Microfinance Private Equity

Ujjivan Gone the SKS Way

Ujjivan Financial Services, a Bangalore-based microfinance institution (MFI), has completed the fourth round of equity infusion by raising Rs 940 million (USD 18.7 million) making it the fourth highest capitalised MFI in India with total paid up capital and reserves standing at over Rs 1.08 billion (USD 21.5 million) The increase in capital was largely invested by existing shareholders including Unitus Equity Fund (UEF) managed by Elevar Equity L.L.C., Bellwether Microfinance FundMichael & Susan Dell Foundation, A.W. Holdings and individual investors including promoter & CEO Samit Ghosh. The five new investors in this private placement transaction will include: Sequoia CapitalLok Capital, Unitus Equity Fund II, India Financial Inclusion Fundand SIDBI.

unique feature of this deal was that this is the first time a microfinance institution has been able to offer a market determined exit to individual investors and this was done in collaboration with Bellwether Microfinance Fund and UEF. This increase in equity will place it below only SKS Microfinance Private Limited,SHARE Microfin and Spandana Sphoorty Financial Limited in India for the amount of equity held by an MFI. New investors Sequoia Capital and SIDBI are also investors in SKS Microfinance.

Ujjivan, an MFI created in 2004, has a mission to provide financial services to the economically active poor and to enable them to lead a better life. Its goals are to have customers free of poverty in five years and serve 500,000 customers in six years. It currently has over 56 thousand active borrowers, 100 percent of which are women, with the average loan balance per borrower at USD 161. It reported total assets of USD 10.2 million at the end of March, 2008 with a debt to equity ratio of 332.11 percent and a return on equity of -47.44 percent. Its equity prior to this latest round of investment stood at USD 2.36 million.

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