India: Aavishkaar Goodwell Completes Successful First Exit From Equitas.

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Sep 2010
Mumbai, India, September, 03 2010 - Aavishkaar Goodwell, a private equity fund for the microfinance sector in India, has made a partial exit from its investment in Equitas Microfinance.

Aavishkaar Goodwell has completed its first exit from its microfinance private equity portfolio in India. Earlier this year, it reached an agreement with Canaan Partners to make a partial exit of its stake in Equitas Microfinance. The transaction has now been completed, and this week Aavishkaar Goodwell distributed its first investment returns to its investors.

Equitas is one of the most impressive success stories in microfinance in India. The microfinance institution started operations in Chennai in late 2007. In early 2008, Aavishkaar Goodwell was the first institutional investor, at a time when it was still difficult for microfinance start ups to find equity investors. Today, Equitas provides microfinance services to more than 1 million clients across five states in India, and has a total outstanding loan portfolio of more than USD 160 million. Founded by a team of experienced finance professionals under the leadership of PN Vasudevan, Equitas has won acclaim for its exceptional growth and groundbreaking innovations in the areas of transparency, efficiency, and governance. Equitas has become the fastest growing startup MFI in the world, and has shown leadership in client focus, transparency, responsible lending practices and sector building initiatives. Equitas has also ensured that client impact is in its DNA, by capping profits and reducing interest rates for its clients when possible. Equitas also allocates part of its profits for social programs such as schools, food security programs and eye camps.

Aavishkaar Goodwell’s first round investment in 2008 of USD 1.5 mln has been catalytic in mobilizing additional equity capital for Equitas amounting to USD 40 mln in three additional equity rounds from a mix of social funds and mainstream private equity firms.

Equitas CEO Mr. Vasudevan expressed his appreciation: “Aavishkaar Goodwell has been one of our earliest supporters and Equitas has always valued them for their fair and supportive approach to partnerships.  They believed in us at a time when there were not many such people and not only invested in us but also gave us critical support, especially in areas like technology”.

Mr. Wim van der Beek, managing partner of Aavishkaar Goodwell commented: “We try to make a difference by supporting start ups and fast growing MFI’s and bringing them to the mainstream, while maintaining their social mission. When we invested in Equitas their plans were unparalleled, but we believed in the capabilities of Mr Vasudevan and his team to realize their plans. And they have achieved their ambitions, now touching the lives of over 1 million families and continuing to grow while serving their clients responsibly. With other mainstream investors on board, our initial task is completed. We are proud to be part of the Equitas success story, and will maintain a meaningful stake and continue to support their growth journey.”

The exit of Equitas is a first exit for Aavishkaar Goodwell, which started investing in 2007. The Aavishkaar Goodwell portfolio in India consists of 7 MFI’s, of which 3 are start ups. With this exit transaction, the fund’s managers have demonstrated that the social and economic value created in this sector can translate into an attractive investment proposition for equity investors seeking to realize significant impact and financial returns simultaneously. The exit to mainstream venture capital firm Canaan Partners underlines the confidence that mainstream investors have in microfinance as an investment worthy sector.

Aavishkaar Goodwell’s managers expect that the Equitas exit will accelerate their efforts to raise a second microfinance private equity fund for India of USD 80 mln, which is planned to have its first closing this fall. The fund is targeted at development banks, family offices, institutional investors and funds-of-funds. The team has hit the road with the new fund earlier this year, and has already received commitments from existing investors in the first fund.

 

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