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The Bangalore-based MFI Ujjivan Financial Services, which recently raised Rs 128 crore, plans to use the funds to grow its asset book.
Mr Samit Ghosh, Managing Director, Ujjivan Financial Services, told Business Line that the MFI would use the additional capital to double its asset book to Rs 1,500 crore in the next three years.
“The successful fund-raising would also help us raise bank debts,” he said.
The fund-raising is significant as the MFI was able to attract two new investors — FMO (Netherlands Development Finance Company) and WCP Mauritius Holdings III (Wolfensohn Capital Partners) — besides existing investors who participated, he added.
Ujjivan's primary focus would be to “provide funding to existing customers”, said Mr Ghosh, adding that the MFI stopped lending during the crisis in Andhra Pradesh in October 2010.
Currently, the MFI has over a million customers across the country.
“We are very cautious and careful about lending to new customers, which happens only after a thorough check on their credit worthiness,” he pointed out.
Mr Ghosh said that banks were opening up slowly since August 2011, thanks to the regulatory changes brought in by the RBI.
Post the crisis in Andhra Pradesh in October 2010, funding from banks almost stopped, which caused a major liquidity problem to these MFIs.
With the crisis ruling out IPO even in the distant future, Mr Ghosh said that the MFI would also look at helping its early investors — both individual and institutional — who had provided seed capital to “exit through secondary sales and bring in liquidity for them”.
This would help attract fresh investors to the company as it would ensure a way out for investors other than IPOs.
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