Rabo India facilitates Spandana to raise INR 250M via mutual fund route

By Nagesh Narayana
Microfinance Focus, Feb , 2010: Spandana Sphoorty Financial Limited (SSFL), a Hyderabad-based microfinance institution, has announced that it has raised Rs 25 crore (INR 250 million) worth of investment in the form of placing commercial paper with a leading mutual fund. Rabo India Finance Ltd has facilitated the transaction. The name of the mutual fund was not given.

Rabo India Finance provides a suite of financing and capital market products to enable Microfinance Institutions to access the debt and equity capital markets efficiently. Announcing the transaction, Kaushik Modak, MD – Corporate Banking & Corporate Advisory of Rabo India Finance Ltd, said, “We are delighted to have successfully closed this pioneering transaction for Spandana and aim to facilitate many more capital market transactions for them. The maturity of the microfinance sector provides the Mutual funds an alternative asset class for investments. We shall endeavour to do more innovative deals in the microfinance sector, a core sector for Rabo in India.”

The transaction has created a niche market for accessing low cost funds in the sector, said Spandana management. “It invokes the interest of money market players into this sector, enabling the microfinance players to raise to the stature of Indian corporate houses. We expect to do more such deals with other investors in the days to come,” Padmaja Reddy, managing director, Spandana added in the statement.

Spandana, with a rating of “P1 on short term and “A- Stable outlook on long term” as assigned by CRISIL, currently has over 3.9 million clients with a portfolio of Rs 3,150 crore under management.
Shiv Narain.Y.V., Vice President (Finance), SSFL, said:“We are the first MFI to do a completely unsecured standalone CP in the history of Asia which is subscribed by an Asset management company (AMC). This transaction has opened up a new asset class for investors enabling us to diversify our fund raising sources, tapping the Capital markets/Money Markets and creating a niche market for accessing low cost funds not only to the institution but also to the sector.”

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