According to information available from multiple investment banking sources, a leading development finance institution based in the United Kingdom is expected to lead the round, besides the existing investors coming in again.
Investment bankers further add while there will be a primary infusion of Rs 300 crore, the rest will be for secondaries, where some of the earlier investors in Ujjivan will be making a partial exit.
Also Read
| WHY NVESTORS ARE BACKING |
|
As and when Ujjivan clinches the deal to raise a record Rs 600 crore this year, it will mark the second such transaction within a period of a couple of months.
Janalakshmi Financial Services, another leading MFI based in Bengaluru, recently clinched a Rs 600-crore private equity transaction in which global PE giant TPG led the round.
Samit Ghosh, founder and managing director of Ujjivan Financial Services, declined to comment on the impending transaction.
According to Microfinance Institutions Network's data, funding to non-banking financial companies and MFIs during the present fiscal grew 49 per cent compared with the previous year.
CARE Ratings in a recent report said the microfinance sector was entering a phase of relative stability after going through three broad risk phases.
Explaining the rationale, CARE Ratings said:"The overall credit profile of the MFIs has shown improvement with improving profitability, stable margins on account of removal of interest rate cap and control in operating expenses.
The players in the sector are also adequately capitalised with overall gearing increasing moderately in spite of good growth in the loan portfolio in the previous fiscal.
Overall gearing has been at comfortable levels mainly on account of equity infusion from the private equity investors post the crisis in Andhra Pradesh."
JP Morgan and Global Impact Investing Network in their research said investment into social impact space was likely to increase globally, with South Asia and Southeast Asia among the top regions likely to attract a major share.
Intellecap, an advisory firm focused on social enterprises, said $1.6 billion of capital has been invested in 220 impact enterprises across India, with half of it in microfinance. Unitus Capital, an impact investment-focused investment bank, expects impact equity investments in India to grow 30 per cent this year.
In its recent report, Intellecap added the microfinance sector alone has been able to attract $225 million in follow-on capital involving only mainstream PE and venture capital investors in later rounds, indicating the sector's ability to attract mainstream capital without the support of impact funds.
Cumulatively, the microfinance sector saw total investments of $458 million from mainstream venture capital and PE investors in the first round and follow-on deals.
Ujjivan has been showing a healthy for the past few years and in the present fiscal, it grew its loan book by 44 per cent reaching Rs 1,617 crore and achieving a pre-tax profit of Rs 83.81 crore.
Its services are spread across 22 states through 350 branches serving 1.3-million active customers with a customer retention rate of 85 per cent.