TPG led a $210 million investment in microfinance company Janalakshmi Financial Services Ltd, building on its 2014 investment in the company. Existing investors Morgan Stanley Private Equity Asia, Havells India and Vallabh Bhansali also participated in the funding, along with new investors.
Janalakshmi Financial Services Limited (“Janalakshmi”) today announced a $150 million (INR 10 billion) round of primary equity financing led by global private investment firm TPG. In addition, secondary transactions aggregating $60 million (INR 4 billion) will provide partial exits to existing investors.
TPG’s investment adds to the 2014 investment it made in Janalakshmi. Existing investors, including an investment fund managed by Morgan Stanley Private Equity Asia, Havells India, and Vallabh Bhansali, also participated in the round alongside new investors.
Janalakshmi is the largest and fastest-growing microfinance institution in India and is among the country’s largest issuers of pre-paid cards and micro-pensions. The company began in 2000 as India’s first urban microfinance program. After a six-year period, Janalakshmi was established as a standalone, purpose-driven, for-profit institution focused on improving the lives of the urban poor. Now, Janalakshmi is represented in more than 184 cities across 19 states and has an AUM of approximately $1.65 billion (INR 10.5 billion).
Janalakshmi’s core product is Small Batch (SB) loans disbursed to Joint Liability Groups. The microfinance institution also provides individual loans to those who have demonstrated a successful credit track record as borrowers under the SB format, as well as loans to micro and small and medium enterprises (MSMEs). Janalakshmi’s promoter is the Jana Urban Foundation, a Section 8 company that undertakes activities to deepen understanding of the challenges around financial inclusion. The Jana Urban Foundation also addresses issues via education, skill development, community connectivity, and financial advisory initiatives.
“Our success depends on meeting the needs of our customers,” said Ramesh Ramanathan, Promoter and Chairman of Janalakshmi. “This latest round of capital will fuel further expansion of the products and services we offer and bring them to more families, businesses, and individuals. We are delighted to successfully close the transaction. Working alongside our investors, who truly share our vision and passion for transforming the lives of the financially underserved, we will build a stronger India through each loan we make.”
“For more than 15 years, TPG has partnered with financial services businesses across India and Asia,” said Puneet Bhatia, Partner and Country Head of India for TPG. “In India, there is a tremendous opportunity to fill the gap between what is being offered by traditional banks and what the nation’s growing population needs. Janalakshmi is a pioneer of microfinance and is at the forefront of addressing this opportunity in a meaningful way. We look forward to our continued partnership with the company and to helping more Indians gain access to financial services.”
TPG has partnered with Indian financial services companies including Shriram Capital, Shriram City Union Finance, Shriram Transport Finance, and Union Bank of Colombo in Sri Lanka. TPG’s investments in financial services also span several countries in Asia and a wide variety of companies such as BTPN, a microloan business in Indonesia, and Shenzhen Development Bank in China.
“Funds managed by Morgan Stanley Private Equity Asia have invested in Janalakshmi since 2013. This is the third round of funding that we have participated in. During the tenure of this investment, Janalakshmi has developed as a leading institution focused on financial inclusion within the lower-income segment. With its focus on technology and innovation, Janalakshmi’s management team has made the company one of the pioneers in this area. Morgan Stanley Private Equity Asia is proud to be partnering with Janalakshmi in the journey ahead,” said Nirav Mehta, Executive Director of Morgan Stanley Private Equity Asia in India.
“We are delighted to participate in the ongoing transformation of Janalakshmi Financial Services Limited. We believe we are part of the institutional building that will go a long way to service an under-penetrated and under-serviced section of the society. The recent approval of a Small Bank License will further Janalakshmi’s effort to provide cost-effective financial solutions and further accelerate the financial inclusion endeavor of the company,” said Mr. Anil Rai Gupta, Director of QRG Enterprises Limited.
Janalakshmi will use the new capital to drive customer acquisition and build upon current product offerings, such as the company’s new monthly savings program. Last September, Janalakshmi received in-principle approval from the Reserve Bank of India (RBI) to convert to a small finance bank. The current round of equity will help Janalakshmi transition to a bank structure and comply with the RBI’s rules for conversion to a small finance bank.
About Janalakshmi Financial Services
Janalakshmi Financial Services Limited (Janalakshmi) is a NBFC MFI with assets of more than INR 10.5 billion to date, with the entire promoter stake held in a not-for-profit, Jana Urban Foundation. Janalakshmi is a new age financial institution that seeks to service the financial needs of the urban underserved in India in a market-oriented fashion. Janalakshmi’s vision is an India where the promise of prosperity touches every Indian. 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; and third, the centrality of technology and processes as the foundation of a scalable enterprise. For more information visit www.janalakshmi.com.
TPG is a leading global private investment firm founded in 1992 with over $70 billion of assets under management and offices in San Francisco, Fort Worth, Austin, Dallas, Houston, New York, Beijing, Hong Kong, Istanbul, London, Luxembourg, Melbourne, Moscow, Mumbai, São Paulo, Singapore, and Tokyo. TPG’s investment platforms are across a wide range of asset classes including private equity, growth venture, real estate, credit, and public equity. TPG aims to build dynamic products and options for its investors while also instituting discipline and operational excellence across the investment strategy and performance of its portfolio. Since the start of 2014, TPG has raised more than $18.6 billion for its investment funds and has launched six new products including Pace Holdings, TPG Real Estate Finance Trust (TRT), and TSL Europe. For more information, visit www.tpg.com.
About Morgan Stanley Private Equity Asia
Morgan Stanley Private Equity Asia 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 $3.3 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.
Morgan Stanley Private Equity Asia has an experienced investment team led by senior professionals with extensive networks, in-depth market knowledge, and the ability to apply international investment principles within each local context. Morgan Stanley Private Equity Asia has offices located in Hong Kong, Shanghai, Mumbai, Seoul, Tokyo, and New York.
About Havells India QRG Enterprises Limited
QRG Enterprises Limited is one of the leading groups in India. QRG Enterprises comprises Havells India Limited and QRG Healthcare. Havells India Limited, the flagship company of QRG Enterprises, is a leading Fast Moving Electrical Goods (FMEG) Company in India with market capitalization of $3 billion. Havells is a well-known brand with Indian consumers in the electrical consumer space and is synonymous with quality, lifestyle, and energy savings. With a wide product basket, Havells has a pan-India presence through a well-diversified distribution network. It has the largest manufacturing facilities in India for domestic switchgears, cables, energy-saving lamps, and fans. QRG Healthcare, a healthcare initiative of QRG Enterprises, owns and operates the 140-bed QRG Central Hospital & Research Center in Faridabad, Haryana.