Trident Microfinance to raise Rs 75 cr equity in second round

In an effort to grow business, Hyderabad-based microfinance institution (MFI) Trident Microfin plans to raise Rs 75 crore by equity from high net worth individuals (HNIs) and two existing investors.

Promoter and Chief Executive Officer Puli Kishore Kumar said discussions for capital infusion were underway and Rs 30 crore would be brought in by the end of this month. The balance funds were expected before March 2011.

Besides some HNIs, the two existing investors — Microfinance Fund and India Financial Inclusion Fund — will participate in the capital expansion plans.

At present, the company’s microfinance portfolio is about Rs 160 crore, with capital base of Rs 25 crore. It services about 200,000 borrowers.

With assets crossing Rs 100 crore, the MFI has become a systemically important, non-deposit taking non-banking financial company (NBFC). Therefore, it will need to maintain a capital adequacy ratio above 15 per cent by March 2011.

At present, the firm has over 60 branches in three states — Maharashtra, Andhra Pradesh and Madhya Pradesh. It has 600 employees on rolls. It intends to set up more branches in Karnataka, Gujarat, Tamilnadu and Punjab over the next five years.

Trident expects its microfinance portfolio to grow to Rs 1,000 crore by March 2015. It would scale up capital base to Rs 250 crore by March 2015. However, there were no plans for floating a public issue to raise equity capital, Kumar said.

The headcount of the MFI is expected to be above 4,000 and branches will be close to 750 at the end of March 2015.

As a step to ensure steady revenues and business growth, Trident has expanded its activity in urban areas. The cash flows are stable, reflecting loans extended to people from diverse businesses and professions. In rural areas, the asset growth is linked to crop cycle. After harvesting, people repay loans, which shrinks the asset base.

Trident was formerly known as Annapurna Financial Services. In January 2008, Trident acquired the microfinance loan portfolio of Trident Seva Society, which started its operations in 2007.

In September 2008, the NBFC acquired microfinance portfolio worth Rs 19.2 crore from Maxwealth Trust, a trust started by the Institute of Chartered Financial Analysts of India. Maxworth had 23 branches in and around Hyderabad.