Kolkata-based microfinance entity Bandhan Financial Services Private Ltd (Bandhan) has completed its maiden equity raising round with a Rs 50-crore ($10.7 million) investment from Small Industries Development Bank of India (SIDBI), a financial institution that finances small and medium enterprises.

Sidbi, which has been continuous source of debt finance for Bandhan since its early days, will now be a long-term investor in the MFI, the only Indian entity to be named in the Forbes list of top 10 global microfinance institutions in 2007.

Bandhan, founded by Chandrasekhar Ghosh in 2001, offers micro-loans to 2.1 million customers across 15 states and has an outstanding portfolio of Rs 1,080 crore. With the fund-raising, Bandhan will be able to consolidate its operations and expand into other states. By 2014, Bandhan is looking at a reach of 8 million borrowers with a loan portfolio of Rs 6,000 crore.

Unitus Capital acted as the sole financial advisor to the transaction.

Sidbi chief general manager (eastern zone) K S Singhwan said, in a statement, SIDBI has extended multiple loans, capacity building grant and Transformation loan aggregating about Rs 490 crore up to November 2009.

India's MFI space continues to attract PE attention. Some recent deals include BlueOrchard Private Equity Fund's $10.22 million investment in Asmitha Microfin and a $5.88 million investment by a consortium of investors in Bangalore's Grameen Financial Services.

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