UK’S CDC Group likely to in­vest over Rs100 cr in Ver­i­tas Fi­nance

Mint ST - - DEALS - BY SWARAJ SINGH DHAN­JAL & SNEH SUSHMIT MUM­BAI

CDC Group Plc, the UK gov­ern­ment’s de­vel­op­ment fi­nance in­sti­tu­tion, is in ad­vanced talks to in­vest over Rs100 crore in Ver­i­tas Fi­nance Pvt. Ltd, which lends to mi­cro and small en­ter­prises, said two peo­ple aware of the de­vel­op­ment.

Chen­nai-based Ver­i­tas was reg­is­tered as a non-banking fi­nan­cial com­pany (NBFC) by the Re­serve Bank of In­dia in Oc­to­ber 2015.

In De­cem­ber, Mint re­ported that Ver­i­tas was in the mar­ket to raise funds.

The com­pany started with an ini­tial cap­i­tal of Rs13.60 crore and raised ad­di­tional eq­uity of Rs30 crore from Lok Cap­i­tal and oth­ers, in­clud­ing Caspian Im­pact In­vest­ment Ad­viser, in a se­ries A round of fund-rais­ing in 2016.

“Ver­i­tas has been in talks with CDC Group and the deal is ex­pected to be closed soon. They are wait­ing for a few ap­provals,” said one of the two peo­ple cited above, re­quest­ing anonymity as he is not au­tho­rized to speak with re­porters.

The com­pany will use the funds to in­crease its loan book and its net­work, he added.

In De­cem­ber, D. Arul­many, man­ag­ing di­rec­tor and chief ex­ec­u­tive at Ver­i­tas told Mint that the firm was look­ing to close fis­cal year 2016-17 with a loan book of Rs100 crore.

Ver­i­tas fo­cuses pri­mar­ily on pro­vid­ing medium-and longterm credit to mi­cro en­ter­prises.

The firm’s av­er­age loan size is Rs4 lakh and its typ­i­cal cus­tomers—small and mi­cro en­trepreneurs who run bak­eries, restau­rants and pro­vi­sion stores—earn Rs25,000 to Rs60,000 a month, with no prior ex­po­sure to for­mal busi­ness fi­nance.

Emails sent to D. Arul­many, man­ag­ing di­rec­tor and chief ex­ec­u­tive at Ver­i­tas, did not elicit any re­sponse.

CDC does not com­ment on spe­cific trans­ac­tions, said Srini Na­gara­jan, head, South Asia, CDC Group, in an email re­sponse.

Delhi-based NBFC Aye Fi­nance Pvt. Ltd, which op­er­ates in the same space as Ver­i­tas Fi­nance, raised about Rs70 crore in Novem­ber in a round of fund­ing led by LGT Im­pact Ven­tures.

Ex­ist­ing in­vestors SAIF Part­ners and Ac­cion also par­tic­i­pated.

CDC Group has been an ac­tive in­vestor in pri­vate lenders, fo­cus­ing on pro­vid­ing fi­nan­cial ser­vices to bot­to­mof-the-pyra­mid cus­tomers and to small busi­nesses.

In Jan­uary 2016, CDC in­vested $50 mil­lion (ap­prox­i­mately Rs330 crore) as tier II cap­i­tal in mi­cro­fi­nance in­sti­tu­tion Janalak­shmi Fi­nan­cial Ser­vices Pvt. Ltd, an erst­while mi­cro­fi­nance in­sti­tu­tion that is now a small fi­nance bank.

CDC’S other mi­cro­fi­nance bets in In­dia in­clude the likes of Equitas Hold­ings Ltd, Ujji­van Fi­nan­cial Ser­vices Ltd and Utkarsh Mi­cro Fi­nance Ltd.

It in­vested $16 mil­lion in Equitas in 2013.

Utkarsh raised $21 mil­lion in round of fund­ing led by CDC and Lok Cap­i­tal in 2014. In 2016, CDC par­tic­i­pated in Ujji­van’s Rs600 crore fundrais­ing. Equitas, Ujji­van and Utkarsh in Septem­ber 2015 re­ceived the Re­serve Bank of In­dia’s in-prin­ci­ple ap­proval to con­vert into small fi­nance banks.

swaraj.d@livemint.com

D. Arul­many, MD and chief ex­ec­u­tive of Ver­i­tas.

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