Guwahati-based microfinance institution RGVN (North East) Microfinance Ltd (RGVNMFL) has raised Rs 41.8 crore ($7 million) from Norway’s Norwegian Microfinance Initiative (NMI) and Dutch social investor Oikocredit with participation of existing investors Dia Vikas Capital and SIDBI.
NMI invested through Norwegian Microfinance Initiative (NMI) Fund III KS while SIDBI, an existing investor, converted its optionally convertible preference shares or OCPS into equity in this round.
RGVNMFL is focused on the North East region of India. At present it serves five states and its core products include loans for income generating activities through JLGs, larger individual loans for micro-businesses and subsidised loans for welfare purposes such as health and sanitation.
The company also offers credit plus services, including insurance for both life and assets and trainings on vocational skills. The company had a portfolio of Rs 125 crore in its 107 branches spread across the five northeastern states with 1,66,623 clients, as on March 31, 2014.
“We are optimistic that this equity raise will help us reach out to more underprivileged thus boosting the region’s growth,” says Rupali Kalita, managing director at RGVNMFL.
“The company is having significant positive financial and social impact in North East India; thus we are pleased to be associated with such a company and are looking forward to providing the required support to expand its outreach and to achieve the vision,” says Njord Andrewes, investment director at NMI.
NMI is a public-private partnership to invest in microfinance institutions (MFIs) in developing countries and provide professional assistance and technical support for these institutions. NMI fund III was established a year ago with an initial fund size of $31 million. The fund invests in Sub-Saharan Africa and South- and South-east Asia.
Last year it co-invested with Incofin-Rural Impulse Fund II in Series B round of Delhi-based Fusion Microfinance Pvt Ltd. In the past, it has invested in Utkarsh Micro Finance Pvt Ltd and Belstar Investment and Finance Pvt Ltd.
Alexander Remy, equity officer, Oikocredit, said, “We are impressed with the way RGVNMFL has been able to reach deserving clients in the difficult north eastern states of India. RGVNMFL has demonstrated great leadership in building this organisation and we are excited to partner with the institution.”
Dutch organisation Oikocredit is a worldwide cooperative and social investor, providing funding to the microfinance sector, fair trade organizations, cooperatives and small to medium enterprises. It has offices in 35 countries.
Unitus Capital was the exclusive financial advisor to the company for this transaction.
Three years ago Dia Vikas Capital, a subsidiary of Opportunity International Australia, had put in around Rs 6 crore into RGVNMFL.
With the microfinance sector leaving the difficult years following the regulatory clamp in the key market of Andhra Pradesh behind, various players have attracted private funding to expand their businesses.
Recently Pune-based MFI Suryoday Microfinance raised Rs 27 crore from IFC, Aavishkaar and Lok Capital; Bhubaneshwar-based Annapurna Microfinance raised Rs 30 crore from Belgian Investment Company for Developing Countries and Incofin Investment Management's Rural Impulse Fund-II; Bangalore-based Grameen Koota raised Rs 80 crore from existing investor MicroVentures Investments; SKS Microfinance saw through a successful QIP and raised Rs 400 crore in the process.
(Edited by Joby Puthuparampil Johnson)