Microfinance Private Equity

India Financial Inclusion Fund to invest in Sonata Microfinance

Sonata has reached out to nearly 85,000 women clients, with a portfolio outstanding of over Rs 42 crore.

India Financial Inclusion Fund (IFIF) has made a commitment to invest in Sonata Finance Pvt Ltd, an Allahabad-based microfinance institution (MFI). The fund is in talks with another investor to finalise the investment in the MFI, which has a presence in eastern part of the Uttar Pradesh. Sonata had earlier raised funding from Bellwether Microfinance Fund. Hyderabad-based Caspian Advisors manages Bellwether Microfinance Fund and advises India Financial Inclusion Fund.

Sonata Finance started operations in January of 2006 and since then has reached out to nearly 85,000 women clients, in more than 15 districts with a portfolio outstanding of over Rs 42 crore. The firm has a target to expand this portfolio to Rs 80 crores by March 2010 and Rs 150 crores by March 2011.

Sonata has been promoted by Anup Singh, Rakesh Dubey, Ashish Kumar Gupta, Swaminathan Ankaleshwar Aiyar (the noted journalist) along with Bellwether Microfinance Fund. “Sonata is one of the most impressive and efficient microfinance institutions in the region, both financially and socially. Sonata has a uniquely strong position in its areas of operation, especially in the state of Uttar Pradesh, which other microfinance institutions have found difficult to emulate,” said S. Viswanatha Prasad, Managing Director of Caspian. MFI has seen the most active venture capital dealflow within the banking and financial sector since January 2008. Of about 50 private equity deals worth $1 billion in banking and finance in the last 18 months, MFIs alone accounted for 20 deals worth over $200 million of Rs 960 crore.

The investors in the space are increasingly looking at relatively unpenetrated regions of North and West India. In one of the most recent deals, Pune based Suryoday Microfinance raise Rs 4.5 crore from Aavishkaar Goodwell. “Through an investment in this round, we will further build capacity in this exceptionally well-run MFI, which will facilitate it to penetrate into relatively-unreached markets within UP and other neighbouring states,” added Prasad.

VCCircle.com

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