Pune-based MFI, Suryoday Microfinance has raised Series B or second round of funding of Rs.17.5 Cr from Lok Capital and from its existing investor, Aavishkaar Goodwell.

As part of the current transaction, Lok has agreed to make a further infusion of Rs.3.5 crore which will result in a total primary issuance of Rs.21 crore.

The fund raised will be used to increase its loan book and to fund its expansion plans by opening more branches across Maharashtra and also plans to enter in other neighbouring states in the medium term.

Earlier, in March 2009, Suryoday has raised Series A funding of Rs.6 crore from Aavishkaar Goodwell.

Transaction Reference: Press Release

Suryoday Microfinance Pvt Ltd (Suryoday) commenced its micro-credit operations in Pune, Maharashtra in May 2009. It is led by a team of three ex-bankers - Baskar Babu, Ganesh Rao and V. L. Ramakrishnan - with combined experience at institutions like HDFC Bank, GE Finance, Cholamandalam-DBS and Development Credit Bank.

Suryoday currently has over 50,000 borrowers across Maharashtra and Tamil Nadu with a network of 25 branches. As part of its expansion plan for July–September 2010, the company will open branches in Bhubaneswar, Trichy; Mumbai, Barshi, Pandharpur, Kolhapur and Sangli in Maharashtra, taking its branch network to about 28, with a cumulative loan disbursement crossing Rs 54 crores to over 50,000 customers.

Yesterday, it received Rs.3.5 crore loan from MV Microfin Pvt Ltd, a Bangalore based Non-Banking Financial Company (NBFC). MV Microfin provides financial services for MicroVentures India which is specialized in the provision of debt financing to promising, well-managed and well-performing MFIs, to fuel their growth and outreach plans. Earlier in July MicroVentures also lent Rs.5 crore loan to SMILE Microfinance Ltd, an MFI operating in the southern State of Tamil Nadu.

Aavishkaar Goodwell India is a Indo-Dutch JV between Aavishkaar India Micro Venture Capital Fund and Goodwell Investments. It has made 7 investments in the India MFI space through its first fund. The size of the first fund is $18.3 Mn. Its portfolio includes Shree Pathrakali Finance Co., Suryoday Micro Finance and Bhartiya Samruddhi Investments among others.

Aavishkar is planning to raise $100 million for its second fund Aavishkaar Goodwell II which is a ten year closed ended PE fund. IFC is planning to invest upto $15 Mn in Aavishkaar Goodwell II. This fund will provide long term capital and active support to MFIs. It will also look to invest in IT and housing finance companies besides MFIs.

Lok Capital LLC is a microfinance venture capital fund. It provides equity capital and venture support to microfinance institutions to facilitate the delivery of affordable financial services, primarily to the low-income households in India. It has investments in Bhartiya Samruddhi, Asirvad Microfinance, Arohan Financial Services, Spandana Sphoorty and RuralShore Business Services.

For past few months, many MFI's have raised funds to fund their credit growth. SKS Microfinance raised $358 Mn through IPO after pricing the issue at Rs.985 per share; Swadhaar FinServe Pvt Ltd also raised Rs.27.5 Cr from Microvest and from its existing investors and Fusion Microfinance raised Rs.4.5 Cr From Incofin Investment.

Bangalore-based Grameen Financial Services Pvt Ltd (Grameen Koota) has also planned to raise Rs.80 Cr-100 Cr to fund its credit growth.

RBI concerned with the money being poured in this sector by Indian and foreign based PE Funds is planning to set a mechanism to keep a tab on MFIs. It is also planning to setup a credit bureau for MFIs.

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