Private Equity News & Analysis

CLSA invests $24m in Indian microfinance

Equitas Micro Finance India will use the investment from CLSA Capital Partners to grow its network of branches across the country.

-
CLSA Capital Partners, the alternative asset management arm of investment bank CLSA Asia-Pacific Markets, has invested $24 million for an undisclosed minority stake in Equitas Micro Finance India, a Chennai-based microfinance institution. 
The investment has been made through the purchase of newly issued equity shares. Following the deal, CLSA Capital Partners has a seat on the board of Equitas with minority rights, a firm spokeswoman told PEI Asia.
Established in 2007, Equitas provides microcredit to low income households in India. It currently has a loan portfolio of almost $130 million and serves more than 900,000 customers from across 150 branches in the states of Tamil Nadu, Andhra Pradesh and Maharashtra. 
The additional capital will be used by the company to expand its operations through the opening of new branches in other parts of the country, to enhance its equity capital and to grow its loan book. 
The microfinance sector in India has developed into a successful and sustainable business model which drives financial penetration to the underprivileged strata of society, Christopher Seaver, chief executive officer of CLSA Capital Markets, said in a statement. 
“Despite the unprecedented growth in this sector during the last five years, there remains considerable, unmet demand in the market,” he added. 
The investment has been made from the $333 million ARIA Investment Partners III, a pan-Asian fund making growth capital investments. The fund has now made nine investments and this is its third investment in India, the spokeswoman said.
Some of the other investments from ARIA Investment Partners III include Fulltech Fiber Glass, a Taiwanese fibreglass yarn manufacturer; Orind Global, a refractories exporter based in China and India; Shanghai Tonva Petrochemical, a Chinese asphalt sales and logistics services company listed in Hong Kong; Sanghvi Motors, a crane hiring company in India; Haiweidao Aquatic Food, a Chinese processor and distributor of aquatic products; and Luminous Power Technologies, an Indian producer of inverters, UPS, batteries and water purifiers.
In addition to ARIA Investment Partners, CLSA Capital Partners also manages MezzAsia Capital, a pan-Asian mezzanine fund; and CLSA Sunrise Capital, a Japan-focused growth and mid-market buyout fund.