Two MFIs to get $10 mn each from IFC

The proposed fund-raising, through ECB route will help the firms expand their base

International Finance Corporation has decided to, in stages, invest around $10 million (Rs 54 crore) in each of two micro finance companies, Chennai-based Equitas and Bangalore-based and Sequoia Capital-backed Ujjivan Financial. The route would be external commercial borrowing (ECB) and the money would help the companies expand their bases.

IFC’s investment in a portfolio micro-finance institution is expected to build confidence in the sector, in the wake of the

Andhra Pradesh crisis, and give confidence to other investors, network partners and stakeholders.

Equitas
Founded by P N Vasudevan, Equitas Microfinance is a 100 per cent subsidiary of Equitas Holdings, an existing investee of IFC.

The proposed investment will help it to diversify its sources of funding and potentially attract a new set of investors. IFC’s debt would be for a longer tenor (greater than five years). The investment would manifest IFC’s support for an existing portfolio investee and would be particularly important as a source of long tenor funding, said the corporation.

Ujjivan
Ujjivan operates in urban and semi-urban areas. Founded by Samit Ghosh, the shareholders include foreign institutional investors, IFC, AW Holdings, Women’s World Banking, India Financial Inclusion Fund, Unitus, Elevar, Sequoia Capital, Lok Capital Group, FMO and Wolfensohn Capital Partners.

Ujjivan is among the few large MFIs that focus on providing micro loans to women borrowers in urban and semi-urban areas.