IFC to invest $40 mn in microlender Ujjivan Financial via debt

International Finance Corporation (IFC) will invest up to $40 million (about Rs 268 crore) in Bengaluru-based microfinance firm Ujjivan Financial Services Ltd via debt.

The World Bank's private-sector investment arm said in a disclosure that the long-tenor debt will help the company expand its reach to low-income borrowers and strengthen its balance sheet as it transforms into a small finance bank.

Ujjivan is one of 10 companies that last year received in-principle approval from the Reserve Bank of India to launch a small finance bank. It floated its initial public offering earlier this year, the second microlender with a small finance bank licence to go public after Equitas Holdings.

The company's public issue in May drew a massive response with investors making bids for 40.66 times the shares on sale. Ahead of the IPO, the firm had raised Rs 265 crore from a bunch of anchor investors including Edelweiss-controlled hedge fund Forefront Capital.

IFC held a 6.04% stake in Ujjivan at the end of June. The company also counts CX Partners, NewQuest, CDC Group Plc and Sequoia Capital as key shareholders.

Founded by Samit Ghosh in 2005, Ujjivan focuses on providing micro loans to women borrowers in urban and semi-urban areas. Ghosh was an international banker for 30 years and was part of the team which launched consumer banking in India at Citibank in 1985. 

Ujjivan’s target customers include self-employed women working as vegetable or fruit vendors, small shop owners, sari sellers, tailors, salaried women working in garment factories, hospitals, cooks, house maids, and piece rate workers involved in incense stick rolling and tailoring. 

As part of the small finance banking operation, the company will start offering loans to micro, small and medium-sized enterprises. 

Ujjivan operates through 469 branches in 24 Indian states and union territories. It has close to 8,000 employees. The company has gross assets under management of Rs 5,389 crore across 3 million customers, according to a May 2016 presentation.

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