Varanasi-based Utkarsh offers microfinance products to the underserved population in the Northern and Central parts of India.
Commonwealth Development Corporation (CDC), world's oldest Development Finance Institution owned by the Government of United Kingdom (UK), together with Lok Capital, one of the largest dedicated venture capital funds in India for businesses focused on serving the bottom of pyramid (BOP) customer segment, have announced Series D investment of $21 million in Utkarsh Micro Finance Private Ltd.
The Series D funds will be utilised to help the company diversify its portfolio of services and products as well as grow in existing geographies while expanding in others. Existing investors IFC, NMI and Aavishkaar have also participated in this round of funding
Founded in 2009 by Govind Singh, Varanasi-based Utkarsh offers microfinance products to the underserved population in the Northern and Central parts of India where access to formal source of finance has been historically underpenetrated as compared to the States in the East and South India.
Speaking on the occasion, Govind Singh, Managing Director & CEO, Utkarsh, said "We are delighted to have CDC and Lok Capital on board as investors. We are also encouraged to see our existing investors participating in this round, reflecting their continued confidence in team Utkarsh. Through this infusion of funding, we plan to impact more districts, diversify products and services and enhance our responsible finance initiatives, social interventions and client engagement initiatives".
Utkarsh has tapped into this large opportunity through credit and pension products and by launching Micro Enterprises Loans and Micro Pension. The company's customer base is predominantly women focused; the joint liability group loans are specifically designed for the lower-income women. Over four lakhs financially excluded women have been impacted in the states Utkarsh operates in.
The company is deeply embedded in 56 districts of UP, Bihar, Uttarakhand, Delhi, Haryana, Madhya Pradesh, Maharashtra and Himachal Pradesh. It currently has 213 branches with an active customer base of over 4.8 lakhs and an impressive loan portfolio of Rs 552 crore as of November 2014.
Announcing the funding, Vishal Mehta, Co-founder and Managing Director, Lok Advisory Services, said "These are progressive times for the financial inclusion space and with the kind of regulatory support MFIs currently have, they have the option to transform into more robust Institutional structures. With this in mind, it becomes important for us to fund institutions that have the vision and capacity to be able to leverage the current environment and we believe Utkarsh is one of them. Govind and team has built a strong institution in a difficult geography with focus on processes and funding relationships".
CDC is one of the investors in Lok Capital LLC and Lok Capital II LLC and is co-investing with Lok for the first time. Talking about the investment in Utkarsh, Maria Largey, Investment Director, CDC Group plc, said "CDC is committed to investing direct equity and debt into the South Asia continent in social ventures, including microfinance and broader financial inclusion. We have been impressed by Utkarsh's sustained growth and hope this fund infusion will enable the company to grow further. Our stable investment approach complements Utkarsh's strong management team."
Prior to this investment, Utkarsh raised three rounds of funding from Aavishkaar Goodwell India Microfinance Development Co. Ltd, International Finance Corporation (IFC) and Norwegian Microfinance Initiative. The funds were deployed for product diversification and to strengthen presence in Uttar Pradesh, Bihar, Uttarakhand and Madhya Pradesh.
Speaking of the latest round of funding, Vineet Rai, Founder & CEO, Aavishkaar, said: "The promoter team at Utkarsh led by the indomitable Govind Singh has built an exceptional institution in the heart of Eastern UP that has built a reputation of high quality responsible finance for people from low income and poor families. The commitment and passion shown by the leadership team at Utkarsh in creating stakeholder value and benefitting all the shareholders at the same time makes this institution special. With the new investment we believe that Utkarsh is poised to leapfrog its competitors and move into a different growth orbit".
Apart from providing a suite of financial products, Utkarsh has also established a non-for profit arm, Samutkarsh Welfare Society, to provide vocational and financial awareness training, market linkages, and build health and green energy (solar) initiatives.