Exclusive: Microlender Sambandh raises funds from Singapore investor

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Microfinance institution (MFI) Sambandh Finserve Pvt. Ltd has raised $2.5 million (Rs 17.2 crore) from Singapore-based Base of Pyramid Asia (Bopa), which invests in small MFIs in Asia, Deepak Kindo, managing director and chief executive of the microlender, told VCCircle.

This is Bopa’s first investment in India. It had earlier invested in Vietnam, Cambodia, Timor Leste (East Timor), Myanmar and Kazakhstan.

Sambandh will use the funds to expand operations in the geographies where it operates — 20 districts across Odisha, Chhattisgarh and Jharkhand — as well as foray into new geographies. Besides, the funds will be used to bring in new technologies to streamline the microlender’s operations.

The microlender, which started operations in 2006, provides financial products and services to low-income, marginalised and indigenous communities.

As on March 2018, Sambandh had 48 branches, 140,000 customers, and assets under management of Rs 235.5 crore.

Sambandh had raised its first round of funds from social impact investor Dia Vikas Capital Pvt. Ltd in 2010, according to VCCEdge (www.VCCEdge.com), the data and research platform of News Corp VCCircle. Two years later, Small Industries Development Bank of India (Sidbi) had also come in as an investor.

Both the investors are still locked in the company and did not participate in the current round, said Kindo.

The two investors had made an investment earlier in March this year, Kindo added, without disclosing the amount.

Microfinance sector
The microfinance industry, which is cash-dependent, had suffered a jolt when the central government abruptly banned high-value banknotes in November 2016. But it has recovered since then.

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The gross loan portfolio of the microlenders grew 50% from a year earlier to Rs 48,094 crore at the end of March 2018, according to the report by Microfinance Institutions Network.

Many Indian microlenders have raised private equity and venture capital money over the years. The segment has also seen some merger and acquisition activity.

In November last year, Centrum Group had agreed to acquire FirstRand Bank’s India microfinance business. In the following month, IndusInd Bank closed the acquisition of Bharat Financial in a stock deal.

Meanwhile, microlender Spandana Sphoorty Financial Ltd, which was one of the worst hit by an Andhra Pradesh ordinance rolled out in 2010 to regulate micro-lending, has filed its draft prospectus with the Securities and Exchange Board of India (SEBI) to float an initial public offering.

 

Source: VC Circle

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