India: Ujjivan Raises Rs 94 cr (USD 18.9 ml) in 4th Round Funding

Nov 2008
Chennai, India, November, 21 2008 - Ujjivan Financial Services, the Bangalore-based microfinance institution focusing on the urban and semi-urban poor, has completed the fourth round of equity infusion by raising Rs 94 crore. Originally planned for Rs 75 crore, the equity round was oversubscribed.

The incremental capital was largely subscribed by existing shareholders including Unitus Equity Fund (UEF) managed by Elevar Equity, Bellwether Microfinance Fund, Michael & Susan Dell Foundation, A W Holdings and individual investors including promoter & CEO Samit Ghosh.

The five new investors in this private placement transaction will include: Sequoia Capital, Lok Capital, Unitus Equity Fund II, India Financial Inclusion Fund and SIDBI.

This will increase Ujjivan’s paid up capital and reserves to over Rs 108 crore. Ujjivan will be the fourth highest capitalised microfinance institution in India. The capital will be used for the company’s major expansion plans for the next one year and to meet the enhanced capital adequacy norms set by the Reserve Bank of India. Grameen Capital India was the exclusive Equity Advisor for this transaction.

Speaking on this transaction, Samit Ghosh said, “Ujjivan has expanded the institutional investor base to create a balance between social and market driven private equity investors to ensure that its social mission is not diluted and at the same time it can maintain the ambitious growth plans. The support of these investors all through this transaction even under these challenging times is a testament to the future of microfinance industry in India.”

A unique feature of this deal was that Ujjivan, in collaboration with Bellwether Microfinance Fund and UEF, was able to offer its individual investors liquidity by offering to buy out part or whole of their investment in Ujjivan and register good value on their investments.

This is the first time a microfinance institution has been able to offer a market determined exit to individual investors and will go a long way to create a secondary market for shares of microfinance companies.

S Viswanatha Prasad, managing director, Bellwether Microfinance Fund and Caspian Advisors, said, “creating a secondary market for microfinance institutions’ stock is one more critical step in integrating MFIs to capital markets and in some sense reflects coming of age of this asset class”.


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