Janalakshmi Financial Services to raise $50 mn from IFC
Photo Credit: Mukul Mudgal/VCCircle

Bangalore-based microlender Janalakshmi Financial Services Pvt Ltd (JFS) is looking to raise about $50 million from International Finance Corp, the private sector lending arm of World Bank, as per a disclosure by IFC.

The investment from IFC will be in the form of senior debt and will help the company reach out to more low-income borrowers who have little or no access to formal source of funding.

Janalakshmi, which is the country’s biggest microfinance institution by gross loans, is one of the 10 recipients of the small finance bank (SFB) licence awarded by the Reserve Bank of India (RBI) in mid-September 2015.

The investment would also benefit the company to support growth and manage liability during the early years of transition to an SFB.

With more than 4.6 million borrowers and a loan portfolio of around Rs 9,100 crore as of March 2016, Janalakshmi is an urban area-focused microfinance institution headquartered in Bangalore.

The company 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 RBI. It is promoted by Ramesh Ramanathan, former MD and European head of corporate derivatives at Citibank.

Apart from Jana Urban Foundation (sponsor entity), other key shareholders include TPG Capital, Citigroup Venture Capital, North Haven Pvt. Equity Asia Platinum Pte Ltd, Alpha TC Holdings Pte Ltd, Treeline, India Financial Inclusion Fund, TRG, and Havells enterprise.

As of March, 2016, Janalakshmi operates through more than 330 branches in 18 states. The states it operates include Karnataka, Tamil Nadu, Maharashtra, Rajasthan, Madhya Pradesh, Uttar Pradesh, Uttarakhand, Delhi, Haryana, Gujarat, Pondicherry, Bihar, Chhattisgarh, Jharkhand, Punjab, West Bengal and Assam.

In April this year, the firm had raised $150 million (Rs 1,000 crore) in a round led by existing investor and global private equity firm TPG.

The microfinance industry, which struggled after regulatory changes in 2010 in its then key market of Andhra Pradesh, has emerged much stronger in the past two to three years. With RBI bringing this sector under its regulatory umbrella, MFIs not only got legitimacy but also attracted loads of venture and private equity funding.

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