Fincare Small Finance Bank in India has received $25m from India Business Excellence Fund – III managed by Motilal Oswal Private Equity (MOPE).
With the investment, the Fund gets a minority stake in the bank through a secondary acquisition.
Fincare Small Finance Bank is a microfinance institution-non-banking financial company (MFI-NBFC) turned small finance bank.
Out of 72 applicants, Fincare was one of the 10 to secure Reserve Bank of India (RBI) approval for conversion into a small finance bank. This was possible as per the guidelines issued by the RBI for this new class of banks in 2015.
Prior to the conversion, the bank was mainly operating from two India-based entities, Disha Microfin and Future Financial Services. The business was carried out under a single management team.
It launched banking operations in July 2017. The focus was on unbanked and under-banked base of pyramid, mass retail, micro and small enterprise segments.
MOPE managing director and CEO Vishal Tulsyan said: “Over the past decade, microfinance has established itself as an asset class with potential for high growth and profitability.
“Based on our assessment, a small finance bank is the best platform to capitalise on this opportunity.”
This transaction enables a partial exit to True North Fund V, an important investor in Fincare. Other investors in the bank include TA Associates, LeapFrog Investments and Tata Opportunities Fund.
In March, Motilal Oswal Private Equity co-led the second tranche of Series C funding round that raised an additional $70m for Indian digital lending start-up KreditBee.