microfinance: Global PE investors warm up to India’s microfinance sector

Kolkata: Overseas private equity investors are making a move to increase their stakes in India’s small and microcredit landscape, which has turned from the lows recorded during Covid-19 and is back on the growth path.

In one of the largest investments in microfinance in recent memory, British International Investment, together with existing investors Incofin Investment Management, the Nordic Microfinance Initiative (NMI) and Dutch impact investor Triple Jump, will invest approximately US$25 million or £196 million in Ahmedabad invest -based light microfinance that has been making strides in recent years.

British International Investment will invest $9.2 million in the NBFC-MFI, while NMI will add $7.9 million to its stake, $5.4 million to Triple Jump and $2 million to Incofin will increase, said people familiar with the development. These three existing investors came on board between 2020 and June 2021 for a total investment of $10 million.

“We plan to use the proceeds from the new investment to expand geographically and strengthen our technology backbone,” CEO Deepak Amin told ET.

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Founded in 2009 by Amin, Rakesh Kumar (Chief Executive Officer) and Aviral Saini (Chief Financial Officer), Light plans to explore Uttar Pradesh, Himachal Pradesh and Odisha to expand beyond its existing operations in Gujarat, Rajasthan, Madhya Pradesh and Haryana to expand.

The lender, which had £1,060bn in assets under management at the end of March, aims to grow its book to £1,800bn by March 2023

It also plans to invest in multiple technology interventions to expand its digital lending initiative, as well as other technology-enabled interventions such as artificial intelligence-based analytics platforms and mobile applications.

In a further development, private equity firm Warburg Pincus and International Finance Corporation (IFC) have invested £3.90 billion in Avanse Financial Services – a non-bank lender focused on education – through a rights issue of shares.

Warburg Pincus, through its subsidiary Olive Vine Investment, owns 80% of Avanse, while IFC owns the remainder of 20%. This capital injection has taken Avanse’s net worth to approximately £1,450 million. The funds would help Avanse in its next phase of growth, managing director Amit Gainda said.

In parallel, Britain’s Greater Pacific Capital is poised to increase its stake in microlenders

Microfin to 16% by pumping in $10 million. Muthoot Microfin chief executive Sadaf Sayeed told ET that the deal is likely to close soon.

Meanwhile, Geneva-based Symbiotics Investments has invested £65m of debt in Aye Finance, a lender to micro, small and medium-sized businesses. Aye, which had £1,730bn in loans at the end of March, is targeting 50% growth this financial year.

https://economictimes.indiatimes.com/markets/stocks/news/global-pe-investors-warm-up-to-indias-microfinance-sector/articleshow/94363913.cms microfinance: Global PE investors warm up to India’s microfinance sector

Russell Falcon

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