This is the largest transaction in Indian microfinance since the 2010 Andhra crisis.
Morgan Stanley Private Equity Asia (MSPEA) led the transaction and Tata Capital Growth Fund and QRG Enterprises, the promoter holding company of Havells India, also participated in the round. Existing investors - Citi Venture Capital (CVCI Private Equity), India Financial Inclusion Fund and Vallabh Bhanshali - also participated.
Edelweiss Financial Services Limited and Unitus Capital jointly advised the Company on this transaction.
Janalakshmi (literal translation, ‘People’s Wealth’) is among the very few MFIs focused on urban Indian microfinance and on comprehensive financial inclusion, which extends substantially beyond group credit. Moreover, it is the only Indian MFI with the entire promoter stake being held in a not-for-profit Section 25 company, Jana Urban Foundation, which focuses on addressing larger issues related to urban inclusion. The structure ensures that no financial benefit arising from the performance of Janalakshmi accrues personally to the promoter.
Janalakshmi has one of the strongest management teams in microfinance with over 300 years of cumulative banking experience, including R Srinivasan (Executive Vice Chairman), a former civil servant with 45+ years of experience with ANZ Grindlays Bank, Fitch Ratings, the Indian Revenue Service and JP Morgan, and V.S. Radhakrishnan (MD & CEO), a veteran banker with 25+ years experience with HSBC and ING Vysya Bank and who is also an IIM-A alumnus.
Speaking on this transaction, V. S. Radhakrishnan, MD & CEO, Janalakshmi, remarked “We are delighted to have raised these funds from both new large investors and existing investors. This is a validation of our business model that we have pursued over the last several years. The core pillars of our business model is our customer and her needs; the persistent use of cutting edge technology and most importantly, strong and motivated human talent from the field team all the way to senior management. This investment will help us continue in our path of growth and innovation, as we continue to focus on building stronger customer relationships with a full suite of financial products and new technology – like Aadhar based front end terminals”
Aluri Rao, Managing Director of Morgan Stanley Private Equity Asia, in India, said, “Janalakshmi has emerged as a thought leader in the urban microfinance space, backed by a passionate and ambitious founder, a professional management team and excellent systems and processes. It is well-positioned to become a pioneer in providing inclusive financial services to the urban-underserved, and Morgan Stanley Private Equity Asia is proud to be partnering with Janalakshmi in its journey forward”
Akhil Awasthi, Managing Partner, Tata Capital Growth Fund, said, “We believe that investment for growth and financial inclusion are closely interlinked and these are both key priorities for the country today. We are therefore delighted to partner with Janalakshmi, a pre-eminent institution engaged in economic welfare of the lower strata of the society”
Qimat Rai Gupta, Chairman and Promoter, Havells India, commented “We share Janalakshmi’s vision of financial inclusion and sustainable economic growth for the under-served. We are enthused with the highly skilled, motivated and professional team led by Ramesh and their commitment to social change”
Sunil Nair, Citi Venture Capital International Managing Partner (India, Europe, Middle East, Africa), remarked, “We are pleased with the progress and the growth of Janalakshmi since we first invested in 2011. We believe that Janalakshmi is well poised to become a market leader in the sector and we are proud to be deepening our relationship”
Viswanatha Prasad, CEO of Caspian Advisors, which advises the India Financial Inclusion Fund said, “The comprehensive product suite of Janalakshmi, coupled with the relentless focus on technology has truly distinguished Janalakshmi as a pioneer in Indian microfinance. It is these two attributes as well as the deepest management team in the space that enables such high growth in assets, while keeping asset quality intact. We are proud to be early investors in Janalakshmi and believe that the best is yet to come”
Gautam Benjamin, Senior Vice President at Edelweiss Financial Services Ltd., said, “Janalakshmi is a truly impressive company. It is rare to find a company of its size to have such clarity of vision, depth of management and strong systems and processes. The fact that several investors have participated in this round is indicative of the good work that the company has done and its prospects going forward. We are proud to be associated with Janalakshmi”
Eric Savage, Co-Founder & President of Unitus Capital added, “Unitus Capital is thrilled to have been working with Janalakshmi the last five year while they have been transforming the India financial inclusion landscape. The impressive growth that they have achieved is a testament to the vision, team and rock-solid foundation that has been put in place. With this landmark transaction, Janalakshmi has again established itself at the cutting edge of financial inclusion, and they are just getting started. I can’t wait to see the transformative impact they will have on millions of lives in the coming years”
About Janalakshmi Financial Services: Janalakshmi Financial Services (Janalakshmi) is a for-profit MFI with assets of more than INR 12 Billion as on date, with the entire promoter stake held in a not-for-profit, Jana Urban Foundation. This is the only MFI in India structured in such a manner, with the deliberate intent of keeping the social spirit intact. Janalakshmi’s market-based approach to financial inclusion is defined by three distinct characteristics: first, an exclusive focus on servicing the needs of the urban poor; second, a strong customer-value driven approach in designing financial products and services; third, the centrality of technology and processes as the foundation of a scalable enterprise (for more information on www.janalakshmi.com).
About Morgan Stanley Private Equity Asia: Morgan Stanley Private Equity Asia (“MSPEA”) is one of the leading private equity investors in Asia Pacific, having invested in the region for over 20 years. The team has invested approximately USD 2.5 billion in Asia, primarily in highly structured minority investments and control buyouts in profitable, growth-oriented companies at attractive valuations with a significant majority of the investments sourced on a proprietary basis.
MSPEA has an experienced investment team led by senior professionals with extensive networks, in-depth market knowledge and the ability to apply international investment principals within each local context. MSPEA has offices located in Hong Kong, Shanghai, Mumbai, Seoul, Tokyo and New York.
About Tata Capital Growth Fund: The Tata Capital Growth Fund (“TCGF” or the “Fund”) is a USD 240 mn private equity fund which manages third party capital raised from investors globally. The Fund targets private equity growth capital investments in companies that derive a substantial portion of their revenues from operations in India. The Fund is managed by Tata Capital Advisors Pte Ltd (Singapore) and is advised locally by Tata Capital Limited. TCGF targets investments around the 4 following themes – urbanization, discrete manufacturing, services which are strategic to value chain and growth opportunities. The Fund’s investment strategy is to provide entrepreneurs in India with value enhancing benefits through operational involvement as against silent capital.
About the Gupta family, promoters of Havells India: The Gupta family, led by Mr. Qimat Rai Gupta, is the Promoter of Havells India, a USD1.3 Billion leading Fast Moving Electrical Goods Company and a major power distribution equipment manufacturer with a strong global footprint. With humble beginnings, Qimat Rai Gupta has been an inspiring and instrumental catalyst behind Havells’ transformation from a commoditized and regional electrical company to a branded global consumer product organization. His belief in people empowerment continues to guide Havells to future growth trajectory.
About Citi Venture Capital International: CVCI Private Equity is a leader in international private equity investing and currently manages over $7 billion in equity investments and committed capital. CVCI Private Equity has an internationally integrated investment team with over 50 professionals worldwide with a local presence in Singapore, Mumbai, New Delhi, Hong Kong, London, New York and Santiago. Since 2001, private equity funds advised by CVCI Private Equity have been active investors across Emerging Markets.
About India Financial Inclusion Fund (IFIF): India Financial Inclusion Fund (IFIF) is a USD 90 mn fund that was set up in August 2008 as an off-shore India-focused equity fund to invest in impact businesses including microfinance, MSME, affordable housing and last mile banking. IFIF is advised by Caspian Advisors, an India-based manager that invests exclusively in the impact space.