Hyderabad-based Share Microfinance Ltd, one of the largest microfinance institutions (MFI) in India, is raising a $50 million round of equity funding. International Finance Corp (IFC), the private equity arm of the World Bank, is looking to invest in the firm with other investors. Share Microfin has raised funding from Legatum Ventures Ltd and Aavishkar-Goodwell India Microfinance Development Co. Ltd.
Share Microfin's Managing Director Udaia Kumar declined to comment for this story as the firm is in talks with investors for the fundraising process.
In 2007, Share had diluted more than 51% stake to Legatum Ventures for $25 million. It also raised $2 million from Aavishkar-Goodwell then. The $50 million fundraising would one of the biggest transactions after SKS Microfinance's $75 million deal in November last year.
Share follows Grameen Bank strategy, where it gives collateral-free loans to women joint liability groups (JLGs). It has diversified its offering to individual loans for micro enterprises as well as personal loans. Share now also offers non credit based services like money transfer, credit life insurance and health insurance.
The MFI serves more than 1.86 million members across 16 Indian states, and claims a 90% client growth in the past three years. Share Microfin has a staff strength of 4,259 staff spread across 766 branches as on March 2009. It holds a total outstanding portfolio of over $241.1 million. With funding, Share will expand in states like Chhattisgarh, UP, MP, Uttranchal, and West Bengal.
Private equity and venture capital investors have also been actively eyeing this sector. MFIs have largely remained unaffected by the meltdown as they are not dependent on global consumption patterns. They also present a large opportunity.
Investors like Lightspeed Venture Partners, Battery Ventures, India Value Fund, etc. are looking at investments in this sector. MFI institutions are also making the best of this investor interest.
Spandana Microfinance, the second-largest MFI in the country, is also raising Rs 300 crore.
SKS Microfinance raised $75 million last year in a round led by hedge fund Sandstone Capital. Ujjivan Financial Services also raised a Rs 94 crore round late last year which oversubscribed. In the most recent equity transaction in this space, Bhartiya Samruddhi Finance Ltd raised $10 million last month.