Share Micro to raise Rs 100cr via bonds

Micro-finance company may see $2 mn investment from Vinod Khosla in his personal capacity

City-based Share Microfin Limited, a non-banking finance company which provides micro-finance to poor women, may see investment from Vinod Khosla, general partner of leading venture capital fund General Partner of Kleiner Perkins Caufield & Byers, into the company in a personal capacity.

The company will also raise close to Rs 100 crore through a bond issue in the next couple of months.

Speaking to Business Standard, Udaia Kumar, founder and managing director of Share Microfin, said: "The Rs 100-crore bonds would be lead managed by JM Morgan Stanley and the US Treasury would partially guarantee these bonds."

The company is in the process of getting rated by Crisil for the issue of bonds and these would come into the market in the next couple of months.

The US Treasury's participation in the bond issue is because of the role played by USAID which is one of entities backing the company. All projects that see the participation of USAID, will get part of their debt guaranteed by the US Treasury.

Kumar said that Vinod Khosla had visited their office and showed keen interest in investing about $2 million in the company because of the work they were doing.

"We are in talks with him. Vinod Khosla has invited me for talks and I will be meeting him in the US sometime in early May and am hopeful that the deal will come through," Kumar said. Khosla, in his recent visit to India, had talked about investing in companies that were involved in micro-finance.

The company, in the last financial year ended on March 31, 2004, had a capital outstanding of more than Rs 82 crore of the Rs 165 crore that it had disbursed.

This year it plans to disburse about Rs 257 crore to about four lakh women under the self-help group (SHG) policy. It will raise the required funds through the Rs 100-crore bond issue, through probable dilution of equity and also through loans from commercial banks.

The average cost of funds for Share Microfin will hover around 12 per cent this year and has come down from 13 per cent last year.

Share Microfin Limited which operates in three states "� Andhra Pradesh, Karnataka and Chhattisgarh "� plans to expand operations to Madhya Pradesh and Maharashtra. The company also promotes Asmitha Microfin Limited in Orissa.

"We have received invitations to set up offices in West Bengal, Rajasthan and Jharkhand and are exploring the possibilities of setting up our operations or having a franchisee there," Kumar said.

Share Microfin also has tie-ups with Life Insurance Corporation, ICICI and other insurance agencies for issuance of policies for their clients.

"We have started this about a year back and women have started to insure their holding or animal or go in for life insurance itself. This is moving slowly but the people who are realising its importance are going for it now."

Share Microfin, which started operating six years ago has more than three lakh clients today. The company provides loans to only women whose total family assets are less than Rs 20,000 and the per capita income is less than Rs 350.

"We give loans to women only because traditionally it has been proven that if the woman of the house gets the money, it helps everybody in the family. They continuously get support and help from us. They get an initial loan of Rs 5,000 to Rs 8,000 initially and once they repay this, they are eligible for higher amounts so that they can expand their business," Kumar explained.

Apart form this the company also helps them in choosing from about 178 listed business and provides training, support services and workshops.