HYDERABAD: Spandana Microfinance, the second-largest MFI in the country, is set to raise Rs 300 crore by diluting a part of its stake to investors by June this year.
It is in talks with over two dozen investors and will narrow down on just one or two high profile ones. The company’s valuation could be over Rs 1,800 crore.
The proposed equity dilution will be proportionate to the stake-holding of its promoters, and existing investors and will help the company fuel its growth plans, said Spandana managing director Padmaja Reddy.
The promoters hold a 51% stake in the MFI now. Mumbai-based JM Financials has a 18% stake, while private equity fund Valiant holds 11%. Lok Capital has a 5% stake and another 15% of the equity is held by senior employees.
Spandana will use the funds raised through equity dilution to strengthen its capital adequacy ratio — a measure of its financial strength.
A higher CAR will help the MFI raise money through securitisation of its future receivables and fund its growth plans. Its CAR stood at 19.5 % last fiscal.
Securitisation is the process of converting existing assets or future cash flows into marketable securities. Many MFIs are taking this route to garner more funds for their .
The company, which lends to the poor, also plans to reach out to this segment by providing healthcare facilities. It is looking at setting up at least five maternity hospitals by the end of this fiscal, in what could be perhaps the first initiative by an MFI.
“We are currently doing a pilot project and will set up one hospital in the city in a month’s time. By the end of the fiscal, we will have five such hospitals. Besides, providing access to financial services, it is very necessary to cater to health services for the poor,” said Ms Reddy.
The hospitals will be floated by Spandana Society, a Guntur-based NGO, which Ms Reddy had launched in 1998. Whereas Spandana Sphoorthy Financial is a non-banking finance company and a separate entity.
The average investment in each hospital would be around Rs 3 crore. Apart from providing pre- and post-natal healthcare services, Spandana will also provide microfinance services to these patients. The company will give loans at an average interest of 10-13% for amounts ranging between Rs 3,000 and Rs 6,000.