Janalakshmi Financial Services closes series C funding for expansion (June '11)
Bangalore, June 22, 2011: Janalakshmi Financial Services, a Bangalore based NBFC Microfinance Institution promoted by Ramesh Ramanathan, announced the raise of capital as part of its Series C round.
Citi Venture Capital International (CVCI), a leading global investment firm has taken a significant minority stake in the company as part of this round. Other participants were existing investors in the company. Additional funds are likely to be raised in the coming weeks as part of the Series C round. Unitus Capital was lead financial advisor and arranger to Janalakshmi and its shareholders for the transaction. Morgan Stanley also acted as an advisor.
Janalakshmi Financial Services Private Limited is among the earliest and one of only a handful of microfinance institutions focused exclusively on the urban microfinance space in India. Importantly, it is the only MFI in India that has a unique structure as a Social Business, with the entire promoter stake being held in a Not-For-Profit Section 25 Company, Janalakshmi Social Services.
Speaking on this transaction, Ramesh Ramanathan said, “We are delighted to have raised these funds from a world-class investor like CVCI. It’s a validation of the business model that we have pursued relentlessly for the past several years, and which helped us weather the unprecedented crisis in our sector with minimal impact. The core pillars of our business model are a constant focus on the customer and her needs; the pervasive use of cutting edge technology; and a deep and disciplined management team. The capital infusion will help us build on this foundation, and establish a strong and responsible MFI.”
Sunil Nair, CVCI MD & Head for Europe, Middle East, Africa and India, said, “CVCI is pleased to partner JFS in its vision of enabling financial inclusion in urban India on a commercially sustainable basis. We believe that the investment from CVCI would enable JFS to scale up operations. We are enthused by the commitment of the professional management team at JFS to build a business with significant social benefits and high levels of transparency.”
Eric Savage, Co-Founder and President of Unitus Capital added, “Unitus Capital is honoured to have been part of this transaction which is the first large equity raise announced since the Indian microfinance crisis began. The investment by CVCI, one of the world’s leading investors, underscores the fact that Janalakshmi’s approach is the future of microfinance. Janalakshmi’s combination of a visionary founder, world-class management team, exemplary governance, superior technology and a diverse, client-centric product suite provides a fantastic model for the microfinance industry globally to emulate.”
Investors in Janalakshmi’s earlier rounds were Bellwether, Lok Capital, the Michael and Susan Dell Foundation, Treeline Investors, and Narayan Ramachandran, ex country head of Morgan Stanley India.
Janalakshmi Financial Services has one of the strongest management teams in microfinance with over 200 years of cumulative banking experience, including R Srinivasan, a former civil servant with over three decades experience in banking and financial sector with ANZ Grindlays, Fitch Ratings and JP Morgan; and VS Radhakrishnan, a veteran banker with over 25 years experience with HSBC and ING Vysya Bank.
Janalakshmi (literal translation, ‘People’s Wealth’), is a ‘social business’. It embraces market principles while pursuing a social objective. To accomplish this, Janalakshmi has been designed in a 2-tier structure:
1. A (Section 25) not-for-profit holding company called Janalakshmi Social Services - in which all promoter stakes are held. Funds in Janalakshmi Social Services can only be used to address social issues; and
2. For-profit operating companies for investors
Janalakshmi Financial Services
Janalakshmi Financial Services is a for-profit NBFC MFI, with the promoter stake held in the not-for-profit entity Janalakshmi Social Services. This is the only MFI in India structured in such a manner, with the deliberate intent of keeping the social spirit intact. Janalakshmi Financial Services’ market-based approach to financial inclusion is defined by three distinct characteristics: first, an exclusive focus on servicing the needs of the urban poor; second, a strong customer-value driven approach in designing financial products and services; third, the centrality of technology and processes as the foundation of a scalable enterprise (for more information on Janalakshmi Financial Services, www.janalakshmi.com).
About Citi Venture Capital International
CVCI is a leader in global emerging markets private equity investing, and currently manages over $7 billion in equity investments and committed capital. CVCI has an internationally integrated investment team with over 45 professionals worldwide with a local presence in Singapore, Mumbai, New Delhi, Hong Kong, London, New York and Santiago.
CVCI is part of Citi Capital Advisors. Citi Capital Advisors is a global alternative asset management platform that offers a broad range of innovative strategies and products to select institutional and ultra-high-net-worth investors.
