Caspian investee Equitas Holdings closes a highly successful IPO!

Equitas Holdings, a Chennai based diversified financial services player that provides small ticket loans to individuals and micro enterprises closed a highly successful IPO on 7^th April, 2016. The company has three business verticals which include microfinance, commercial vehicle finance and housing finance.

The IPO issue got subscribed more 17 times even though Foreign Institutional Investors were not allowed to participate. This is possibly the largest ever domestic only IPO issue and is the first ever issue of a Small Finance Bank licensee.

Caspian was one of the earliest investors in Equitas, way back in 2008 and had made a series of investments over the years from its two funds – Bellwether Microfinance Fund (Bellwether) and India Financial Inclusion Fund(IFIF). At the time of the IPO, Caspian’s IFIF was the third largest shareholder in the company. As a part of the IPO, Caspian exited a part of its holdings in Equitas. It will continue to hold a small stake post the IPO.

It is also worth mentioning that as a part of Caspian’s impact assessment initiatives, Equitas Holdings underwent GIIRS rating process and received a Platinum and 5 Stars ratings for social and environmental measures, the highest ratings available under GIIRS. GIIRS is a ratings platform for impact investing that provides comparable social and environmental performance data on high impact investment funds and companies seeking investment capital.

For further on Equitas IPO, please read news article.

Caspian investees get in-principal approval to set up Small Finance Banks.

On 16^th September 2015, the Reserve Bank of India (RBI) announced the list of selected applicants who have won the in-principal approval to set up Small Finance Banks.

The RBI has come out with two different sets of differentiated banking licenses in the recent past. With the Payment Bank licenses issued last month and the Small Finance Bank licenses issued earlier this week, the financial inclusion sector in India is up for a big transformation.

Three of Caspian equity investees (Equitas, Janalakshmi, Ujjivan) and a total of seven Caspian portfolio companies (equity and debt investees) have got the approvals in this round.

While Caspian was one of the earliest equity investors in Ujjivan, Janalakshmi and Equitas from its equity funds- the Bellwether Microfinance Fund and India Financial Inclusion Fund (IFIF), it has also extended debt to four of the remaining seven selected companies from Caspian Impact Investments (CII), the third impact fund set up and managed by Caspian.

Caspian Impact Investments crosses INR 200 Crores in disbursals!

Caspian Impact Investments (CII), the multi-sector debt fund managed by Caspian Impact Investment Adviser (Caspian), has crossed INR 200 Crores in disbursals. This marks an important milestone for the fund and also validates the need for CII.

CII is the third fund set up and managed by Caspian with the mandate of providing debt to enterprises reaching out to the underserved segments in India. Caspian had earlier set up and managed the Bellwether Microfinance Fund (Bellwether) and the India Financial Inclusion Fund (IFIF). Through these funds, Caspian made a number of key investments in the form of debt and equity and helped in shaping the financial inclusion sector as we know it today. Currently, CII funds food & agribusiness SMEs (Producer Owned and Entrepreneur Owned), microfinance, small business finance and affordable housing finance institutions as well as affordable housing builders. CII plans on entering the healthcare sector in the near future.

Since its inception in 2013, CII has disbursed more than 50 loans across food & agribusiness, financial inclusion and affordable housing sectors with an average ticket size of about INR 4 Crores. CII can do both secured and unsecured loans of up to INR 9 Crores. The fund has the ability to make plain vanilla monthly instalment based loans as well as loans with flexible repayment schedules. This flexibility makes the loans offered by CII very attractive to high growth businesses, especially the food & agribusiness SMEs which tend to have a seasonal operations. The tenor of loans offered by CII range between 6 months to as long as five years.

CII has forged strong partnerships with several international financial institutions who have chosen Caspian as a partner in India. CII has a knowledge and risk sharing partnership with the Rabo Rural Fund for the agribusiness SME portfolio. In addition, the Rabobank Foundation provides guarantees for CII loans to Producer Owned Organisations. This knowledge partnership will enable Caspian to strengthen the extensive research that it does on each sector that it lends to.

In March this year, CII raised funding of USD 20 Million from the US Government’s development finance institution, Overseas Private Investment Corporation (OPIC), USA. The initial investors in CII include reputed development finance institutions and investors like Gray Ghost Fund, Triodos and FMO.

Frequently Asked Questions-CII

Here are some frequently asked questions on Caspian Impact Investments (CII), if you can’t find the answer here, please feel free to contact us at http://www.caspian.in/contact-us.html.

What is Caspian Impact Investments?

Caspian Impact Investments (“CII”), is an Indian multi-sector social impact debt provider that invests in institutions across sectors with a view to enable positive development impact. Currently, CII focuses on four sectors: Food & Agriculture, Microfinance, Small Business Finance and Affordable Housing (Finance & Developer). You can learn more about CII, here: http://cii.caspian.in/

CII is the third fund managed by Caspian Impact Investment Adviser Private Limited (“Caspian”). Caspian manages two other funds “Bellwether Microfinance Equity Fund” and “India Financial Inclusion Fund”. For more details on Caspian, please visit: http://www.caspian.in/

Why CII?

CII recognises that one of the key challenges that all early and growth stage businesses face is the lack of access to appropriate finance based on the needs of the business. CII was set up with the mandate to address that gap for specific sectors.

Our team has combined experience of 60 years in making successful debt and equity investments in early and growth stage businesses. CII was set up to leverage this experience to provide debt to high quality organisations across the focus sectors mentioned above.

In order to ensure that all investment decisions are backed by sound understanding of the underlying business, CII also leverages the understanding of a network of experienced practitioners, advisors and specialised partner organisations. All clients of CII client benefit directly or indirectly from the experience and the networks that we have.

We focus on the unique needs of each high quality business and provide a largely customised solution that is structured to help the business grow. Unlike a broker or service facilitator, we invest our own funds in the businesses and hence our success is measured by the success of the businesses we lend to.

What kinds of businesses does CII support?

CII supports growing India based for-profit businesses across a range of sectors which currently include financial institutions (microfinance, small business finance, affordable housing finance and financial inclusion enablers), affordable housing developers and food & agribusiness institutions.

We consider the following legal entities;

• Private and Public Limited companies
• Co-operatives and Producers’ Companies

Given that the minimum ticket size of the loan that CII makes is INR 10 Million, the business has to have appropriate turnover (typically more than INR 50 Million) to justify a loan from CII.

 Which kinds of business or sectors does CII NOT support?

CII does not invest in not-for-profit organisations (NGO’s) (Note: CII can support non-profits only in the microfinance sector) or proof-of-concept or R&D programs. We also do not support any businesses which do not comply with applicable environmental, legal and social requirements as detailed in our ESG (environmental, social and governance policy).

What are CII’s main criteria for investment?

CII supports businesses that have a proven ability to generate enough cash flow to service all debt obligations while being financially sustainable for all its stakeholders. We look for ethically sound entrepreneurs or business owners who are committed to the business and have the relevant skills, experience and/or track record to run their business.

We look for businesses that have a well-defined governance structure and a clear intent to track and deliver social returns in addition to the financial returns.

We prefer companies that have external investors and a strong Board. In case of Producer Owned Organisations, a strong track record and/or a strong promoting organisation is preferred in addition to a strong professional management.

What type of finance does CII provide?

CII provides debt and structures the loans based on the unique needs of the business.

The loan funds can be used to:

• Grow the business or a new product line
• Invest in assets related to the business

How much financing will CII provide and  for how long?

CII will make a loan between INR 10 million to INR 70 million.

CII designs a suitable loan structure and repayment structure which is based on the unique needs of the business. Typically we invest in a business for a tenor of 1 to 3 years. In some cases, we may decide to take a five year exposure.

How to apply for finance?

To apply for finance please visit http://cii.caspian.in/apply-loan.html

Will CII ask for collateral?

Collateral will always be considered in any lending process and not just in CII’s case.

CII is modelled to be a specialised lender for early and growth SMEs and our experience allows us to identify and manage risks associated with investing in such businesses. Our decision to lend is based primarily on the ability of the business to generate cash flows and the quality of the promoters. Collateral is an important but a secondary consideration.

It is important to note that if an applicant has little or no collateral but has the required expertise or experience and we are comfortable with the reasons why the applicant can offer no collateral, CII will still consider investing in such a business as it has done so many times in the past.

We make an assessment of the collateral availability in the following two ways. Firstly, if someone has been in business or working for many years and has not build up assets we would want to understand why this is the case. Lack of assets may be an indication of weak business track record.

Secondly it is also a strong indicator of commitment. If someone has collateral and is not prepared to pledge this collateral we may be hesitant to invest as this suggests that the entrepreneur or business owner/s don’t believe in their own business plan and its chances of success.

In summary, CII is prepared to invest in a business even if it does not have collateral as long as the quality of the entrepreneur and the viability of the business is not in question. CII will never invest in a business where viability of the business is not evident even if there is adequate collateral available.

Does CII invest in equity?

No. CII is a debt fund managed by Caspian. Caspian does manage other funds that invest in equity but the criteria and focus sector vary depending upon the fund. For further details on Caspian, please visit: http://www.caspian.in/

If you have further queries, please feel free to contact us at http://www.caspian.in/contact-us.html.

Janalakshmi raises funding from TPG and existing investors

Janalakshmi Financial Services Pvt Ltd, a microfinance institution based in Bangalore, has raised an undisclosed amount led by global private equity major TPG Asia SF Pte Ltd and from existing investors including Alpha TC Holdings, a fund backed by Mizuho Securities and managed by Tata Capital, among others. For further details, please click read.

Janalakshmi is an investee company of Caspian. To read more about how Caspian contributed towards Janalakshmi’s growth, please read: Understanding Our Impact.

Equitas raises $53M led by DEG and Creation Investments

Chennai-based microfinance and micro-housing finance company Equitas Holdings Pvt Ltd (formerly Equitas Micro Finance India Pvt Ltd) has raised Rs 325 crore ($52.5 million) from a consortium of six investors.

The funding round was led by two new investors—German development finance company DEG, which brought around Rs 100 crore, and impact investment firm Creation Investments (Creations). For further details please read.

Equitas is an investee company of Caspian.

Caspian Launches Indian Debt Vehicle Focused on Impact Sectors

Caspian Advisors Private Limited announced the launch of Caspian Impact Investments (CII) with USD 10 million of committed investments from FMO, Triodos Doen and Hivos-Triodos Fund, Gray Ghost Microfinance Fund, promoters Caspian, and local Indian investors. The targeted fund size is USD 40 million. CII is an Indian local vehicle that will provide debt capital to a wide range of institutions serving low-income or financially excluded communities. The initial focus will be businesses in the Microfinance, Small Business Financing, Affordable Housing and Food & Agriculture sectors. This will be the third fund launched by Caspian Advisors Private Limited, with prior funds totaling USD 120 million in assets at the Funds’ respective closings.

In India, the current supply of debt to social impact enterprises is scarce. CII seeks to invest in specialized intermediaries that support these impact enterprises, building the capacity and resources of these institutions and their clients, helping to promote the growth of social enterprises in India and enabling social entrepreneurs to scale their businesses without depending entirely on equity capital or debt funding from banks, which are primarily driven by priority sector or directed lending considerations.

The investors have extensive experience both with Caspian and impact investing: FMO and Triodos Investment Management of the Netherlands are among Europe’s most experienced impact investors and the Gray Ghost Microfinance Fund of the United States is a pioneering global fund of funds with expertise in microfinance and impact investing. They were also founding investors in Caspian’s first initiative, the Bellwether microfinance equity fund which was launched in 2005 as the first fund focused on the Indian microfinance sector. This fund is now fully invested. These lead investors share the goal of providing responsible finance that drives social and environmental as well as financial returns.

The Fund will also collaborate with Dutch NGO Hivos through the ProCif program that is aimed at improving the ability of producer organizations in the Food & Agriculture sector to access debt from this Fund. In addition, FMO will provide technical assistance to the Fund for Research and Development of the Food & Agriculture portfolio.

“As investors in both Caspian’s previous funds, we are very familiar with the lead role that the team has played in developing the microfinance and impact investing space in India. CII uses the team’s considerable skills and experience to good advantage to address a critical gap between capital providers and several of the most important sectors addressing pressing social needs,” said Paul DiLeo, Gray Ghost Microfinance Fund.

According to Dirk Elsen, Director Emerging Markets at Triodos Investment Management, “Our investment in CII very well fits with our aim to contribute to the further development of inclusive financial services in emerging markets as well as pursuing a broader impact investing agenda, particularly in the Food & Agriculture sector. Many who are active in this sector – small-scale farmers but also rural SMEs – still remain excluded from financial services. CII wants to change this.”

“For smaller institutions that are providing Microfinance, Small Business Finance, Housing Finance and Agricultural, access to debt financing is still limited. By providing these entities with debt, CII adds value and creates impact,” added Anneloes Mullink, Investment Officer at FMO.

“While there are several funds that are either already investing or looking to invest in impact enterprises in India, most funds today are offshore and focused on equity due to the significant challenges facing non-resident investors providing debt. CII offers impact investors an opportunity to reach these social enterprises and extend their impact,” said S. Viswanatha Prasad, Founder and Managing Director of Caspian Advisors.

Equitas Holdings raises Rs 140 crore from IFC

Equitas Holdings Pvt Ltd, a leading, Chennai-based microfinance and micro-housing finance company, has equity capital of Rs 140 crore.

IFC, Washington, the arm of the World Bank that gives equity and debt funds to private sector companies, has put in Rs 90 crore. Microventures and India Financial Inclusion Fund, both existing investors of Equitas, have together invested the other Rs 50 crore.

Spark Capital was the financial advisor to the transaction.

Equitas Holdings recently diversified into financing for used commercial vehicles (Equitas VF) and affordable housing (Equitas HF) through wholly-owned subsidiaries. The equity capital raised would be used to capitalise the three subsidiaries and grow the respective businesses. Equitas VF and Equitas HF commenced business in June 2011 and are in the process of scaling up their network and operations. Equitas operates its three businesses through more than 350 branches across nine States and has an outstanding loan portfolio of Rs 1,125 crore. Equitas has a borrower base of 1.3 million across five States.

Equitas Holdings has already been invested in by a set of marquee investors including CLSA, Sequoia, Aavishkaar, SIBDI, Canaan Partners, Aquarius and Helion Ventures.

“The reach of microfinance within the country continues to be limited with most of India´s population having limited or no access to financial services,” said Thomas Davenport, Director for IFC South Asia. “We will work with Equitas to promote a more balanced growth of microfinance in India by supporting an institution that promotes responsible financing.”