ADB’s investment in the Bhubaneswar-based Annapurna is an equity expansion, while a few of the existing investors such as Oman India Joint Investment Fund (OIJIF), Oikocredit and Bamboo Finance Partners raised their holding in the MFI through secondary market deals totaling Rs 75 crore, Dibyajyoti Pattanaik, director at Annapurna Finance, told ET.
The expansion of equity will help the firm expand its loan portfolio in asset classes such as MSME and affordable housing, beyond its bread and butter microfinance.
“We look forward to leveraging ADB’s experience to strengthen our product and our reach to people in need of financing solutions,” said Annapurna Managing Director Gobinda Chandra Pattanaik.
ADB has backed MFIs to help achieve its broader objective of reducing poverty in Asia and the Pacific.
The investment by ADB will expand Annapurna’s net worth to Rs 580 crore immediately. This was Annapurna second equity expansion in as many years, following OIJIF’s Rs 155-crore investment in June last year. OIJIF is backed by State Bank of India and State General Reserve Fund of Oman.
“Investor appetite in the microfinance sector continues to be very strong despite the liquidity crisis that happened a few months ago. Both strategic and financial investors are understood to be queuing up for mid- to large-sized MFIs that are geographically well diversified,” said Unitus Capital Managing Director Abhijit Ray.
Unitus Capital advised Annapurna on the ADB deal.
Meanwhile, OIJIF raised its stake in the microfinance firm to about 22% from the initial 20.9%. One of the earliest investors in Annapurna, the Belgium-based investment fund Incofin Investment Management, fully exited by selling its 4.13% stake. SIDBI Venture Capital lowered its stake to 1.7% from 8.3% earlier. ET had highlighted this possibility in a report published on June 13, 2018.
Other investors such as DCB Bank or the Women’s World Banking did not participate in the secondary sale.
Annapurna’s asset under management was Rs 2,420 crore at the end of January from its operations in 277 districts across 14 states. With close to 500 branches, Annapurna has 85% of its borrowers from rural India.