Bangalore-based microfinance company Janalakshmi Financial Services has raised Rs 1,000 crore by issuing fresh equity shares to a group of investors led by global private investment firm TPG, as the country’s biggest microfinance institution by gross loans gears up to convert into a small finance bank (SFB).
Other existing investors, which participated in the latest round, include Havells India, Vallabh Bhansali and an investment fund managed by Morgan Stanley Private Equity Asia, the company said in a release on Monday.
The small finance bank (SFB) licencee also announced that several existing investors have sold a part of their stake valued at Rs 400 crore.
Post the capital raising exercise, its promoter and chairman Ramesh Ramanathan said, “We are delighted to successfully close the transaction. Working alongside our investors, who truly share our vision and passion for transforming the lives of the financially underserved, we will build a stronger India through each loan we make.”
In September 2015, the Reserve Bank of India (RBI), as part of its objective to further financial inclusion, had granted in-principle approvals to 10 entities (from among 72 applicants) for setting up SFBs.
While the central bank hasn’t put any restriction on the area of their operations, it has mandated that at least 50% of an SFB’s portfolio should constitute loans and advances up to Rs 25 lakh and that at least 75% of their exposure should be to the priority sector.
Since the RBI has set a deadline of April 2017 for SFB licencees to start operations, most of them are working overtime to get their capital structure in place.
As per RBI guidelines, SFBs have to adhere to the FDI policy for private sector banks so far as foreign shareholding is concerned. However, foreign shareholders hold a majority stake in most of these companies.
Foreigners, for instance, had 68.87% stake in Janalakshmi Financial Services as of FY15.