Grameen Koota raises $10M round led by Creation Investments

Microfinance firm Grameen Financial Services Pvt Ltd, popularly known as Grameen Koota, has raised its third round of equity funding, led by US-based Creation Investments Capital Management. The Bangalore-based MFI raised Rs 53.2 crore ($10 million) in the new round of funding, of which Rs 37.5 crore was invested by Creation while the rest came from existing investors Incofin Investment Management and MicroVentures. Aavishkaar Goodwell India is another investor in the company.

This will be the first round of equity funding for Grameen Koota after the MFI crisis in 2010. The firm raised $5.9 million in December 2009 and $3.64 million in April 2008.

Besides Grameen, several small-to-mid-sized MFIs, who were most impacted by the freeze in lending and equity fundraising after the Andhra Pradesh crisis in 2010, also managed to raise fresh equity rounds over the past 5-6 months.

These include Arohan Financial Services ($11.3 million), Sonata Finance ($6.35 million), Suryoday Micro Finance ($3.7 million) and Fusion Microfinance ($4.5 million).

Grameen Koota said that the equity round came close after it raised Rs 21 crore in debt funding through unsecured, redeemable, non-convertible debentures (NCDs) from Deutsche Bank’s Global Commercial Microfinance Consortium II B.V. The firm also used the NCD to route fundraising of Rs 25 crore in 2012 and Rs 35 crore in 2011.

Grameen Koota lends to poor women in Karnataka, Tamil Nadu and Maharashtra, and has a loan portfolio of Rs 376 crore.

“The newly infused funding will add to the growth of the company and help Grameen Koota achieve its target of reaching out to more than 10 lakh poor and low-income households. The capital will also strengthen our vision towards extending and expanding our loan operations to other neighbouring states,” said Grameen Koota managing director Suresh Krishna.

Creation Investments, which has invested in bottom-of-the-pyramid businesses across the world, has backed companies like business correspondent and mobile banking technology provider Eko and MFI Sonata in India.

(Edited by Sanghamitra Mandal)

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