had invested $50 million in private equity firm True North’s sixth fund.

Around the same time, ADB made a small equity investment in firm DCDC Health Services Pvt. Ltd.

ADB had made a $50 million equity investment in ReNew Power Ventures in 2014 and exited in 2018 by selling its stake to Canada Pension Plan Investment Board (CPPIB).

The lender’s other investments in India include RBL Bank Ltd, an education firm Hippocampus and Welspun Renewables.

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