Fusion Microfinance secures $69m from Warburg Pincus, others

Photo: Reuters/Amit Dave

Fusion Microfinance Pvt. Ltd, a microfinance institution (MFI) based in New Delhi, on Tuesday said it has secured 500 crore from existing investors Warburg Pincus and Chicago-based impact investor Creation Investments Capital Management Llc.

The latest capital will be used to boost its distribution network in India, integrate technology solutions across key business lines, and strengthen the platform for more growth opportunities within the microfinance sector.

“The follow-on investment by existing investors will help expand the capital base to support Fusion’s growth plans,” said Narendra Ostawal, managing director, Warburg Pincus.

In December 2018, Warburg had led a 520-crore funding in Fusion, which also marked Warburg’s first investment in a microfinance firm in India. Warburg’s other investments in financial services include AU Small Finance Bank, education-focused lender Avanse Financial Services, IDFC First Bank, and life insurer IndiaFirst Life Insurance.

Fusion, founded by Devesh Sachdev in 2010, served nearly two million clients through its team of more than 5,500 people across over 575 branches in 18 states in India as of 31 December 2019. The micro-lender’s assets under management stood at 3,350 crore and about 92% of it were focused on rural customers. Over three-fourths of its portfolio was concentrated in five states, Bihar, Uttar Pradesh, Odisha, Madhya Pradesh, and Haryana.

“Fusion has been among the faster growing companies in the sector over the last few years and is committed to maintaining a steady and sustainable pace at a much larger scale over the next 3-5 years. Building on a strong operating platform and strategic initiatives, we are well placed to become a valued company in the financial inclusion space,” said Sachdev.

As of fiscal year ended 31 March 2019, the micro-lender’s net interest income stood at 213.15 crore, while its profit stood at 65.35 crore. In terms of asset quality, the company’s gross non-performing assets were 1.41% of its total advances, while its capital adequacy ratio was at 27.33%, according to a 30 August report by ratings agency Icra Ltd.

The microlender has diversified its portfolio geographically, thus reducing the exposure to the top three states in its portfolio, which earlier contributed almost three-fourths of its loan book, Icra noted.

“Fusion Microfinance has diversified its portfolio geographically with the share of the top three states reducing to 51% as on 30 June 2019, from 73% as on 31 March 2016. Even at the district level, the share of the top 5 and top 10 districts decreased to 9% and 15%, respectively, as on 30 June 2019 from 24% and 38%, respectively, as on 31 March 2016,” the credit rating agency said.

This article was first published on livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.