TPG Leads $210-m Funding in Janalakshmi Fin Services
Microlender will use proceeds to drive customer acquisition & build upon current product offerings
RAMESHRAMANATHAN Chairman, Janalakshmi Financial Services This latest round of capital will fuel further expansion of the products and services we offer and bring them to more families, businesses, and individuals
New Delhi: TPG has led a $210-million (about .₹ 1,400-crore) funding round in Janalakshmi Financial Services, as the global private equity major along with existing investors, double down on the country’s largest microfinance institution (MFI). The round, which has a mix of primary and secondary components, also marks the entry of new investors, whose names have not been disclosed. Other existing investors, including an investment fund managed by Morgan Stanley Private Equity Asia, Havells India, and Vallabh Bhansali, also participated in the latest round.
The microlender, which is the country’s largest in terms of gross loan portfolio, also did not provide details about the buyers and sellers involved in the secondary transactions, but said it had raised $150 million (about .₹ 1,000 crore) in primary equity financing, while an additional $60 million (.`400 crore) was raised through secondary transactions that would provide partial exits to existing backers. “The government and the Reserve Bank of India have been very constructive in pushing the agenda of broader financial inclusion. Janalakshmi is going to be a spearhead, and is a shining example of companies servicing a real need,” Puneet Bhatia, country head for TPG, told ET. The non-banking financial institution-MFI, which was founded in 2000 by former Citibank senior executive Ramesh Ramanathan, manages assets of over .₹ 10,500 crore and is among the country’s largest issuers of prepaid cards and micropensions.
The microlender operates under a two-tier structure in which a nonprofit section 8 company, Jana Foundation, holds the promoter’s shares, while a for-profit Janalakshmi, which raises capital from investors, is run as a financial services institution for India’s under-privileged.
Janalakshmi, which is currently present in more than 184 cities across 19 states, will use the proceeds from the latest round to drive customer acquisition and build upon current product offerings. Last September, it was among the 10 entities that received an in-principle license to form a small finance bank that can provide basic banking services like accepting deposuts and lending to unserved and under-served sections. “Our success depends on meeting the needs of our customers. This latest round of capital will fuel furt- her expansion of the products and services we offer and bring them to more families, businesses, and individuals,” said Ramanathan, chairman, Janalakshmi Financial Services. In January, it was reported that the Bengaluru-based microlender had raised .₹ 330 crore from British development finance institution CDC, its first funding round since receiving the in-principle license from RBI. “Funds managed by Morgan Stanley Private Equity Asia have invested in Janalakshmi since 2013. This is the third round of funding that we have participated in. During the tenure of this investment, Janalakshmi has developed as a leading institution focused on financial inclusion within the lower-income segment,” said Nirav Mehta, executive director of Morgan Stanley Private Equity Asia in India.