Creador invests $33m in India’s Ujjivan

24.11.17 / Author: Holden Mann

Creador has invested INR2.15 billion ($32.9 million) in Ujjivan Financial Services, the publicly listed holding company for Ujjivan Small Finance Bank.

Creador will take a 5% stake in Ujjivan, according to a statement. The company will use the new capital to support its conversion into a small finance bank (SFB). It has already rolled out 100 full-service banking branches in India and plans to convert all of its 445 existing branches within the next two years.

Ujjivan started operations in 2005 as a microfinance institution (MFI) targeting Indian urban and semi-urban poor customers. In 2015 it received approval from the Reserve Bank of India to set up an SFB, along with nine other MFIs and non-banking finance companies (NBFCs). The license allows institutions to perform basic banking services such as acceptance of deposits and lending, and is aimed at helping rural and low-income customers enter the formal banking system.

Ujjivan raised INR8.9 billion in its 2016 IPO, and saw its stock rise on its trading debut to INR231.9 from the INR210 issue price. Several of its private equity backers, including Netherlands development finance institution FMO, Women’s World Banking Capital Partners, Wolfensohn Capital Partners, and Unitus Capital made full exits in the offering, while Elevar Equity, International Finance Corporation (IFC), India Financial Inclusion Fund and Sarva Capital made partial exits. The price has appreciated significantly since, and stood at INR383 as of the close of trading on November 10.

A number of SFB license recipients have pursued public listings, seeing them as an effective way to reduce their foreign shareholding to qualify for the license. Au Small Finance Bank, earlier known as Au Financiers, was among the most successful, raising INR19 billion in its offering earlier this year and providing partial exits for Warburg Pincus, ChrysCapital, Kedaara Capital and IFC.