Microfinance firm Janalakshmi raises funding from TPG and existing investors

Janalakshmi Financial Services Pvt Ltd, a microfinance institution based in Bangalore, has raised an undisclosed amount led by global private equity major TPG Asia SF Pte Ltd and from existing investors including Alpha TC Holdings, a fund backed by Mizuho Securities and managed by Tata Capital, among others, as per a disclosure.

TPG Asia Buyout Fund VI , a fund managed by TPG Capital Inc, through its affiliate TPG Asia SF Pte. Ltd, invested in the micro finance company.

As per previous media reports, the deal value is pegged at around $100 million, making it arguably the single-biggest private funding round of an Indian microfinance firm.

In 2009, three venture capital investors invested $75 million in SKS Microfinance and last year Janalakshmi raised $57 million. In a parallel but separate deal, Equitas has just raised $53 million.

However, SKS has raised much bigger sums through its IPO, which was an offer for sale by its shareholders.

An email query to Janalakshmi spokesperson for clarity on the investment quantum, did not immediately elicit a response.

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 at 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 (Caspian), GAWA Capital and QRG Enterprise, the promoter group 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.

For TPG, this marks another bet on financial services space in the country, having previously invested in Shriram Capital besides two other listed firms of the group Shriram City Union Finance and Shriram Transport Finance.

TPG has two separate teams operating in India. TPG Capital, investing through its Asia and global buyout funds, looks at large buyouts and strategic transactions. The other unit is under TPG Growth, which does growth capital deals.

Since the latest deal is through the buyout team, it would necessarily involve a bigger ticket size.

Law firm AZB & Partners was the legal adviser to TPG and Alpha Holdings for the transaction.

(Edited by Joby Puthuparampil Johnson)

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