International Finance Corp, the private sector lending arm of the World Bank, may lend up to Rs 120 crore (close to $20 million) to microlender Janalakshmi Financial Services Pvt Ltd and up to Rs 35 crore (around $5.5 million) to Vistaar Finance, a non-banking finance company focused on micro, small & medium enterprises (MSME).
Urban area focused MFI Janalakshmi will issue non-convertible debentures (NCDs) to IFC as part of the debt funding.
The Bangalore headquartered MFI has a borrower base of more than 1 million women and a loan portfolio of around Rs 1,400 crore ($223 million).
As on January 31, 2014, Janalakshmi operated through more than 145 branches in 16 states, including Karnataka, Tamil Nadu, Maharashtra, Rajasthan, Madhya Pradesh, Uttar Pradesh, Uttarakhand, Delhi, Haryana, Gujarat, Bihar, Chhattisgarh, Jharkhand, Punjab and West Bengal.
Janalakshmi was incorporated in July 2006 and took over micro finance business from Jana Urban Foundation (then known as Janalakshmi Social Service) with effect from April 1, 2008 on receipt of NBFC licence from the RBI. It is promoted by Ramesh Ramanathan, former MD & European Head of Corporate Derivatives of Citibank. He has also been a member of RBI’s financial inclusion committee.
Apart from Jana Urban Foundation (sponsor entity), other key shareholders of Janalakshmi include Citigroup Venture Capital, Morgan Stanley Private Equity, Tata Capital, Treeline, India Financial Inclusion Fund, GAWA Capital and QRG Enterprise, the promoter of Havells.
Last August it raised a Series D round of funding worth Rs 350 crore ($57 million), in one of the largest private investment transactions in the Indian microfinance industry since the regulatory crisis in Andhra Pradesh in 2010. Janalakshmi is also among the 25 odd applicants in race for a new banking licence.
IFC’s proposed investment in Vistaar is also in the form of NCDs to be issued by Vistaar Financial Services Private Limited.
As of January 31, 2014, Vistaar has a customer base of around 23,600 borrowers across 74 branches with a loan portfolio of Rs 207.1 crore (around $33 million).
IFC’s investment will help Vistaar meet its requirement of long-term debt financing and enable it to scale up business and operations.
Recently, Vistaar-founded Brahmanand Hegde and Ramkrishna Nishtala-had raised Rs 40 crore in a Series B round from Lok Capital, Omidyar Network and existing investors Elevar and SVB Capital Partners.
“IFC's debt investment will help the company (Vistaar) diversify sources of funding by providing comfort to potential lenders and investors. Further, IFC debt would be for a longer tenor than is typically available and help the company build scale to attract other lenders,” according to IFC.
Vistaar is headquartered in Bangalore and operates through around 74 branches in Karnataka, Tamil Nadu, Maharashtra and Gujarat.
(Edited by Joby Puthuparampil Johnson)