The re-capitalization of MFI sector is in full swing. Now IFC invests Rs135 Cr into Bandhan Financial Services for 11%. This has been going on since Jan

Earlier SIDBI had bought into the MFI in 2009 a 10.81% for $10.7 MM. The latest round take the micro finance institution’s net worth to close to Rs 510 crore from Rs 377 crore at the end of March 2011.

There’s some speculaltion that the strategic investment that managed to cross Rs500Cr net worth could be a precursor to a push for banking license. If this happens, it will be fulfillment of RBI’s (I think) plans of clearing the MFI sub-prime into organized priority sector lending type ‘sustainable banking’ model.

The money will be utilised for Bandhan’s business expansion.
Bandhan also plans to raise Rs 2,400-crore debt this fiscal, 43% higher than what it raised in 2010-11, to grow business.

Bandhan was valued at between Rs 1,050 crore and Rs 1,215 crore before IFC’s investment.

The context for this deal, that of Andhra Predatory Lending curbs and resultant default rates, leading to need for re-cap is well known.

If MFI's follow the good advice given by Barclay's Nigerian MFI turned bank boss on 'the banker lifestyle', next round of MFI disaster could be averted, otherwise one more round of US style SLA rout.

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KVEZAR VIEW

  DEAL TRACKER FOR

Date	Transaction	Type	Buyer	Size ($mn)
06/09/11	Bandhan Financial - IFC	Private Equity	International Finance Corporation	29.27
23/12/09	Bandhan-SIDBI	Private Equity	Small Industries Development Bank of India	10.70

 

  Recent Transactions In The Sector

Date	Type	Buyer	Target	Size ($mn)	State
07/05/12	Private Equity	International Finance Corporation	Ujjivan Financial Services Private Limited	9.35	Planned
07/05/12	Private Equity	International Finance Corporation	Equitas Holdings Private Limited (Formerly Equitas Micro Finance India Private Limited)	18.70	Planned
18/04/12	Private Equity	Looking For	Janalakshmi Financial Services Private Limited	9.65	Planned
16/04/12	M&A	Basix Group	Unknown Asset	-	Planned

 

  Profiles

Fund
Name	Corpus	Target Sector	Website	KeyContact
International Finance Corporation		Micro Finance Infrastructure Energy	www.ifc.org	Anup Kumar Agarwal

Company
Name	Promoters	Office	Competitor	Website
Bandhan Financial Services Private Limited	Chandra Shekhar Ghosh	EC-76,SECTOR-1,SALT LAKE CITY KOLKATA - 700064 West Bengal	Bhartiya Samruddhi Finance Limited SKS Microfinance Limited	www.bandhanmf.com

  Advisor

Intellectual Capital Advisory Services Private Limited