Ujjivan to raise Rs 350 crore through PE route

Fund raised will be amongst the largest in the MFI space in recent times

Bangalore-based Ujjivan Financial Services, one of the highly-regarded microfinance institutions (MFI), is set to raise a record Rs 350 crore through the private equity route. This will surpass the Rs 320 crore PE funding that another Bangalore-based MFI, Janalakshmi Financial Services, raised in 2013-14. Ujjivan's latest fund raise will also surpass all its previous funding rounds put together.

Samit Ghosh, founder and managing director of Ujjivan Financial Services, confirmed to Business Standard about the fund raise. He said Rs 250 crore will be the primary infusion and the rest will be to provide part liquidity to the MFI's earlier investors. According to Microfinance Institutions Network's data, funding to non-banking financial companies and MFIs during FY14 grew 49 per cent compared to the previous year.

Ujjivan is also perusing the ways to work closely with a strategic player in the marketplace. "We are exploring options on how we can work with large financial organisations, but there will no equity infusion. The current round will be purely private placement and we should have clarity on the process in the near future," Ghosh, a respected MFI veteran, told Business Standard.

It is understood that the promoters will be diluted further in the fresh round. "I am already diluted to a single-digit level, but promoters holding significant stake is not how MFI business is run. The focus is on empowering the poor through proper structured lending and improving their livelihoods through financial inclusion," Ghosh added.

This move by Ujjivan comes hardly a few weeks after it reported healthy financials for FY14, during which 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. Ujjivan has services spread across 22 states through 350 branches serving 1.3 million active customers with a customer retention rate of 85 per cent.

"We are pleased that FY14 has been a golden year in the history of Ujjivan. It has balanced growth and profitability while enhancing portfolio quality and significantly reducing operating costs."
UJJIVAN'S KEY NUMBERS FOR 2013-14

• 1,409,969 customers;
• 22 states, 48 unbanked districts; 350 branches
• Rs 1,631 crore dues; Rs 6,974 crore disbursed
• 99.89% -plus repayment rate; pre-tax profit of Rs 83.81 cr
• Loan book for 2013-14 up 44% reaching Rs 1,617 crore