Private equity major Blackstone Group is investing Rs 150 crore ($33 million) in FINO Ltd, which provides technology solutions for banks and microfinance institutions, for a significant minority stake. The cash infusion will be used for funding overall growth of the company and meeting long-term capital requirements, said a statement.
E&Y advised FINO for this fund raising.
Founded around five years ago, FINO is into developing technologies which enable financial institutions to serve the under-served and the unbanked sector, and also to service the technology requirements of entities engaged in servicing the bottom-of-pyramid customers. It has been backed by various banks like ICICI, besides venture capital investors like Intel Capital, Headland Capital and International Finance Corporation (IFC).
In late 2009, FINO raised Rs 70 crore Headland Capital, along with Intel Capital and International Finance Corporation. Headland and Intel had also purchased the entire stake of Legatum Ventures, which invested in March, 2007, in that round. Last year, an HNI also invested in FINO in a secondary transaction.Mumbai-based FINO works with banks in India to provide products like saving accounts, recurring deposits, loan products, remittances, insurance products and government subsidies disbursement, among others. Its solutions are anchored around using biometric smart cards, hand-held devices and micro deposit machines to perform field operations and biometric authentication.
FINO has enrolled more than 35 million customers and plans to double its customer base in the next couple of years. It employs over 2500 people while 20,000 business correspondent agents are spread across 239 offices.
“The company has done well and the outlook is even stronger with the government focus of using the business correspondent channel for cash subsidies and the RBI’s drive to achieve total financial inclusion. FINO is a pioneer in the financial inclusion space and we plan to extensively leverage Blackstone’s global expertise of scaling up and transforming businesses,” said Manish Khera, chief executive officer of FINO Ltd.
“India has a significantly high number of financially excluded households – more than 100 million, with an exclusion rate of over 50 per cent. The exclusion is much more prevalent in the rural areas. For sustainable and inclusive growth, India needs to extend basic utilities like financial services to the excluded population. As a dominant market leader, FINO is uniquely positioned to capitalise on this opportunity. While growing at almost 100 per cent CAGR in the last few years, FINO has demonstrated conviction and commitment to changing India’s rural banking landscape,” said Akhil Gupta, chairman and managing director of Blackstone Advisors India.
Another banking correspondent player is A Little World, in which India’s largest bank SBI had picked up 20 per cent stake in October, 2010, for Rs 80 crore, valuing the firm at Rs 400 crore. A Little World is backed by Enam, Bellweather Microfinance Fund, India Financial Inclusion Fund and Legatum Ventures.
Another player in this area is rural banking infrastructure provider Eko India Financial Services, where Colorado-based 4B Capital Fund picked up 30 per cent stake in December last year.