HSBC Asia, Intel Capital, IFC back Indian microfinance with INR700m

HSBC Private Equity Asia, Intel Capital and International Finance Corporation have invested a combined INR700 million ($15 million; €10 million) in Financial Informational Network and Operations (FINO), an Indian banking technology provider.

The investment also represents an exit for investment firm Legatum Ventures, which sold its stake in FINO to HSBC Asia and Intel Capital. In 2007, Legatum Ventures invested about $4 million for a minority stake in the company alongside IFC, which invested $5 million, and Intel Capital. International investors now hold a 40 percent stake in the company while public and private entities hold a 30 percent stake each, according to FINO’s website.

Details for the transaction were not disclosed. Intel Capital did not respond to requests for comment at press time.

Founded in 2006 and based in Mumbai, FINO develops technology solutions and sevices to help financial institutions reach India's underserved sectors. 

The capital will be used to build a scalable technology platform for 25 million customers and expand the company’s business correspondent network to more than 25,000 locations over the next three years, Rishi Gupta, FINO’s chief financial officer, said in a statement from the company.

There are up to 600 million people who are excluded from India’s banking industry, especially the underprivileged sections of the population, the statement noted. 

HSBC Asia made its investment out of HSBC Asian Ventures Fund 3, which closed on $230 million in July this year, nearly twice the size of its $120 million predecessor that closed in March 2005. HSBC Technology Fund closed on $54 million in January 2001, according to a HSBC spokeswoman. 

HSBC Asian Ventures Fund 3 makes investments in companies focused on information technology, digital media and internet-related services, alternative energy and consumer products and services in China, India, South East Asia and South Korea.

The fund's previous investments include Chinese silicon maker Jaco Corporation, Taiwanese software company Egis Technology and Gourmet Master, which owns the Café 85oC stores in Taiwan and China. It expects to have deployed up to 30 percent of its capital by the end of the year, the spokeswoman said.

Intel Capital, the semiconductor giant’s venture arm, manages private equity funds focused on the Middle East and Turkey, China, India and Brazil, in addition to two global technology funds.

The International Finance Corporation is the World Bank’s private investment arm.