Indian microfinance institution Ujjivan raises $25.5m

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Indian microfinance institution (MFI) Ujjivan Financial Services has raised INR28bn ($25.5m) in its fifth round of equity funding.

Ujjivan is one of India’s largest urban poor-focused microfinance institutions, and serves over a million clients in 20 states including 49 under-banked districts across the country.

The round attracted commitments from new investors Netherlands Development Finance Company (FMO) and Wolfensohn Capital Partners, which commmitted INR326m and INR400m respectively.

Existing investors Lok Capital, India Financial Inclusion Fund, Sequoia Capital, Mauritius Unitus and Elevar Equity also participated in the round, investing respective amounts of INR100m, INR200m, INR100m, INR25m and INR125m.

The round, which follows a previous tranche in 2009, will bring Ujjivan’s total capitalisation to INR2.3bn ($47m) Kotak Investment Banking advised on the transaction.

The additional capital will help increase the loan book from the current INR6bn ($122m) to around INR16bn ($325m), given the Reserve Bank of India’s 15 per cent capital adequacy requirement for NBFC-MFIs.

“When we look for large MFIs which are truly client centric, transparent, have good systems, great leadership, and are sincere in its social objectives, Ujjivan is the only MFI which comes to mind. Our investment thesis is built around making it the borrower of choice for the base of the pyramid, across the country,” added Venky Natarajan, a managing partner at Lok Capital.

Lok Capital is a Mumbai-based social investment firm focused on providing micro finance institutions with management expertise and operational best practice. Last week the firm closed its second fund with commitments of $65m.

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