Financing will be used to expand Vistaar’s over INR 3,100cr portfolio of secured long-term loans to MSMEs in India.
Bangalore (Karnataka), August 5: One of India’s leading MSME lending institutions, Vistaar Financial Services Private Limited (Vistaar), has secured a commitment for a loan up to U.S. $50mn from the U.S. government’s development finance institution, U.S. International Development Finance Corporation (DFC).
Vistaar was founded in 2010 when MSME lending was not very common in India. The company has developed the MSME financing market as a leader in providing long-term loans for this segment that has traditionally been unserved or has had to contend with informal high-cost borrowing. Vistaar’s financing has enabled over 2,00,000 MSMEs across 12 states in India since inception to enhance their productive capacity and hence incomes. The company’s clear vision to serve small businesses and be one of the important catalysts in India’s drive towards “Make in India” has taken it to the strength of over 2,500 employees and AUM of INR ~3,100 cr as of March 2023. This loan from DFC comes on top of a recent primary equity infusion amounting to ~$36mn from Warburg Pincus, a leading global private equity firm focused on growth.
India has an MSME financing gap of over $230 billion, or 11% of GDP annually, with women-owned and -led enterprises facing disproportionate barriers to accessing finance. DFC’s support is expected to assist Vistaar in expanding its secured MSME lending portfolio in India with an emphasis on serving women-owned and led enterprises and rural MSMEs.
Setuka Partners LLP, a boutique advisory firm focused on catalyzing patient capital from international financial institutions for emerging and frontier market enterprises, was the exclusive advisor to this transaction.
Speaking on the development, Avijit Saha, CEO of Vistaar, said, “We are extremely thankful to the U.S. International Development Finance Corporation (DFC) for committing to this facility, which comes to us at the right time and helps us in our goal of strengthening women’s led entrepreneurship, further deepening our presence in rural markets, and reaching out to more unserved and underserved customers.”
Brahmanand Hegde and Ramakrishna Nishtala, the Founders of Vistaar, said, “In our Vision of ‘Catalyst to the underserved,’ we have created a niche for ourselves empowering small businesses and the self-employed across 12 States in India by providing them with reliable and responsible funding so that they can achieve greater economic and social well-being. We aim to achieve this social goal through grassroots efforts without compromising on the pillars of asset quality and profitability that are needed to build a sustainable institution of scale.”
“DFC’s $50 million investment in Vistaar will expand access to capital for lending to small women-owned and -led enterprises in rural India facing barriers to financing,” said James Polan, Vice President of DFC’s Office of Development Credit. “DFC is proud to work alongside partners like Vistaar to support increased access to financing for innovative enterprises in India.”
About U.S. International Development Finance Corporation
The U.S. International Development Finance Corporation (DFC) partners with the private sector to finance solutions to the most critical challenges facing the developing world today. We invest across sectors, including energy, healthcare, critical infrastructure, and technology. DFC also provides financing for small businesses and women entrepreneurs in order to create jobs in emerging markets. DFC investments adhere to high standards and respect the environment, human rights, and worker rights.
About Vistaar Financial Services Private Limited
Started operations in April 2010 and based in Bengaluru, Vistaar provides secured loans to micro-enterprises across 12 states with more than 200 branches and over 2,500 employees. The company provides 100% secured lending across ticket size categories through business and housing loans and targets small businesses such as shops, small manufacturing units, power looms, kirana /general shops, and home-based industries, which do not have access to organized funding for growth.
The company’s transparent & consistent disclosures have helped build a strong and stable liability franchise with access to 40+ lenders. With a long-term credit rating of ‘ICRA A (Stable)’ and ‘India Ratings A (Stable)’, the company has achieved an AUM of INR ~3,100 cr with an AUM CAGR growth of 40% over the last 10 years. Early investors in the company include Elevar Equity, Omidyar Network India, Saama Capital, and Westbridge Capital.
About Setuka Partners LLP (www.setuka.in)
Setuka Partners LLP is a mission-driven boutique advisory firm that works with responsible enterprises in emerging and frontier markets and investors to forge enduring partnerships that involve the movement of catalytic capital (debt, equity, grants) and capacity from overseas providers to deserving social enterprises. Founded in April 2019 by Aman Khanna and based in Washington, DC, the firm has already unlocked catalytic capital and value creation for investors and several social enterprises in these markets.
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