New-Delhi-based microfinance institution (MFI) Satin Creditcare Network Ltd has raised $10 million through external commercial borrowing (ECB), according to a press release.
WorldBusiness Capital, a US-based lender, has given a eight-year loan, partially guaranteed by Overseas Private Investment Corporation (OPIC), the US government's development finance institution. Around 35 per cent of the total amount was paid in the form of unsecured subordinated debt and remaining 65 per cent was in senior secured debt.
This is the first issuance of ECB for Satin Creditcare since RBI eased access to foreign investments by allowing NBFC-MFIs to tap the overseas borrowing route.
Earlier, Chennai-based Equitas Micro Finance and Bangalore-based Ujjivan Financial Services raised funds from IFC through the ECB route.
The borrowing will help Satin to consolidate its position as north India’s largest MFI and the sixth-largest nationwide, it said.
The transaction also marks WorldBusiness Capital’s second long-term loan in the microfinance sector in India. Recently, it invested in Tamil Nadu-based Grama Vidiyal Microfinance Ltd through ECB.
The latest transaction was executed by Chennai-based IFMR Capital.
"Financing through ECB will open a new source of funding for the company. Of the total $10 million, $3.5 million is tier-II capital which will help us increase our outreach. The eight-year tenor offered by the lender will help us improve the asset liability management (ALM) of the company," said H P Singh, chairman and MD, Satin.
“WorldBusiness Capital’s India Lending Team continues to seek opportunities to offer medium and long-term loans for Indian financial institutions and middle market businesses in a wide variety of industries," said Brett N Silvers, president and CEO, WBC.
Satin serves over 1 million semi-urban & rural poor women in 11 states across India. The firm employs over 2,000 people and has 240 branches. It has disbursed loans of over Rs 3,000 crore with a repayment rate above 99 per cent and with assets under management at around Rs 1,250 crore as of September 30, 2014.
Last August, the firm was looking to raise $10-15 million (Rs 61-91 crore) from venture capital investors.
(Edited by Joby Puthuparampil Johnson)