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Grameen Koota raises $10 million USD (or 532 million INR) in its 3rd round of equity funding lead by Creation Investments

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Grameen Koota raises $10 million USD (or 532 million INR)
in its 3rd round of equity funding lead by Creation Investments

February 27, 2013 – Bangalore, India: Grameen Financial Services Pvt Ltd (GFSPL), popularly know as Grameen Koota today announced its third round of equity funding of $10 million USD (or 532 million INR) lead by Creation  Investments Capital Management (Creation Investments Social Ventures Fund II, L.P. USA.  Two current investors also invested in this round – Incofin Investment Management (IIM Impulse 2, Mauritius) and MicroVentures (MVHS.p.a, Italy and MV SICAR, Luxembourg).

GFSPL has been working with poor and low-income households for the past 13 years and has provided these households with diverse financial and developmental services that caters to all life-cycle needs of its over 350,000 clients spread across three states of Karnataka, Maharashtra and Tamil Nadu. The equity  funding comes close at the heels of the instiution receiving $3.9 million USD (or 210 million INR) in debt funding through unsecured, redeemable, non-convertible debentures (NCDs) from Global Commercial Microfinance Consortium II B.V., Netherlands, a fund managed by Deutsche Bank.

Speaking on the new equity infusion, GFSPL Managing Director Suresh Krishna, said “The newly infused funding will add to the growth of the company and help Grameen Koota achieve its target of reaching out to over 10 lakh poor and low income households.  The capital will also strengthen our vision towards extending and expanding our loan operations to other neighbouring states.”

GFSPL understands that micro-lending cannot happen in isolation and therefore has rigourously engaged in social development activities including entrepreneurial education, health, sanitation, etc. Commenting on the equity raised, Founder-Chairperson, GFSPL  Vinatha Reddy,  added “Ours has been a constant endevour towards being a well run MFI with a firm social purpose and we are happy that existing investors have reposed their faith in Grameen Koota’s work by increasing their stake, as we welcome Creation Investments, our new investor. ”

For Creation Investments, the equity funding is just the beginning of a long relationship with GFSPL. Speaking about the capital infusion, Creation Investments co-founder/director Ken Vander Weele said  “We are excited in partnering with a leading MFI like Grameen Koota that has brought about innovative loan products and are constantly evolving themselves to cater to the financial needs of the poor in India.“

Paolo Brichetti, Chairman of MicroVentures, a veteran in the social capital investment space in developing countries such as India, believes that the equity raised will only benefit the company and further enhance its activities towards accomplishing its  vision. He said, “Our relationship with Grameen Koota has deepened a further notch and we are glad that we continue to back an MFI like Grameen Koota that continues to remain a benchmark within the Indian Microfinance sector.”

Speaking on the follow-on investment in GFSPL, Aditya Bhandari (Regional Director, Incofin South Asia) stated “Grameen Koota’s instant brand recall amongst clients and its strong focus on client relationship makes it as one of the best MFIs in the world. We are excited to once-again support GFSPL in its vision to create long term sustainable value for all stakeholders (clients included).”

About Grameen Financial Services Private Limited:

Grameen Financial Services Private Limited (GFSPL), a microfinance institutions headquartered in Bangalore, popularly known as Grameen Koota has over 350,000 clients with 1300 employees working out from 168 branches in Karnataka, Maharashtra and Tamil Nadu. It had loan outstanding of about $84 million USD (or 4.5 billion INR). Being socially focused Microfinance Institutions; Grameen Koota has over a decade of experience in micro lending towards Joint Liability Groups formed exclusively of women from poor and low income households with other support products like Water, Sanitation, Health Care, Energy Efficient Cook Stove etc. For more information, visit www.gfspl.in

About Creation Investments Capital Management

Creation Investments is an alternative investment management company with over $100 million in assets under management. Named a leading Impact Investment fund manager by ImpactAssets50 in 2011, Creation Investments Capital Management, LLC currently manages 4b Capital Fund A, L3C, Creation Investments Social Ventures Fund I, and Creation Investments Social Ventures Fund II, with a focus on private equity and control equity investments in Microfinance Institutions, Small-and-Medium Enterprise lenders, BOP Financial Services Providers, and other Social Ventures in emerging markets seeking to maximize financial and social returns on investment. Investments in microfinance and social ventures create opportunities through access to capital and needed products and services for those living in poverty to engage in small-business activity, income generation, and significantly impact those living at the bottom of the economic pyramid.

About MicroVentures

The MicroVentures initiative was started-up in Italy by a group of private social entrepreneurs with previous experience in the field of social venture capital and business cooperation with the Developing Countries. The initiative has gradually expanded into an international network of affiliates, which includes the Bangalore-based MicroVentures India (specialized in providing debt to indian MFIs), Bina Artha Indonesia and  MicroVentures Investments SICAR, a specialized investments fund based in Luxembourg, which provides equity  and debt financing to promising Microfinance Institutions in Asia and Latin America.

About Incofin Investment Management

Incofin Investment Management (www.incofin.com) is a specialized fund management company with more than 10 years of experience in microfinance and currently more than 350 M EUR assets under management. Incofin IM manages the following funds and facilities: Incofin CVSO (40 M EUR), Impulse (46 M EUR), Volksvermogen (10 M EUR), VDK (75 M EUR), Rural Impulse Fund I (30 M EUR), Rural Impulse Fund II (120 M EUR), BIO (10 M EUR) and Fair trade Access Fund (20 M EUR). Investors are mainly Western Europe and US based, including ~50% public investors (DFIs such as IFC, KfW, EIB, FMO, BIO etc) and ~50% private (institutional investors such as banks, pension funds etc). The total investment portfolio includes over 100 MFIs in more than 44 countries around the world. Incofin IM has a strong track record, having executed more than 566 transactions since 2003.

 

http://in.reuters.com/article/2013/03/06/grameen-koota-raises-10m-round-led-by-cr-idINDEE92504P20130306

 

http://www.legallyindia.com/201303043483/Private-equity-/-VC/tatva-jsa-on-us-social-vc-s-7m-pe-in-indian-mfi-grameen

 

http://www.ivcpost.com/articles/6926/20130306/grameen-koota.htm

 

http://www.thehindubusinessline.com/companies/grameen-koota-raises-rs-5320-cr-equity-fund/article4482251.ece

 

http://www.thehindubusinessline.com/industry-and-economy/banking/grameen-koota-raises-over-rs-53-cr-in-third-round-of-funding/article4479058.ece

 

http://articles.economictimes.indiatimes.com/2013-03-05/news/37469982_1_incofin-grameen-koota-microfinance-firm

 

http://www.altassets.net/private-equity-news/by-news-type/deal-news/creation-investments-leads-10m-grameen-equity-financing.html

 

http://blogs.ft.com/beyond-brics/2013/03/08/india-hint-of-recovery-in-microfinance/#axzz2N14VCTtL

MFIs still seeing significant growth

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May Kunmakara 
Thursday, 02 February 2012
Outstanding loans and deposits in 28 of Cambodia’s microfinance institutions rose between 30 and 40 per cent year-on-year in 2011, official data from the Cambodian Microfinance Association indicated.

The CMA’s data showed outstanding loans rose 41.5 per cent from US$916.3 million with 1.3 million borrowers in 2011, compared to $647.8 million with 1.22 million borrowers a year earlier.

Deposits grew by 32 per cent to $1.26 billion with 1.1 million depositors, compared to $952.2 million with 36,776 borrowers in 2010. MFIs in the Kingdom first began to take deposits in early 2010.

Non-performing loans (NPL) declined from 1.3 per cent of the loan total to 0.4 per cent. Officials and insiders said a strong macro-economy performance and clear regulations were responsible for the shift.

National Bank of Cambodia director general and spokeswoman Ngoun Sokha recognised the favourable direction the economy was heading, especially in the agricultural sector, which she believed was responsible for the rising demand for loans.

“The government supports the agricultural sector, especially the export of milled rice. So we promoted the adoption of MFI loans for agriculture and actually received a lot of growth in that area, adding up to more than 50 per cent of all loans,” she said.

Bun Mony, director of CMA and chairman of Sathapana Microfinance, told the Post that loan portfolios at Sathapana rose about 65 per cent to $94.6 million compared to $57 million in 2010. The number of borrowers grew from from 43,565 to 55,001.

“There was a high demand for loans as business activities continue to grow, and we don’t even seem to have any problems with repayment,” he said, adding that the NPL rate declined to from 0.93 per cent to 0.22 last year.

Sathapana provides loans to all sectors, with 40 per cent going to retail and small businesses, and more than 20 per cent to the agricultural sector.

The country’s biggest MFI, Prassac Microfinance, reported that by December 2011 its gross loan portfolio was $151 million, an increase of 43.6 per cent, with active borrowers increasing 10.9 per cent to 125,127.

“In general, I think that the industry performed well last year because all MFIs grew their portfolios while the NPL rate decreased,” Sim Senacheert, president and CEO of Prassac, said.

Prassac loans to the agricultural sector accounted for 33 per cent of its total portfolio, with trading and service making up 47 per cent.

Hout Ieng Tong, general director of Hattha Kaksekar Microfinance, reported that loan portfolios rose 70 per cent to $75 million with 62,703 borrowers, from $44 million with 47,952 borrowers the year pior.

He added that NPL declined from 0.9 to 0.07 per cent, and that agricultural loans accounted for 35 per cent of total stocks at his compay. Sathapana Microfinance’s total deposits rose 129.4 per cent from $39 million to $17 million, while Hattha Kaksekar’s total deposits grew more than 160 percent to reach $15.78 million compared with only $5 million the year before. Prassac reported smaller increases, as its operations just began in mid-2011.

The successes are tempered, however, by the uncertain economical fates of the EU and US, where much of the industry gets its primary funding. “We are a bit worried,” said Bun Mony.

“We see the EU in a crisis, and think there could be some slight impact on us, specifically regarding investments.”

Ngoun Sokha suggested a solution, saying, “We try to teach MFIs good governance, and to strengthen their internal capacity for infrastructure, so that they will be able to easily seek a source of funds domestically rather than just looking abroad.”

MFI Research Shows Clients Better Off Through Microfinance

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May Kunmakara 
Monday, 16 January 2012
A survey by Cambodian microfinancers showed debtors were better off in several respects than those who didn’t borrow from the institutions, MFI officials claimed.Responding to recent concerns over the role of microfinance institutions and the alleged role they played in creating poverty and loss of property in the Kingdom, the Cambodia Microfinance Association on Friday released a study that showed positive outcomes for borrowers in changes in income, assets and the empowerment of women, among others.The Cambodia Institute of Development Study, an independent institution, surveyed 1,876 MFI clients, 568 non-clients and 533 former clients in 15 provinces during the first nine months of 2011.

About 54 per cent of MFI clients saw increases in income in 2010, compared with 32 per cent among non-clients, the survey showed. Nearly 80 per cent of clients had multiple sources of income. Among non-clients, 66 per cent had more than one job.

Cambodia Microfinance Association and Netherlands Development Finance Company funded the survey, of which 80 per cent of the responders were women.

The ability of MFI clients to repay their loans has grown as the industry has matured, association director Bun Mony told the Post Friday.

“During the last 10 years, customers used to borrow from us just around US$50. But now they are able to get about $10,000,” said Bun Mony, also the director general of Cambodia’s third-largest MFI, Sathapana.  “How can we loan them so much money? After our assessment, we see that our clients can pay back these large amounts of money with interest and principle.”

MFI loans average at about $500. The industry has about $570 million in outstanding loans to 1.1 million customers. Prasac, the country’s biggest MFI, had a default rate of 0.14 per cent, the company’s director told the Post last week. About 30 per cent of the MFI’s loans go to the agriculture sector. Kalyan Mey, a senior advisor to Cambodia’s Supreme National Economic Council, as well as an outspoken critic of high microfinance interest rates, told the Post last week that, with up to 50 per cent annual interest on some loans, the potential for default among the Kingdom’s rural population was high.

A lack of understanding among rural debtors could lead to social instability and a loss of property, Kalyan Mey said at the time.

“[The interest rate] is too high to justify any productive gain from the farmer raising pigs or growing rice,” he said.

“At the end of the day, many farmers will lose their houses and their land. It can become a big social problem for the rural community.”

Son Koun Thor, president of the state-owned Rural Development Bank, said last week that free-market forces had left the rural borrowing population at a disadvantage in terms of interest rates.

At many MFIs, rates have fallen from an original monthly 5 per cent to between 2 and 3 per cent. Sathapana’s interest rates are about 25 per cent a year, according to Bun Mony. Prasac’s rates are slightly lower.

Some insiders, however, have said the rates could climb again as more MFIs start to take deposits.

Depositors would demand higher savings interest rates from the institutions, which before 2010 were only permitted to give small-scale loans, a source familiar with the industry told the Post last week on condition of anonymity. “The spread between deposits and loans will only increase,” the source said.