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.
If the deal goes through, this would be third investment by Temasek in financial services space. It had earlier invested in non banking financial services company Fullerton India and also in ICICI Bank.
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.