Bangalore-headquartered microfinance firm Grameen Financial Services Private Limited has raised Rs 35 crore ($8 million) in debt funding through an issue of secured, redeemable, nonconvertible debentures (NCDs) to Developing World Markets (DWM). The NCDs, which are listed on the Bombay Stock Exchange, will be fully placed with DWM (Cyprus) Limited. This NCD issue follows a similar Rs 20 crore NCD issue in January 2010 which was placed with MicroVest.
Grameen has been backed by funds like Aavishkaar Goodwell, Incofin and MicroVest. Unitus Capital was the exclusive financial advisor and sole arranger to the NCD issue.
Grameen Koota has over 450,000 members with over 2,000 employees working out of over 200 branches in Karnataka, Maharashtra, Tamil Nadu and Madhya Pradesh. It had loan outstanding of Rs 311.22 crore as of September, 2010.
This is the second such deal by DWM, which makes social investments globally, in as many months. Last month it invested Rs 40 crore in an NCD deal with Bangalore-based MFI Ujjivan Financial Services. DWM currently manages over $650 million in “socially positive assets.”
Though the funding for MFIs has dried up after the AP ordinance crisis hit the industry, development finance institutions and microfinance-focused funds have remained active in the market. International Financial Corporation (IFC), the private investment arm of World Bank, is looking to invested $35 million in Bandhan Financial Services. Several guarantee funds have also come up from organisations like Asian Development Bank (ADB).
“This transaction is a great milestone for Grameen Koota and is very critical given the current liquidity position of the industry,” said Suresh Krishna, Managing Director, Grameen Koota.
“Given the current status of the sector, banks are wary of lending to MFIs. As such, it has become even more critical for MFIs to diversify their funding sources. The transaction has helped Grameen Koota raise bulk funding at competitive rates and reaffirm the positive investor sentiments towards the Company and the sector in general,” stated Gautam Verma, Director, Unitus Capital.