The Hindu Business Line : Bellwether Microfinance Fund to invest $1.5 m in MAS Financial

New partnership
Investment aimed at facilitating MAS enlarge its commercial micro-finance portfolio
With this, BW contributes to 45 per cent of MAS' risk capital.

Hyderabad , July 24

Bellwether Microfinance Fund (BW), the micro-finance venture capital fund with an existing corpus size of $10 million, has announced an investment of $1.5 million in the Ahmedabad-based Rs 100-crore non-banking finance company — MAS Financial Services Ltd.

An agreement to this effect was signed by the BW Co-Founder and Fund Manager, Mr S. Viswanatha Prasad, and the MAS Managing Director, Mr Kamlesh Gandhi, here on Monday.

Addressing a press conference, Mr Prasad said the investment was aimed at facilitating MAS enlarge its commercial micro-finance portfolio. With this, BW contributes to 45 per cent of MAS' risk capital.

According to Mr Gandhi, MAS, with 11 years of existence, has a significant presence pan-Gujarat in commercial micro-finance, personal and commercial vehicle loans. Through its alliance with BW, the NBFC aims to build its micro enterprise-lending portfolio making it more than 75 per cent of its portfolio in the next five years.

MAS is the first NBFC that is downscaling its operations to target the micro-finance segment, he said.

Investment in India

Stating that this is the 10th investment that BW has made in India in the last 14 months with an aggregate investment of $6 million, Mr Prasad said the venture capital fund is currently at an advanced stage of negotiations with certain major fund houses for raising its corpus size to $20 million.

The Netherlands-based Hivos-Triodos Fund and the US-based Gray Ghost Microfinance Fund are the major investors in BW at present, he said.

He said BW has a long-term view of 15 years for its investments in India and proposes to stay invested in each of the MFI ventures for at least 4-7 years.

Exit route options

On the exit route options available for BW, Mr Prasad said the MFI ventures financed it by could tap the equity market or large global fund houses could buy BW's investments or the MFIs could evolve into larger entities through mergers and acquisitions attracting the commercial banks to buy these MFIs at later stage.

Going forward, BW intends to partner with several NBFCs such as MAS and build them into successful micro-finance distribution vehicles, he said.

MFIs need to run like any other businesses to maximise the stakeholders' value, Mr Prasad said, adding that the Indian micro-finance market is one of the largest in the world with a projected demand of Rs 40,000 crore of debt capital per year.

Given the size of the market, there is a need for many more MFI players, he said, adding that it was the objective of BW to promote professional MFIs that adopt a strategy that spells large-scale growth of the sector.

In its pursuit, BW not only brings in capital but also operating expertise into creating scalable MFIs.