Incofin aims at closing fundraising for Rural Impulse Fund II in 2 months

Aditya Bhandari

By Nagesh Narayana

Microfinance Focus, Feb. 5, 2010: Incofin, a Belgium-based microfinance fund, is raising funds for its second Rural Impulse Fund with a target of about EUR100 million ($186 million), Incofin’s equity expert in India Aditya Bhandari told Microfinance Focus. It would be a successor to the existing fund and part of it would be invested in India. Incofin aims to close the fundraising in two months.

With assets worth over EUR 128 million, Incofin has invested in two microfinance institutions in India in the last one year. In June it invested about Rs 8 crore in Asomi Finance Private Limited picking up a 25 per cent stake in the northeastern MFI with focus on rural microfinance. Seven months later, it made its second investment in Bangalore-based Grameen Koota, another NBFC MFI with major presence in rural segments of Karnataka. So far, it has invested $4 million in India.

Incofin is currently examining few more deals ranging between $1 million and $5 million, said Mr Bhandari  and explained the criteria that Incofin employs while making investment decisions.  Firstly, the management of the MFI and its quality weigh more while considering investment options, and secondly, rural focus of the MFI or at least some presence in rural pockets would be taken into account. Finally, geography or location of the MFI or its operations in a particular area would come into picture, he added. (See BOX)

Essentially, those MFIs which take adequate care of their customers, provide quality products and do not charge very high or unreasonable interest rates are in the radar of Incofin while investing in India, said Mr Bhandari. He was quite confident that Incofin, through its international network and outstanding reputation in the field of microfinance, will bring additional value.

Mr Bhandari said there is a very high investor confidence in the Indian microfinance sector and investment funds look at the performance of an MFI in the long run. He pointed out that the dlinquency issue in Karnataka, purely a local problem, did not alter the performance of major MFIs in the region. He has also welcomed the move to set up credit bureaux to share information and keep a tab on borrowers who tend to avail excessive loans.

On SKS Microfinance’s forthcoming IPO, he said its success would pave the way for many other MFIs, especially in the southern part of India, to follow similar strategy. “Not all MFIs can do it. Smaller ones may also venture for the IPO route but they have to guaze the market seriously before going for it,” he cautioned but quickly added that the success in IPO by microfinance institutions would certainly lead to consolidation in the sector.

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