Bangalore-based Ujjivan Financial Services Pvt Ltd, one of the top-tier microfinance institutions in the country, has raised Rs 600 crore ($96 million) from CX Partners, CDC, NewQuest Asia Investments and Bajaj Holdings.
Existing investors IFC and Elevar Equity also invested in the company as part of the transaction.
Founded by Samit Ghosh in 2005, Ujjivan is headquartered in Bangalore with offices in New Delhi, Kolkata and Pune. It operates a network of 423 branches in 21 states and three union territories.
It has gross managed assets of more than Rs 3,100 crore. It follows joint liability group lending and individual lending models and has a network of 423 branches across the country in 21 states and three union territories.
Ghosh said the fundraise is a strong indicator of the increasing interest of foreign and domestic investors and DFIs in the MFI sector.
This is the second-largest fundraise ever in the microfinance sector and comes close on the heels of Bandhan Financial Services Pvt Ltd getting commitment to raise around $260 million from IFC and Singapore's sovereign wealth fund GIC. Bandhan, the largest microfinance firm in India, is setting up a retail bank and a part of this money is to be channelled for the bank. IFC has already said it will invest over $90 million. Bandhan chairman and managing director Chandra Shekhar Ghosh has previously said on record that GIC is bringing another $165 million, though GIC is yet to make that deal public.
In another large transaction last year, Janalakshmi Financial Services Pvt Ltd raised an undisclosed amount led by TPG and participation of existing investors including Alpha TC Holdings, a fund backed by Mizuho Securities and managed by Tata Capital. Separate media reports had pegged the deal size at around $100 million.
Meanwhile, the latest transaction in Ujjivan involved a combination of primary issuance of shares and partial secondary exit to a few of its existing shareholders. The names of those who sold shares were not disclosed.
The firm had previously raised money from several investors, including Lok Capital, Unitus, Sequoia Capital, Wolfensohn Capital, Caspian, Michael & Susan Dell Foundation, Bellwether, Dutch development financial institution FMO besides debt funding from SIDBI and Developing World Markets.
Bellwether, the first private investor in the firm, had exited the company in 2012.
Avendus Capital was the advisor to the latest transaction.
The funding also reflects on investors coming back to chip in with large sums to back microfinance firms in the country. The sector was hit by regulatory clamps in the single-largest market, Andhra Pradesh, after several farmers committed suicides over dues to micro-lenders, around four years ago.
The industry has gone through a consolidation since then and after clarity from RBI on regulation, has been rebuilding its business.
(Edited by Joby Puthuparampil Johnson)