Ground-breaking Investment by Legatum and Aavishkaar-Goodwell to Support SHARE's Growth to 6 Million Clients by 2012
15th May 2007

Legatum and Aavishkaar Goodwell announce a landmark equity investment in SHARE Microfin Limited, India's leading microfinance institution. Legatum, a private firm that invests in capital markets and in initiatives that support human and social development, will invest US$ 25Mln acquiring a majority stake in SHARE. The India-focused microfinance development company Aavishkaar Goodwell will invest US$ 2Mln in SHARE. The investment will enable SHARE to reach an additional five million customers over the next five years, and represents the largest equity investment to-date in the global microfinance sector.

Legatum's financial adviser on the transaction was Intellecap Pvt. Ltd., a leading social investment adviser based out of Mumbai and Hyderabad, India.

Udaia Kumar, Chairman and Managing Director of SHARE Microfin Ltd., said that the transaction exemplifies the important role that experienced global investors will play in helping to develop the microfinance industry.  According to Mr. Kumar, SHARE is now ready for the next stage in its growth. Mr Kumar welcomes the global experience and vision of Legatum and the business experience and on the ground presence of Aavishkaar Goodwell's team.

Mark Stoleson, President of Legatum, said "SHARE is at the forefront of the transformation of the sector in India and is an excellent example of how well-run businesses are able to deliver social solutions that are both scalable and sustainable. With over a million clients across 8,000 villages, SHARE has already established itself as India's leading microfinance institution. Along with Aavishkaar Goodwell India Microfinance Development Company, we will seek to support SHARE in setting new standards for best practices and governance, while providing high quality financial services to the unbanked in India."

Mr Vineet Rai, who leads Aavishkaar Goodwell's team in India, said "The track record of Mr Udaia Kumar and his team is impressive. That Mr Kumar welcomes us on board is a clear recognition of our strategy to provide hands-on support to fast growing organizations such as SHARE and help them integrate into the mainstream. We believe SHARE has a bright future ahead and will be leading the field as the sector in India is growing very rapidly and becomes more mature."

To read the official press release from Legatum, please click here.

To read the official press release from Aavishkaar Goodwell, please click here.

 

 

Interview of Mr. Udaia Kumar with Indianngos.com

This is an excerpt of Mr. Udaia Kumar’s interview with Indianngos.com. Mr. Kumar is the Chairman and Managing Director of SHARE Microfin Limited.

How did SHARE enter into Micro Finance?
Initially, when I was exposed to reasons for poverty in the country, I found that literacy, education, health, income generation and self governance are the major issues that needed to be tackled to address the problem of poverty.

Then we analyzed the situation very carefully, we found that the Government is not expected to give the capital, it was considered as the job of the commercial banks. When you look at the commercial banks, you see that the design of the banking system is such that whoever has some sort of an asset base gets the access to the loans provided by these banks. This means that 40% of the population in this country that is poor and doesn't have an asset base is deprived of getting access to this working capital.

It is only the big and the rich strata which avail of this capital and are able to multiply. Moreover this deposit comes from public deposits i.e. this is public money which is used by only 60% of the population but balance 40% doesn't have access. On one hand, the government has been spending on training but they are unable to link the commercial banks with these training programs and I wanted to address this gap.

For this I did a study and I realized that financial services can be provided even without collateral provided you are able to develop the techniques and the appraisal system. If you study a money lender, he gives a loan to others but he doesn't take any collateral. So the individual to individual borrowing takes place but if you are able to institutionalize it, you have succeeded. This is how the initiative of SHARE was born.


Share was started as a not for profit entity, today SHARE Micro fin Ltd is a Public Limited Company. Are these two different entities or they are same. If two different entities, they why? And what is the role of each one?

In the year 1989-90, I did some kind of a study and then came out with an action research project in terms of SHARE which was an NGO. So when I started out with this project, the main aim was to try out the idea of providing financial services to poor people without collateral. At that point of time I don't think any microfinance project existed in this part of the world. It was present in Bangladesh but was not widely known. I started it in the form of an ngo, as I realized that the action research project , we were very careful as I had borrowed Rs 18 lacs and NGOs were not used to borrowing money when free grants were available. Nobody believed me initially when I said that I was borrowing 18 lacs from the bank and lending the money to the poor to improve their quality of life. Moreover there was no prior model in this country in which you give borrowed money to poor people and recover it back. But I was confident as I had studied every aspect and I was sure that this action project would succeed.

To read the complete interview, please click here.