Grameen Foundation : Resource Center : Print Newsletter : Spring 2006 : Half Million Equity in Indian MFI
GFUSA and Venture Capitalist Infuse Half Million Equity in Indian MFI
A $500,000 equity investment in the Indian microfinance institution CASHPOR Financial and Technical Services was made at the end of 2005 by Grameen Foundation USA (GFUSA) and Vinod Khosla, co-founder of Sun Microsystems and a Silicon Valley venture capitalist.
A $500,000 equity investment in the Indian microfinance institution CASHPOR Financial and Technical Services was made at the end of 2005 by Grameen Foundation USA (GFUSA) and Vinod Khosla, co-founder of Sun Microsystems and a
Khosla and GFUSA each contributed $250,000, giving both investors an 8.1 percent stake in the microfinance institution (MFI). “I am happy to invest in CASHPOR Financial & Technical Services Ltd., as it is providing microfinance to the poor,” said Khosla.
Access to equity is often an MFI’s largest barrier to meeting demand for its services. The microfinance institution can use the equity for leveraging debt funds from commercial banks and thus overcome the capital constraint. The Economic Times, India’s leading financial newspaper, quoted Khosla saying, “I hope that the Indian government in general, and the Reserve Bank in particular, will facilitate and promote mutually-beneficial and commercial relations between MFIs and banks, so that the huge amounts of loan funds needed by the poor to reduce their poverty will be made available to them.”
GFUSA and Khosla hope that the investment will encourage other similar investments in Indian MFIs. The transaction also represents GFUSA’s first equity investment in one of its microfinance institution partners and signals a vote of confidence in Cashpor’s long-term sustainability.
The equity investment is the latest collaboration in an ongoing friendship between Khosla and GFUSA. Khosla is a member of GFUSA’s Investment Committee and has acted as a donor-guarantor in its Growth Guarantee Program.
More recently, Khosla joined other social investors to invest $2.5 million in GFUSA partner SKS that will give hundreds more people in poverty access to microfinance.
Grameen Foundation : Resource Center : Print Newsletter : Spring 2006 : Half Million Equity in Indian MFI
Grameen Foundation uses microfinance and innovative technology to fight global poverty and bring opportunities to the world's poorest people. With tiny loans and financial services, we help the poor, mostly women, start businesses and escape poverty. Our global network of 55 microfinance institution (MFI) partners including our Growth Guarantee partners has touched more than 34 million people in 24 countries. In addition, we introduced and now sustain technology initiatives (Mifos and Village Phone) in Cameroon, Kenya, Rwanda, and Uganda, bringing our total country outreach to 28.
+1-202-628-3560 www.grameenfoundation.org
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