NEW DELHI: Access Development Services, an institutional entity established by CARE and DFID, is organising an investment fair for global investors including private equity groups on microfinance, a sunrise investment sector in India. Almost 65 microfinance institutions (MFIs) have been shortlisted as investees.
About 15 international and national investors will set up shop at the conference to interact with the MFIs, scheduled next week. The investors at the fair will include Morgan Stanley, Omidyar Network, Microvest Fund, Rabo Bank, Accion, Incofin, MEDA, Blue Orchard, Planet Microfund. The MFIs have been supported by the Microfinance India platform to develop their business plans and pitchbooks.
Access Development Services CEO Vipin Sharma, "Given the interest of private equity players in MFI investments in India, a new feature this year is the first 'Investment Fair' for MFIs. Another contribution of the Microfinance India is the State of the Sector Report that it brings out each year. It is an annual progress report of the sector in totality. The pace of change and institutional diversity of the Indian microfinance sector has evolved to a level that it became necessary for us to bring out such a report in both India and abroad."
The 4th annual edition Microfinance India Conference will be held here on October 9 and 10, slated to be inaugurated by finance minister P Chidambaram. The theme for this year's conference is 'Formal Financial Institutions and Microfinance — The Challenges of Depth and Breadth'.
The conference is raise issues like the regional skewness in the spread of microfinance, quality of the self help groups (SHGs), priority lending targets of the formal banking channels and recovery rate from MFIs, SHGs. The likely impact of the commercial orientation of MFIs due to PE investments, absorptive capacities for capital in the sector, supply-side aggression by private lenders will also feature in the discussions.
The sector has already witnessed one of the biggest PE investment in the world. Recently private equity group Legatum and Aavishkaar Goodwell have partnered to invest $25 million capital in a micro-finance group, Share. California-based venture capital group Sequoia and Unitus, the Seattle-based company that lends to and invests in MFIs, have ploughed $11.5 million into SKS Microfinance.
In a landmark deal, Morgan Stanley and Switzerland-based Blue Orchard raised $108 million from the issue of a securitised bond backed by repayments from micro-finance loans. The money will be invested in 21 MFIs in more than 10 countries. Of the estimated annual requirement of Rs 1,35,000 crore of credit for the underbanked, the microfinance sector in India meets little over 5% of the annual demand.
It is estimated that there are more than 200 MFIs in the country, of which the top 20 account for 80% of the total MFI portfolio.