UK’s development finance institution CDC Group Plc has invested $16 million in Chennai-based microfinance and micro-housing finance company Equitas Holdings Pvt Ltd (formerly Equitas Micro Finance India Pvt Ltd).
CDC’s investment in Equitas is a part of the financing package of $36 million that includes additional funding from FMO (the Dutch DFI) and other investors, and this its first direct investment in an MFI since the launch of its new strategy in 2012 which enables CDC to make direct equity and debt investments as well as to continue to commit capital to third-party funds.
“CDC's investment will underline the faith in the sustainability of the microfinance business following the changed regulatory environment in India. It will also build investor confidence in institutions like Equitas which have taken a diversified approach and offer a broader range of financial services to low-income households," said Maria Largey, CDC’s Microfinance Investment Manager.
Equitas expects the funding to help it reach 5.5 million customers by 2018 (up from 1.5 million currently) across all three business units, boost its loan portfolio to $2 billion from $235 million and grow its network of branches to 825 in 2018 from 350 currently.
“The Indian microfinance sector is going through systemic changes and Equitas is at the forefront on setting new benchmarks in this sector. We value this investment by a marquee investor like CDC and reinforcement of support by our existing investors as we seek to make Equitas a robust and diversified NBFC catering to segments of society not catered to by the mainstream financial markets,” said PN Vasudevan, managing director of Equitas.
Founded in 2007, Equitas offers micro credit to people who are otherwise unable to access finance from the mainstream banking channels. The firm provides loan to poor rural, urban and deprived women for income generating activities like trading, animal husbandry, agricultural production and transportation. Equitas operates its three businesses through more than 350 branches across eight Indian states and a union territory.
It is now one of the top 10 MFIs in the country and has started operating in the area of affordable housing through Equitas Housing Finance Pvt Ltd and used commercial vehicle financing through Equitas Finance Pvt Ltd to cater to the relatively unbanked population in these financial services sectors. Both organisations are part of the Equitas group into which CDC is providing equity. The firm counts various other private investors as shareholders, including WestBridge Capital, Helion Venture Partners, Canaan Partners and IFC.
CDC is one of the largest investors in Indian private equity funds with over $680 million invested - and $1.1 billion committed - supporting almost 300 companies in the country. Around 28 per cent of CDC’s Indian investment has been in infrastructure. CDC has committed over $260 million to India this year alone.
(Edited by Joby Puthuparampil Johnson)