At a time when microfinance institutions are facing liquidity crunch due to the tightening in the regulatory environment, Bangalore-based Ujjivan Financial Services has raised Rs 40 crores of debt capital from DWM (Cyprus) Limited through issuance of non-convertible debentures (NCDs). DWM(Cyprus) Limited is a member of the Developing World Markets (DWM) group of companies.
The NCDs are listed on the Bombay Stock Exchange and have been fully subscribed by Connecticut-based DWM, which is an asset manager and investment bank exclusively dedicated to making socially positive investments to promote sustainable economic and social development on a global scale, Ujjivan said in a statement.
Unitus Capital is the exclusive financial advisor and sole arranger of the issue.
“We expect the banks and financial institutions in India to resume lending to MFIs outside Andhra Pradesh post Reserve Bank of India’s directions of December 22, 2010,” Samit Ghosh, Managing Director, Ujjivan, said.
“We are proud to be the recipient of the first international transaction after that date, where DWM has showed the way,” he added.
Following this deal, DWM announced its commitment to crisis-ridden micro-finance sector in India.
“DWM is committed to the microfinance sector in India, and we hope to expand our support to Indian MFIs in 2011,” Jim Kaddaras, Partner for Debt, Structuring and Legal Affairs at DWM, said.
The Andhra crisis and the regulations by RBI have crippled business and operations of the microfinance sector (especially those with exposure in the state), once a favourite with the investors. Apart from Ujjivan, many established MFI players like Basix, Bandhan, Spandana, Ujjivan, Grameen Koota, Janalakshmi, are looking at raising funds through other options including private equity.