SMBC Asia Rising Fund, a corporate venture capital fund co-founded by Japan’s Sumitomo Mitsui Banking Corporation, has acquired a 4.99 per cent stake in Shivalik Small Finance Bank, the only small finance bank in India to have evolved from a cooperative entity.
The fund invested $7 million (approximately Rs 60 crore) for the stake, valuing the bank at about Rs 1,200 crore, Shivalik’s Managing Director and CEO Anshul Swami told ET.
Existing investors contribute Rs 40 crore in pro-rata participation
According to the report, the existing investors of Shivalik such as Accel, Quona, Lightspeed and Sorin Investments have also participated in this round, contributing a combined Rs 40 crore on a pro-rata basis. This brings the total equity raised to Rs100 crore.
“The fresh equity will be used as growth capital,” Swami told the publication. “We are building a strong digital foundation to serve the MSME and retail customers across Bharat.”
Fresh capital to strengthen technology, product, and operations teams
He further added that capital raised will be utilised to strengthen the bank’s technology stack and expand its workforce across critical functions such as product, engineering, and operations.
Furthermore, Rajeev Ranka, Partner at SMBC Asia Rising Fund, told ET that the fund seeks “partnerships with regulated entities that can enable our portfolio companies to collaborate and co-create products.”
This marks Shivalik’s third equity raise since becoming a bank. In June last year, it secured Rs 100 crore from global venture capital firm Lightspeed and Sorin Investments, founded by Sanjay Nayar, with additional contributions from existing investors Accel India VII (Mauritius) and Quona Accion Inclusion Fund III.
Currently, institutional investors together have a 29.31 per cent interest in the bank while the promoters hold around 40 per cent. The balance is with retail investors, who are mostly old cooperative members. The bank is not listed on the stock exchanges.
The fresh capital will raise the bank’s capital adequacy ratio from the current 19 per cent to 24 per cent and help drive its targeted business growth of 35-40 per cent this fiscal. For SMBC Asia Rising Fund, this marks its sixth investment in India.
Swami added that, along with organic growth, the bank’s management is also considering acquisitions to accelerate expansion. “We are open to acquiring a small entity in the affordable housing finance space or in the secured MSME lending space,” he said.