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| Share Microfin Ltd. |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 28327 |
| Company name | Share Microfin |
| Country | India |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Pending Approval |
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| Date SPI disclosed | May 26, 2009 |
| Projected board date | June 26, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Share Microfinance Limited (“SML” or “the company”) is a leading microfinance institution in India with a presence in 16 states.
SML broadly follows the Grameen operating model and lends mainly to women Joint Liability Groups (“JLG”). The company has diversified its product range and is now offering individual loans for Micro Enterprises as well as personal loans. The company is also offering non credit based services viz. money transfer, credit life insurance and health insurance. |
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| Project sponsor and major shareholders of project company |
SML was founded in 1989 as an NGO and transformed into a public limited company in 1999. It was promoted by Mr. M. Udaia Kumar a well known professional in the Indian microfinance sector and currently the CMD. Mr. Udaia Kumar has 20 years experience in the field of microfinance and development.
The key shareholders in the company include Mr. Kumar and his associates, Legatum Ventures Limited and Aavishkar-Goodwell India Microfinance Development Company Limited. |
| Total project cost and amount and nature of IFC's investment |
SML plans to raise additional equity funding up to $50 million to support the growth in its business especially outside Andhra Pradesh.
IFC is considering an equity investment along with other investors in the project to support the growth plans of the company. |
| Location of project and description of site |
SML is headquartered in Hyderabad and currently operates with a branch network of over 750 branches across 16 states covering close to 15,000 villages, with operations mainly in the states of Andhra Pradesh, Chhattisgarh, Karnataka, and Madhya Pradesh. The borrowers are mainly the poor in rural and semi-urban areas.
IFC investment made in the organization would benefit the entire network and allow the company to expand to other states and rural areas. |
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| Anticipated development impact of the project |
SML plans to significantly grow its operations in the northern, central and eastern states (Chhattisgarh, UP, MP, Uttranchal, and West Bengal) many of which are identified by IFC as low income states. This project will help in expanding the projected outreach of access to finance to incremental 8.6 mn borrowers (about 43 mn population) by FY13 in some of the poorest states in India.
Most of the MFIs operating in India are concentrated in southern India. This project will promote a more balanced growth of microfinance in India. SML is focusing on growth in the northern, central and eastern India, where microfinance penetration is very low.
The company provides loans primarily geared towards employment generation and productive investments. |
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| IFC's expected development contribution |
IFC’s investment would provide increased access to finance particularly in the low income states: This project has a strong fit with IFC’s strategy to improve access to finance/ rural finance. The company’s plan to grow outside the home state of Andhra Pradesh provides an opportunity to increase microfinance penetration in the low income states.
IFC will help balance outreach with sustainability and provide comfort to sponsors to raise additional funds needed for nationwide expansion. |
| Environmental and social issues - Category FI |
This project involves IFC’s support for the business of microfinance and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. Share will be required to:
- Develop a procedure relevant to its business process, prior to disbursement, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on the IFC Microfinance exclusion list
- Identify qualified persons to manage and implement the procedure
- Demonstrate commitment and resources to implementing the procedure
- Demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions
- Submit a periodic report to IFC as per a format to be provided by IFC |
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| For inquiries about the project, contact: |
Mr. Udaia Kumar
Share Microfin Limited
#1-224/58, Rajeev Nagar
Nacharam; Hyderabad 500076.
Tel 040 27158380/7
sml@sharemicrofin.com |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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