India MFI investments: British International Investment and others to pump in $25 million in Light Microfinance

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In one of the biggest investment in microfinance space in recent times, the British International Investment along with existing investors Incofin Investment Management, Nordic Microfinance Initiative (NMI) and Dutch impact investor Triple Jump will put in about $25 million, or Rs 196 crore, in Ahmedabad-based Light Microfinance, which has made strides over the past few years.

British International Investment, the development financial institution of the UK government, will be investing $9.2 million in the NBFC-MFI. In parallel, NMI will raise its holding by another $7.9 million investment while Triple Jump will put in $5.4 million and Incofin $2 million, people familiar with the development said.

These three existing investors came on board between 2020 and June 2021 with a cumulative $10 million investment.

“We plan to use the proceeds of the fresh investment in geographic expansion, new products and to boost our technology backbone,” managing director Deepak Amin told ET.

Founded in 2009 by Amin, Rakesh Kumar (chief executive office) and Aviral Saini (chief financial officer), Light is planning to explore Uttar Pradesh, Himachal Pradesh and Odisha for expansion beyond its existing operations in Gujarat, Rajasthan, Madhya Pradesh and Haryana.

It also plans to invest in multiple technology interventions as it looks to ramp up its digital lending initiative as well as other technology-based interventions such as artificial intelligence-driven analytics platforms and mobile applications.

Amin said that there could be follow up equity expansion this financial year itself. “Several other investors were keen to invest. We may raise more money if we get the right investor,” he said.

The lender is also talking to some fintech firms to explore acquisition possibilities. “We have received feeders from several fintech firms and we are talking to some of them selectively,” Amin said.

The lender, which had its assets under management (AUM) at Rs 1060 crore at the end of March, aims to grow its book to Rs 1800 crore by March 2023. At present, its AUM stands at Rs 1300 crore, the company said.

The NBFC-MFI sector could grow between 20-30% year-on-year in FY23, India Ratings & Research said. “The disbursements are expected to pick up for the rest of FY23 post the slowdown seen in the first quarter,” the rating company said, adding that the growth would be backed by expansion of capital.

The NBFC-MFIs together have a collective portfolio of Rs 98000 crore, which constitutes 35% of the Rs 2.76 lakh crore microfinance universe at the end of June. Banks are the biggest contributors with 38% share while small finance banks, other non-banking finance companies and not-for-profit players contribute the rest.



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