NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, January 12, 2015

UK’s Commonwealth Development Corporation (CDC), private equity investors CX Partners, Newquest and a unit of Bajaj Group are leading a Rs 600-crore investment in Ujjivan Financial Services, clinching the single largest funding deal in India’s microfinance sector, sources directly familiar with the matter said.

Bengaluru-based Ujjivan, founded by former Citibanker Samit Ghosh, is a microfinance lender serving urban poor — primarily unbanked women — through a network of over 400 branches across 24 states.

The three new foreign investors and an arm of the Mumbai-based Bajaj conglomerate will invest Rs 300 crore in the company, while an equal amount will be deployed for buying shares from several existing investors. The transaction is expected to close by February end.

Existing investors such as Elevar, Sequoia, Wolfenson and Lok Capital may be paring their stake, while others like International Finance Corporation will participate in the latest funding round, sources added. “Some of our existing investors are diluting their stake. Fresh funds raised would be utilized to double our loan book by the end of the fiscal,” said Sudha Suresh, chief financial officer of Ujjivan, when contacted.

Ujjivan’s loan book at the end of March 2014 stood at Rs 1,617 crore, and this is expected to move up to Rs 3,300 crore by the end of this fiscal. Ujjivan plans to foray into the housing loan segment next fiscal by launching loan products with tenure up to 10 years and a maximum limit of Rs 10 lakh.