German development bank KfW picks up 30% stake in IIMPS for $3.3M

German development bank Kreditanstalt fur Wiederaufbau (KfW) has invested $3.28 million in Invest India Micro Pension Services (IIMPS) in Series B round of funding for 30 per cent stake. Economist Swaminathan Anklesaria Aiyar participated in this round as well. Existing investor Michael & Susan Dell Foundation also put in an additional $400K in IIMPS to increase its shareholding in the social enterprise.

IIMPS will use the money to enhance the impact of its model by educating and enabling 5 million low-income households over the next 3 years – so that they can start saving for their old age. Michael & Susan Dell Foundation had invested $1 million in 2011 in the company’s Series A round of funding.

Unitus Capital acted as the sole financial advisor to the deal while HSA was the legal advisor to IIMPS.

KfW, which supports small and medium-sized enterprises, environmental protection, housing and infrastructure sectors, commits over €500 million for investment in India in the area of sustainable economic development, energy and natural resources management. This deal with IIMPS marks the first direct equity investment by KfW in India.

Founded in 2006 by Gautam Bhardwaj and Ashish Aggarwal, Noida-based IIMPS offers pension and insurance products and services to low-income workers, in collaboration with micro-finance institutions, co-operatives, self-help groups, worker unions, multi-lateral and bi-lateral aid agencies, government departments and finance firms. The firm’s institutional shareholders include UTI AMC and SEWA.

“The equity investment from KfW and the Dell Family Foundation will further help strengthen financial literacy and client protection mechanisms as we surge ahead on building a mass-market for non-credit financial and risk management solutions for vulnerable households across the country,” said Gautam Bhardwaj, managing director of IIMPS.

“We have been long associated with IIMPS as a support partner and have seen them transform their ideas from a pilot into a scalable model. IIMPS is the only instance we see globally of an organisation that is exclusively addressing old age micro-savings needs of the financially excluded and it is exciting for us to solemnise our longstanding relationship into an equity partnership,” said Barbara Schnell, division head (financial and private sector for Asia), KfW.

“Through an innovative and tested model, IIMPS is uniquely positioned to address a critical financial need of low-income families. Our follow-on investment in IIMPS will help the organisation scale the business model and become a role model in the space of financial inclusion,” said Satyam Darmora, lead, family economic stability, at Michael & Susan Dell Foundation.

(Edited by Sanghamitra Mandal)

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