TPG Leads $210-m Fund­ing in Janalak­shmi Fin Ser­vices

Mi­crolen­der will use pro­ceeds to drive cus­tomer ac­qui­si­tion & build upon cur­rent prod­uct of­fer­ings

The Economic Times - - Disruption: - Biswarup.Gooptu @times­

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.

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