India: Spandana raises $19.5m equity funding from Kedaara Capital, OTPP

Spandana Sphoorty Financial Ltd, which has been on a fundraising spree, has raised another Rs 125 crore ($19.5 million) in equity from existing investors Kedaara Capital and Ontario Teachers’ Pension Plan (OTPP).

The announcement comes close on the heels of the micro-finance institution completing its fourth securitisation deal with Kolkata-based Bandhan Bank last month. Spandana had securitised Rs 100 crore portfolio to Bandhan Bank through Pass-Through Certificates.

The latest round is the second equity raise by the company after its emergence from corporate debt restructuring (CDR) in March this year.

In March, Spandana Sphoorty had raised $270 million through a mix of equity and debt funding. That round was led by private equity major Kedaara Capital and joined by OTPP, while $170 million was raised from IndusInd Bank, Yes Bank and ICICI Bank in the form of debt.

Kedaara and OTPP had invested Rs 514 crore in March 2017 and this is the second investment they made within eight months of their first investment, according to an official statement.

Spandana, which had been referred to CDR by its lenders in 2011 after the Andhra Pradesh microfinance crisis, was raising funds to clear its existing debt with 37 financial institutions which had previously gone bad.

In March 2017, the company successfully exited CDR and claims to have1.2 million borrowers across 14 states with a workforce of 3,500.

This latest funding will be used to leverage debt from banks and capital markets. The Andhra-based company also has plans to go public in the second quarter of next fiscal (FY19) and is in the process of appointing merchant bankers, Spandana said.

Microfinance institutions have seen increased interest from investors. Earlier this year, Odisha-based Annapurna Microfinance raised a new funding round of Rs 61 crore (9.5 million) led by Bamboo Capital Partners. Arohan Financial Services Pvt Ltd, a part of Aavishkaar-Intellecap Group, raised a total of Rs 155.5 crores ($24 million) in May to fund its expansion plans.

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