Singapore’s sovereign fund GIC investing $165M in Bandhan

Singapore's sovereign wealth fund GIC is investing Rs 1,020 crore ($165.1 million) in India's top microfinance firm Bandhan Financial Services Pvt Ltd, Reuters reported citing company's top executive.

With this, Bandhan gets fresh investment commitment of Rs 1,600 crore ($258.9 million) as IFC has also said it may invest Rs 580 crore ($93.8 million) across both Bandhan and its upcoming retail bank.

Bandhan was one of the two financial services firms selected last year to get an in-principle approval for setting up a new bank in India, along with IDFC.

The firm is looking forward to transform itself into a universal bank focused on low-income households. It aims to expand and diversify its operations to include a range of products such as savings, remittances, payments, etc.

IFC is an existing investor in Bandhan Financial and its proposed investment would enlarge its commitment to the group while separately backing its upcoming retail bank. It had previously invested $30 million to buy a minority stake in Bandhan Financial in 2011. Last Year it invested $26.68 million more in Bandhan through subscription to non-convertible debentures (NCDs).

Other shareholders of Bandhan Financial include SIDBI, Financial Inclusion Trust and North Eastern Financial Inclusion Trust.

For GIC, this will increase the number of its investments in finance domain in India. In the past it has backed several firms such as Muthoot Finance, Edelweiss Financial besides banks ICICI Bank and HDFC Bank among others.

It has been one of the most active sovereign funds in India and lately been aggressively adding up to its real estate portfolio. Recently, it struck a deal to acquire a significant minority stake in public listed IT park owner Nirlon Ltd for Rs 660-784 crore and has made an open offer to buy more which could cost it as much as Rs 568 crore more. Around the same time, it inked a joint venture agreement with Gurgaon-based developer Vatika Group to develop two residential projects in Delhi-NCR.

Prior to this, GIC invested in Flipkart and also signed a deal with Bangalore-based Brigade Group to jointly invest up to Rs 1,500 crore ($247 million) in residential developments in select cities of South India besides other investments.

Bandhan Financial, currently registered as an NBFC-MFI, is India’s largest microfinance institution in terms of number of borrowers and outstanding portfolio. Headquartered in Kolkata, West Bengal, it has a borrower base of more than 6.1 million women and a loan portfolio of approximately Rs 7,800 crore (close to $1.3 billion).

It operates through more than 2,000 branches in 22 Indian states.

(Edited by Joby Puthuparampil Johnson)

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