Chennai-based MFI Grama Vidiyal raises debt funding from WorldBusiness Capital

Grama Vidiyal Micro Finance Ltd (GVMFL), a Tamil Nadu-based micro-finance institution (MFI), has raised debt funding from WorldBusiness Capital Inc (WBC), as per a public statement. The quantum of funding remains undisclosed but the transaction involves long-term senior and subordinated debt facilities.

“WBC welcomes the opportunity to provide financing to an established, well-managed lending institution such as GV which plays a vital role in supporting an under banked sector of the Indian economy. This transaction also demonstrates WBC’s ongoing commitment to identifying and developing unique lending opportunities in the Indian marketplace,” said Scott Freiday, senior vice-president and India team leader at WBC.

“Our in depth understanding of the local needs and repayment capabilities along with a robust network spread across four states, have helped us grow a sound microfinance portfolio. We are happy that WBC was able to see immense value in our business model and will work with us towards creating a stronger footprint," said S Devaraj, chairman & managing director of GVMFL.

Avendus Capital advised GVMFL on this transaction.

Established in 1993, GVMFL provides general, seasonal, business and housing loans. In partnership with Activists for Social Alternatives (ASA), it has provided small loans to women without access to formal credit.

The MFI has a gross loan portfolio in excess of Rs 550 crore and has five types of credit and credit-plus products. It operates in four markets—Tamil Nadu, Maharashtra, Madhya Pradesh and Pondicherry—with a customer base of 1 million.

The firm is backed by MicroVest, Unitus Equity Fund and Amar Foundation, a California-based non-profit corporation of veteran venture capitalist Vinod Khosla.

Founded in 2003, WBC is a commercial finance company that offers flexible term loans helping small and midsize businesses globally. It lends to businesses in sectors include manufacturing & distribution, packaging, food processing & agribusiness, logistics & transportation, renewable resources and financial institutions.

In the MFI sector, most recently another Chennai-based microfinance firm Equitas raised $16 million from CDC and Utkarsh Micro Finance raised $12M through NCDs.

(Edited by Joby Puthuparampil Johnson)

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