Chennai-based Equitas Micro Finance India has raised Rs 50 crore from three investors in

RELATED ARTICLES Bharti Airtel shares rally up to 5.6% on Qualcomm deal Tata Power shares down 5% post Q4 results Thomas Cook shares up over 2% on bourses SBI shares extend rally for third day; stock up over 3% Reliance Capital shares zoom over 7% on smart Q4 earnings

its second round of capital rising through issue of compulsorily convertible preference shares. With the funding the company’s networth stands at Rs 65 crore and makes it the fourth highest capitalised micro finance institution in India.

Bellwether Microfinance Fund, India Financial Inclusion Fund and MVA Ventures are the three new investors in Equitas. MVA Ventures has invested Rs 25 crore while other two have jointly brought in the remaining. The compulsorily convertible preference shares would be converted into equity by end of August 2009.

Equitas was started in January 2008 with a capital of Rs 15.5 crore. The promoters brought in 80 per cent, while remaining 20 per cent was raised from private equity firms Aavishkaar Goodwell India Microfinance Devel-opment Company and Small Industries Development Bank.

“We lend money only for business purposes and not for consumption. The demand for micro finance is huge. There is huge gap in demand and supply, with meagre Rs 20,000 crore in supply against an projected demand of Rs 2 lac crore,” P N Vasudevan, founder and managing director of Equitas, said.

Equitas has a client base of 70,000 at present and outstanding loan of Rs 65 crore and recovery rate of 100 per cent. It plans to reach 600,000 clients in Southern India by end of fiscal 2009.

The company expects to increase its head count to 1,200 from present 350 and expand its branches to 100 from 15 at present by end of fiscal 2009.

Vasudevan, the former executive from Development Credit Bank, said the company would mainly focus on Southern India in its first full year of operations and also target the urban market. There are 11 lakh households in Chennai alone who are in need of micro finance, he added.

Equitas is adding 1,000 clients per branch per month compared to the industry average of 250 clients per month. The company offers loans of Rs 10,000, Rs 12,000 and Rs 15,000 for two years and the repayment is fortnightly. It charges interest rate of 26 per cent.

Vasudevan also noted that the company’s cost of client acquisition is the lowest in the industry due to efficient use of technology. He added that the company aims to return 20 per cent of capital employed in the next three years.