The Asian Development Bank (ADB) and private equity firm Oman India Joint Investment Fund (OIJIF) are investing 180 crore (around $25 million) in east India-based microfinance firm Annapurna Finance, said two people aware of the development.

Bhubaneswar-based Annapurna is promoted by social activist Gobinda Pattanaik. With a portfolio of more than 2,253.4 crore, it is one of the leaders in microfinance in eastern India. It serves more than 1.4 million borrowers through a network of more than 500 branches, with more than 4,000 employees.

“They are in advanced stages of closing the paperwork for their latest round of funding. The formalities are expected to be completed in the next few days. ADB has invested around 130 crore in the company in this round, while the rest has come from OIJIF, which has made a secondary investment by purchasing shares from some existing shareholders of the firm," said one of the people cited above, requesting anonymity as the discussions are private.

Bringing ADB as an investor will allow Annapurna access long-term credit line from ADB, the person said.

Emails sent to ADB and OIJIF did not elicit any response. Annapurna declined to comment on the development.

The latest round of funding follows Annapurna’s 155 crore fundraise in June last year from OIJIF, a private equity fund backed by Oman’s sovereign wealth fund, State General Reserve Fund, and India’s largest lender, State Bank of India.

Annapurna, which is focused on rural India, is primarily engaged in providing micro loans to women for income-generating activities.

The company has raised multiple rounds of equity in the past.

Its earlier investors include Small Industries Development Bank of India (Sidbi), Incofin, Belgian Investment Organization, Sidbi Venture Capital, DCB Bank, Oikocredit, Women’s World Banking and Bamboo Capital Partners.

The microlender reported a 39% growth in revenue in financial year 2018 to 342 crore.

OIJIF, which has topped up its investment in Annapurna, last year announced the second close of its second fund, OIJIF II, with commitments of $230 million.

Other investments from its second fund include 100 crore in Pune-based automobile components maker Divgi TorqTransfer Systems and a 170 crore investment in Stanley Lifestyle, a luxury furniture and home decor products maker.

Several non-bank lenders have raised funds from private investors in recent months, despite fears of a liquidity crunch in non-banking financial companies (NBFCs).

NBFCs that have raised private equity funding in recent months include SME lender Veritas Finance Pvt. Ltd and commercial vehicle financiers Ess Kay Fincorp Ltd and Kogta Financial India Ltd.

On 14 January, Mint reported that Samunnati Financial Intermediation and Services Pvt. Ltd, an NBFC specializing in loans to farmers and entities engaged in agriculture, is in talks with global private equity firms General Atlantic and Warburg Pincus to raise around $50-70 million.

Earlier this month, the Press Trust Of India (PTI) reported that ADB plans to scale up its funding commitments in India to $4.5 billion (about 31,500 crore) in 2019, with about $1 billion earmarked for the private sector.

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