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I by no means thought that promoting our shares in an IPO—the holy grail of personal fairness investing—can be such a grueling course of. Nevertheless it was all value it when on April 28th within the pre-dawn hours of a New York morning I checked the information from India. The subscriptions had are available slowly at first, however within the remaining day of selling of its preliminary public providing, certainly one of our fund’s key investments, Ujjivan Monetary Providers Ltd. (India), had damaged data. The domestic-only Ujjivan IPO was oversubscribed practically 41x… far exceeding the domestic-only IPO report set by one other microfinance agency simply days earlier (Equitas Holdings had been 17 occasions oversubscribed). At that second, the $50M inclusive finance firm we’d invested in—devoted to offering monetary providers to Indian ladies within the lowest financial strata—was valued at over $375M and would climb above $425M as soon as it began buying and selling.
“So what?,” you might say, “it’s simply one other IPO.” That’s what IPOs do—they flip each crackpot thought into billion-dollar companies.” However that is totally different. The success of Ujjivan is a robust assertion concerning the worth of serving low-income ladies with monetary providers, and the flexibility of mission-aligned buyers resembling Ladies’s World Banking’s Capital Companions LP to assist them obtain spectacular returns, from each a social and monetary perspective.
Ladies’s World Banking Capital Companions is a non-public fairness restricted partnership promoted by the worldwide nonprofit Ladies’s World Banking. It makes direct fairness investments in women-focused inclusive finance establishments. Established in 2012, with funding capital from 27 Restricted Companions, who purchase into its mission, Capital Companions seeks to show Ladies’s World Banking’s long-held conviction that offering poor ladies with entry to monetary providers is a worthwhile enterprise mannequin that additionally contributes to the financial progress and welfare of households and communities. And, critically, that buyers, even small ones, can play an vital function in influencing establishments to remain centered on ladies as a key a part of their progress technique and future profitability. This is named gender lens investing.
Ladies’s World Banking’s historical past with Ujjivan preceded the institution of the Capital Companions fund. Ujjivan grew to become a member of the Ladies’s World Banking community in 2008. Membership within the community requires not solely {that a} monetary establishment supply providers to un- or under-served ladies shoppers, but in addition that it meets a rigorous set of economic and social efficiency requirements to make sure it delivers on the double bottom-line. CEO Samit Ghosh’ sturdy dedication to each monetary and social returns was evident within the every day operations of the then-rapidly rising microfinance establishment, making it the proper candidate to be a community member, and, as soon as the fund was launched in 2012, an investee firm.
One of many advantages of being a Capital Companions investee firm is entry to Ladies’s World Banking’s practically 40 years of expertise growing monetary merchandise, providers and supply channels that work for low-income ladies. Analysis specialists, product design specialists and management growth packages can be found via technical help. When this technical help is mixed with fairness funding, (and attendant shareholder affect, and in some instances (together with Ujjivan’s) a board seat,) it turns into a robust worth driver for an establishment.
In 2011, Ladies’s World Banking performed analysis on behalf of Ujjivan to grasp the chance to increase monetary entry for Ujjivan’s goal shoppers via particular person lending. Our analysis discovered important demand throughout the enterprise sectors occupied by low-income ladies. Previous to this work, Ujjivan was solely providing group loans, the staple product of microfinance establishments. Nonetheless, Ladies’s World Banking is aware of that group loans usually are not sufficient to assist the capital wants of microentrepreneurs as they develop. As an investor and board member, Capital Companions grew to become a powerful advocate of pursuing this new enterprise line, and Ujjivan’s board took on the problem of designing, piloting and rolling out particular person lending with Ladies’s World Banking’s help. Ladies’s World Banking’s product specialists offered technical help to develop the suitable credit score evaluation methodology, advertising and marketing, coaching and operations to implement this new product. This pivot to particular person lending grew to become certainly one of Ujjivan’s key market differentiators. When the following spherical of fundraising got here in 2015, buyers pointed to the person lending technique as one of many worth drivers, and acquired the shares at a 20% enhance in valuation. The establishment additionally caught the attention of India’s regulator, the Reserve Financial institution of India (RBI,) and was given the chance to use for a Small Financial institution License. Ujjivan misplaced no time in pursuing the Small Financial institution License contemplating this is able to enable it to supply desperately wanted financial savings merchandise to its ladies shoppers. That call in the end introduced it to the capital markets with the intention to shore up its capital base with home buyers as required by the RBI, and to its record-breaking IPO. With a consumer base of low-income ladies, a observe report of providing them a handy and various product set, and constantly stellar monetary and social efficiency (it’s amongst Ladies’s World Banking highest performers on social metrics), buyers lined up 41 deep for each share on supply to get an opportunity to spend money on Ujjivan and its ladies shoppers.
Ladies’s World Banking and Capital Companions is happy with the function it performed on this story. Throughout the time of its stewardship, Capital Companions acted as an ally within the board room to assist maintain the deal with ladies and Ladies’s World Banking specialists assisted the establishment in unlocking the complete worth of its ladies consumer base. The thrilling IPO lead to flip supplies Capital Companions with its first, very compelling, information level towards demonstrating the enterprise case for investing in ladies. With the earnings from promoting our Ujjivan shares, we can spend money on extra establishments to assist them alongside the identical path to serving extra ladies with the monetary providers they should construct a greater future for themselves and their households.
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