Utkarsh Micro Finance Capital Raise

In this article, I talk about the various rounds of funding/ equity capital raise by Varanasi based microlender Utkarsh Micro Finance, which has now also been granted Small Finance Bank license by the Reserve Bank of India.

Utkarsh Micro Finance Limited is registered as Non Banking Finance Company-MFI (NBFC-MFI) with Reserve Bank of India (RBI) with both its registered office and corporate office in Varanasi (Uttar Pradesh).

Utkarsh started its operations by providing credit under Joint Liability (JLG) structure and insurance, but later it started Micro Enterprises Loan and Micro Pension.

Area of Operations

Utkarsh Micro Finance mainly services the Northern and Central belt.

  • August 2009 – It started its operations with four branches, two urban and two rural branches in Varanasi district and subsequently it has expanded to One Hundred and Eight other districts.
  • 2011- 2012 – In 2011-12, the company expanded its operations in Bihar.
  • 2012-13 – The company started operations in Uttarakhand, Madhya Pradesh, Delhi, besides penetrating deeper in Bihar.
  • 2013-14 – Utkarsh Microfinance further expanded to Haryana, Maharashtra, Himachal Pradesh and Jharkhand.
  • December 2016 – The company operates from 369 (346 JLG, 23 Micro Enterprize Loan and Housing Loan business is being operated from MEL branches) branches in these 109 districts.

Investors in Utkarsh Micro Finance

  • Aavishkaar GoodwellAavishkaar Goodwell is a for-profit business development company that provides equity finance and hands-on support to entrepreneurial microfinance organizations in India on a socially and commercially sustainable basis.
  • CDCCDC is the UK’s Development Finance Institution (DFI) wholly owned by the UK Government’s Department for International Development (DFID).
  • International Finance Corporation (IFC)IFC is a member of World Bank Group and supports microfinance
    Lok Capital – The Lok Capital initiative was launched at the end of 2000 with the support of a grant from the Rockefeller Foundation.
  • Norwegian Microfinance Initiative (NMI) – The Norwegian Microfinance Initiative (NMI) is a new and innovative strategic partnership between the Norwegian public and private sectors that invests in microfinance institutions in developing countries.

Utkarsh Microfinance Capital Raise

International Finance Corporation and Aavishkaar Goodwell India Microfinance Development Co. Ltd. were among the first investors to backUtkarsh Micro Finance in 2009.

August 2010

The International Finance Corporation (IFC), a member of the World Bank Group announced that it would be investing INR 13.5 Crore (USD 300,000) in Utkarsh Micro Finance.

Till 2013, the company raised Rs.6.6 crore and Rs.25 crore in two rounds of funding.

April 2013

In April 2013, Utkarsh Micro Finance Pvt. Ltd on Monday raised Rs.20 crore from its existing investors Aavishkaar Goodwell India Microfinance Development Co. Ltd, International Finance Corporation (IFC) and Norwegian Microfinance Initiative (NMI).

November/ December 2013

Utkarsh Micro Finance raised Rs 29.8 crore through the issue of secured, rated, listed, redeemable, transferable, non-convertible debentures of face value of Rs 1,000,000 each on a private placement basis.

In December 2013, Utkarsh Micro Finance Pvt Ltd raised Rs 75.8 crore ($12.09 million) in debt funding through an issue of secured, redeemable, non-convertible debentures (NCDs). The NCDs listed on the Bombay Stock Exchange, were financed by UTI International Wealth Creator 4, Microfinance Enhancement Facility and AAV Sarl.

December 2014

Utkarsh Micro Finance Pvt Ltd raised $21 million (Rs 135 crore) in Series D round of funding. The funding was led by UK’s development financial institution Commonwealth Development Corporation (CDC) and Lok Capital. Existing investors Norwegian Microfinance Initiative (NMI), Aavishkaar and International Finance Corporation (IFC) also participated in the capital raise round.

The shareholding of important investors during 2015/ 2016 were:

  • Aavishkaar Goodwell (15.29% stake)
  • Sarva Capital LLC (12.82%)
  • Norwegian Microfinance Initiative (17.28%)

September 2016

In August/ September 2016, Utkarsh Micro Finance Pvt. Ltd raised fresh capital of Rs 395 crore ($60 million) from several domestic institutional investors in order to bring down the foreign holding below the 49% mark to enable transition to a small finance bank. ICICI Securities and Avendus Capital advised Utkarsh Micro Finance on the capital raise.

The microlender raised funding from

  • HDFC Standard Life Insurance
  • HDFC Ergo General Insurance
  • ICICI Prudential Life Insurance
  • Shriram Life Insurance
  • RBL Bank
  • Small Industries Development Bank of India (SIDBI)
  • private equity funds Faering Capital and Arpwood Capital

October 2016

In September/ October 2016, listed private sector lender RBL Bank picked up 9.99 per cent stake in Varanasi-based Utkarsh Micro Finance.


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A Few Last Words

Before making any investment decision, please contact your financial adviser.

I have provided this article for educational purpose only.

I hope you found this article on Utkarsh Micro Finance Capital Raise useful. If you have something to add please leave a comment in the post. Please feel free to contact me.

Subhodeep Mukhopadhyay

I am a Management Consultant in the Education Sector. In my previous corporate career, I have worked in Banking, Private Equity and Software industry. I am an MBA in Finance/ Computer Engineer and enjoy doing equity research and financial analysis in my free time.

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