New Delhi, India, March 31, 2010
—IFC, a member of the World Bank Group, will invest 350 million Indian rupees in AU Financiers, a local nonbanking finance corporation, to serve the financial needs of low-income, self-employed, first-venture, and small transport entrepreneurs in semi-urban and rural Rajasthan and other Indian states. AU Financiers expects to reach more than 180,000 small borrowers in five years.
The India Business Excellence Fund, or IBEF, a private equity fund managed by Motilal Oswal Private Equity Advisors Private Ltd., also known as MOPE, will invest 200 million Indian rupees in the project. MOPE has invested in the company since 2008.
AU Financiers plans to build on its presence in remote areas and grow from a small base to meet the needs of those who find it challenging to access credit for business activities. The company intends to expand its nascent business of loans against property and small-ticket business loans for micro and small enterprises. With IFC and IBEF support, AU Financiers will be able to build scale, penetrate deeper into semi-urban and rural areas, and access bank funds to increase lending.
“AU operates as an extended arm of banks and aims to reach borrowers in remote areas untouched by banks. High costs make it difficult to reach this segment. With IFC’s and MOPE’s support, we expect to realize significant potential in our outreach,” said Sanjay Agarwal, Managing Director, AU Financiers.
“IFC is excited about supporting AU Financiers as it aims to reach small borrowers, two-thirds of whom have limited or no access to finance from organized players,” said Paolo Martelli, IFC Director for South Asia.
"Since our initial investment in February 2008, we have incubated AU Financiers and worked closely with the company to strengthen its business model. The current round of financing is a significant milestone to help develop AU Financiers into the most respected nonbanking finance company in India with a rural focus," said Vishal Tulsyan, CEO and Director of MOPE.
IFC is the only international financial institution focused exclusively on the private sector, the engine of sustainable development in emerging markets. Along with IBRD, it is currently seeking a capital increase to strengthen its ability to create opportunity for the poor in developing countries—including by helping local firms like AU financiers expand borrowing to low-income and underserved customers.
About IFC
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $14.5 billion in fiscal 2009, helping channel capital into developing countries during the financial crisis. For more information, visit
www.ifc.org
.
About AU Financiers
AU Financiers is a Jaipur based asset finance company. The company offers loans to low income segments for commercial vehicles, multi-utility vehicles, tractors and three wheelers. Most of the borrowers are first time buyers and small fleet operators, in Tier II/Tier III cities and rural regions in Rajasthan, Maharashtra and Gujarat. The company has also initiated working capital loans to micro and small enterprises.
