Suryoday Microfinance looks for inorganic growth; raises Rs 20 cr

Mumbai-based microfinance company Suryoday Microfinance is looking at inorganic opportunities to grow its customer base to 10 lakh by next year and has also announced that it has raised Rs 20 crore led by existing investors Aavishkaar Goodwell and Lok Capital.

“At present we have two to three deals on the plate, however, nothing has been finalised. We have 1.5 lakh customers and in our effort to take it to 10 lakh, an inorganic route could be looked into,” Suryoday Microfinance Chief Executive Officer Baskar Babu told Deccan Herald.

The company has a loan outstanding of Rs 120 crore and believes that even in a time when banks are heavily pushing financial inclusion at the rural level, microfinance still remains relevant.
“It's the last mite connectivity that microfinance institutions provide as its not viable for a bank in terms of cost management and smaller loans,” Babu added.

Suryoday Microfinance will use the capital infusion to strengthen its presence in Maharashtra, Tamil Nadu, Gujarat and Orissa, as well as to expand into neighbouring states.

Aavishkaar Goodwell was the first round investor followed by Lok Capital in 2010. Most recently, Suryoday raised equity capital from HDFC Group.

Vineet Rai of Aavishkaar Goodwell said, “Suryoday’s business model is strong, as it does not look at financial inclusion as a single dimensional platform for credit, but helps move the under-served population towards formal banking habits.”

Aavishkaar is a venture capital fund, managing 4 funds of $140 million.This investment has been done through the Aavishkaar Goodwell India Microfinance Development Company II Ltd fund which invests in entrepreneurial microfinance and financial inclusion businesses in India.

Suryoday has also initiated a practice of crediting loans to their customers' bank accounts instead of handing over cash. The company, at present, has 5 per cent of their total loans credited directly to the bank accounts and it targets to take it to 25-30 per cent by next year.