Hyderabad: Satin Creditcare Network Ltd, a microfinance company that lends mostly in the northern parts of the country, is in talks to raise 70 crore by selling a 10-11% stake, and an additional 100 crore as tier II capital, a company official said.

“We have shared our mandate with one fresh venture capital investor and one existing investor. A larger portion of the equity is likely to come from fresh investors by February next year. Also, the tier II capital will be in place by December this year," said Vivek Tiwari, chief operating officer, Satin Creditcare.

Existing investors in the company include Danish Microfinance Partners, Microvest Capital Management, SBI Ven Capital and Shorecap. In 2013, Lok Capital had sold its stake in Satin Creditcare.

The company has raised 1,500 crore debt this fiscal year and in the next six months, would bring in 2,300 crore through various banks. “The fresh funds would help us tap a 70% growth in business and cross 5,000 crore gross loan portfolio by next year," Tiwari said.

Unitus Capital and IFMR Capital would advise Satin Creditcare on its fund raising plans.

NSE-listed Satin Creditcare is among the few microfinance companies in India pushing for cashless transactions, after a pilot in Uttar Pradesh. The company wants to make at least 80% of all its transaction cashless by March next year.

The microlender currently has a presence in 16 states. “In Gujarat, we will start operations with 100% cashless disbursements and also complete it in Bihar. The challenge, however, remains to educate customers as the financial literacy is quite bleak. Most of the customers do not even know how to protect passwords," the COO said.

After the Reserve Bank of India granted small finance bank licences to eight MFIs, the industry hopes the funding scenario would improve, not just through banks but also the debt markets.

“The sector looks very promising now and is over the hump with strong reinforcement and governance abilities. It’s not that investors are suddenly chasing nor are they pulling out. From an equity point of view, there seem to be more of private equity investor interests than venture capitalists," said Kshama Fernandes, chief executive of IFMR Capital, which acts as structurer, arranger and investor for companies that lend to the financially excluded.

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