New Lease of Life for Spandana Sphoorty Microfinance, Raises $270 Million

After 7 years of virtual hibernation, Hyderabad’s Microfinance lender Spandana Sphoorty Financial Ltd has raised $270 million of funding, to bail it out from the corporate debt restructuring cell (CDR).

While $100 million will be in the form of equity from a Kedaara Capital-led consortium including Ontario Teachers’ Pension Plan, and the rest in the form of debt capital from IndusInd Bank Ltd, Yes Bank Ltd and ICICI Bank Ltd, said Spandana Microfinance, which was one of the five MFIs referred to the CDR cell under the Andhra Pradesh 2010 law to stop suicides by defaulted members.

Padmaja Reddy, founder and managing director of Spandana Sphoorty, told media last month Spandana has fully repaid its outstanding restructured loans. Share Microfin is the other MFI which has come out of the woods while other three MFIs – Trident Microfin Pvt. Ltd, Asmitha Microfin Ltd and Basix or Bhartiya Samruddhi Finance Ltd, are still struggling to come out of the crisis.

“With this capital infusion, Kedaara will pick up close to a 55% stake in the company,” said Padmaja Reddy, revealing that in next 18 months, Spandana may go for an IPO. “We could look at an initial public offer in next 18 months.”

With her shareholding reduced to 20%, other major investors include JM Financial India Fund, Valiant Capital Partners FDI Ltd, Lok Capital, Helion Venture Partners and Small Industrial Development Bank of India (SIDBI), whose shareholding got reduced to more than half now.

From a whopping loan portfolio of Rs4,500 crore before the 2010, Spandna saw erosion of half of its loans due to the Andhra Pradesh suicides crisis in the sector and recovered slightly in 2013-14. Currently, it has a loan portfolio of Rs.1,287 crore with 524 branches spread across 13 states.

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