CFPA Microfinance Management, one of China’s largest microfinance players, announced that it has secured nearly Rmb1 billion ($140 million) in commitment for its Series C equity financing led by The Rise Fund, a global impact investing fund managed by TPG Growth.
The latest funding round adds The Rise Fund to CFPA’s list of big-ticket investors, which now include Ant Financial, China Foundation for Poverty Alleviation, IFC, Sequoia Capital China, High Impact Capital Advisors, and Renda Puhui.
Founded by the China Foundation for Poverty Alleviation in 1996, CFPA offers microfinance services to poverty-stricken populations in rural areas for productions and consumption.
The company said its microlending currently reaches more than 380,000 customers in 91,000 villages across China, with 22-per cent year-over-year growth in net revenues and more than 3,000 on-the-ground staff sourcing and reviewing loans.
“The investment of this round is aimed to continue to support the company with technology innovation, operation upgrade and coverage expansion to bring inclusive financial to broader population with diversified and enhanced service offering to rural market,” CFPA Microfinance said.
China is home to one of the largest unbanked populations in the world. Nearly 500 million people across rural China are served by neither traditional banking systems nor non-bank institutions.
But microfinance started late in the country, compared to India, but it grew rapidly. By 2012, the country had 6,000 microcredit providers, with just a quarter having been in operation for more than three years.
“The initial intention of CFPA Microfinance was to resolve the problem of obtaining loans for middle and low-income people in rural areas. We are committed to ‘break through the last 100 meters of rural finance,” said CFPA Microfinance president Dongwen Liu.
The Rise Fund, the lead investor in this round, is one of the world’s largest global fund committed to achieving measurable, positive social and environmental outcomes alongside competitive financial returns. It is managed by TPG Growth, the global growth equity and middle market buyout platform of alternative asset firm TPG.
The investment in CFPA Microfinance is part of TPG’s global effort to expand financial inclusion, and it will be the Rise Fund’s second investment in China. It also builds on The Rise Fund’s existing investment in Baidu Financial Services Group, which offers low-cost education loans to consumers across China.
“As one of the few profitable national micro-finance platforms focus on rural populations, we see a strong collinearity between commercial success and impact in CFPA Microfinance, which is fully in line with the Rise Fund’s investment strategy”, said TPG China managing partner Chang Sun.