Microfinance Private Equity

Share Microfin set to raise Rs 250 crore through PE route

Share Microfin, a regulated microfinance institution, is looking to raise close to Rs 250 crore through the private equity route. The Hyderabad-based company started in 1989 and having close to 2 million clients spread over 16 states in India, has made a total disbursement of Rs 5,100 crore with an outstanding portfolio of Rs 1,100 crore. According to recent statements from the company it has plans to reach out to more than 15 million clients in 20 states with a total disbursement of Rs 39,610 crore in the next four years.

Share broadly follows the Grameen operating model and lends mainly to women joint liability groups. The company has diversified its product range and is now offering individual loans for micro enterprises as well as personal loans. The company is also offering non-credit based services including money transfer, credit life insurance and health insurance.

According to industry information, the infusion of Rs 250 crore will be through at least three investors coming in. Share had earlier raised funds from Legatum Ventures and Aavishkar-Goodwell India Microfinance Development Company. Dubai-based Legatum had invested Rs 100 crore during 2007 to expand the credit base of Share.

Share is raising fresh fund to grow its operations in the northern, central and eastern states (Chhattisgarh, UP, MP, Uttranchal, and West Bengal) many of which are low income states. Share has over 750 branches across 16 states covering close to 15,000 villages, with operations mainly in the states of Andhra Pradesh, Chhattisgarh, Karnataka, and Madhya Pradesh.

Share recently executed a rated loan assignment transaction of Rs 49.34 crore with YES Bank during March 2009. The transaction involved rating identified loan receivables from micro clients, numbering around 104,000 borrowers, with an average loan size of Rs 4,700. Udaia Kumar, managing director of Share had said, “Such type of structured credit products would enable increased access to the capital markets and adequate funds to provide financial services to those sections of the poor who have no access to mainstream banking services.”

A senior official of YES Bank noted that the Indian MFIs have been relying heavily on simple term loans to fund their growth. “Now they have become large and sophisticated enough to potentially engage structured credit products. From a long-term perspective, this transaction is also likely to stimulate demand for more innovative financially structured products in the sector,” the official added.

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