Fusion Microfinance receives equity funding of Rs 4.5 cr from Incofin

Microfinance Focus, June 02, 2010:  Fusion Microfinance, a Delhi based start-up NBFC-Microfinance today announced equity funding of Rs 4.5 crores (approx USD 952,276) from Incofin, a Belgian microfinance investment company. Incofin which has recently raised a new fund of Euro 100 million called Rural Impulse Fund 2, has been very active in India with three investments in last two years having social impact across the country in more than eight states.

Fusion was founded and promoted by Devesh Sachdev, Ashish Tewari and Ankur Singhal . The company started its Greenfield operations in January 2010 and further augmented it by a unique acquisition of the microfinance division of Aajeevika (a not for profit body operating in Delhi). As on date, Fusion has a base of 2,600 clients in 3 states across of 4 branches with a loan book of Rs 22.6 million. Fusion is a NBFC registered with Reserve Bank of India and is operational in the less penetrated North Central part of India (Uttar Pradesh, Uttranchal, Delhi and Madhya Pradesh). In the next five years, the company plans to serve over 500,000 borrowers predominantly living in the rural areas.

“We are delighted to enter into this partnership with Fusion”, says Geert Peetermans, Chief Investment Officer of Incofin. “Incofin aims to establish footprint in many impoverished parts of India, in particular in rural areas. In previous years we have made investments in microfinance NBFCs that cater to the states of the South and of the North-East. Now this venture clearly positions our interests in an additional geography which is the North Central part of India. Not only is this our third investment in the Indian microfinance space, it is also the first Indian deal for our latest global fund, Rural Impulse Fund 2, together with investments we are undertaking from this fund in Brasil and Zambia”.

In October last year, Incofin made an equity investment of 100 million INR in Karnataka based Grameen Koota. It also acquired 34% stake in North-East based microfinance institution, Asomi’s capital through its Rural Impulse Fund. It was Incofin’s first investment in Indian microfinance sector. Speaking on the investment in Fusion Microfinance, Aditya Bhandari, Private Equity Expert, Incofin Investment Management stated that the partnership was to enhance social impact through a very thoughtful commercial approach. “We are proud to be part of Fusion Microfinance, which has a unique combination of a management team with a very strong local & microfinance expertise, a geography which caters to the lesser penetrated areas of North Central India, focus on cost controls/technology and finally the vision to grow organically as well as inorganically although maintaining a conscious tab on irrational growth” he added.

Commenting on the investment, Devesh Sachdev (CEO of Fusion Microfinance) said, “We strongly feel that partnership with Incofin will bring global best practices as they have diverse geographical experience in working with different MFIs across the globe – learning’s from this would be of immense help in a fast growing market like India. On the other hand, Fusion would focus on building strong processes leading to operational efficiencies, strengthening human capital, prioritizing corporate Governance and offering client-centric products while striving for a balance between financial and social bottom-line.”

Commenting on the new partnership, Ashish Tewari (COO of Fusion Microfinance) said, “Fusion’s vision is to create a sustainable business model which would be able to withstand potential impacts arising from any possible downtrend scenario. In order to do so Fusion is concentrating in the rural geographies of Uttar Pradesh, Uttranchal, Delhi and Madhya Pradesh. The team’s localized expertise in these states gives us a competitive advantage in turn helping us to serve the borrowers in a more customised fashion.”

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