Singapore government-sponsored investment house Temasek Holdings is close to investing $60 million or Rs 300 crore in Hyderabad based Spandana Sphoorty Financial Ltd. According to sources, the deal is being closed at $400 million or Rs 2,000 crore valuation.
VCCircle had reported last week, quoting Spandana’s CEO Padmaja Reddy, that the microfinance institution would be closing a $60 million deal this week. When contacted, Manish Kejriwal, Senior Investment Director, India & International, Temasek Holdings, told VCCircle, “We haven’t closed the deal.” Reddy was not available for a comment.
In Spandana, Temasek could be buying out half the stake of Lok Capital, which holds 5% stake in Spandana. Lok Capital is looking at divesting 50% of its interest, Reddy had told VCCircle last week. The other stakeholders in Spandana include JM Financial PE fund (18%), Valiant (11%) and senior employees (15%).
Spandana, like many other MFIs like SKS Microfinance, has been aggressive on the capital-raising front. It has already raised debt to fund its growth plans. In June, it raised Rs 80 crore via non-convertible debentures. Also, it recently concluded Rs 50-crore ($12 million) loan deal with Rabo Bank, a Dutch cooperative.
Private equity and venture capital investors have taken a serious shine to the MFI sector, although there is a refrain that the sector is overvalued.
Earlier this year, SKS Microfinance raised Rs 75 crore ($15.8 million) through a one-year non-convertible debenture issue at a coupon rate of 10%. In late 2008, SKS raised Rs 366 crore ($75 million) with investments from Sandstone Capital, Kismet Capital and SVB India Capital partners. Fellow Andhra Pradesh MFI player Share Microfin is also in the process of raising $50 million from International Finance Corporation, the private equity fund of World Bank, and others. In April, Bhartiya Samruddhi Finance Ltd raised $10 million.