Sequoia Capital invests $11.5 mn in Indian MFI SKS Microfinance

Leading Indian microfinance institution SKS Microfinance has received $11.5 mn of venture capital funding from Sequoia Capital. This is “the first pure for-profit private equity play” ever seen in the micro-lending world, according to SKS Microfinance CEO Vikram Akula, in an interview with CNBC. Sequoia’s investment makes SKS the largest for-profit microfinance institution in the world. Sequoia’s investment also makes it SKS’ lead investor. Other stakeholders include Unitus Equity.

The concept of microfinance, which is providing small business loans to poor borrowers who lack credit, was made famous by Nobel peace prize winner Mohammed Yunus, founder of the not-for-profit Grameen Bank of Bangladesh. While the foundations are similar in concept, SKS’ version of micro-lending provides loans that carry interest rates to its 600,000 members in 7200 villages in rural India.

However, it is to be noted that Sequoia’s investment comes with a rider: in the next 3-5 years, SKS will either have an initial public offering or be acquired.

Amalgamated Bean Coffee Trading to spin off coffee chain Cafe Coffee Day into a separate company

Amalgamated Bean Coffee Trading Company Limited (ABCTCL) is planning to spin off its coffee chain Cafe Coffee Day into a separate entity. The motive behind such a move would be to list Cafe Coffee Day in the next three years. It is expected that the coffee bar business will have a turnover of a little over Rs. 800 crores by 2010 from the current Rs. 380 crores. It had recently raised close to Rs. 160 crores through a mix of debt and equity from Sequoia Capital and International Finance Corporation.

Cafe Coffee Day has its business spanning the entire value chain of coffee consumption in India. Its different divisions include Coffee Day Fresh ‘n’ Ground (which owns 386 coffee bean and powder retail outlets), Coffee Day Xpress (which owns 500 Coffee Day kiosks), Coffee Day take-away (which owns 7000 vending machines), Coffee Day Exports and Coffee Day Perfect (FMCG packaged coffee) division.

ABCTCL in its roadmap has stated it aims to double the number of coffee bars to 800 in three years, while the coffee powder vending stores will number up to 650 from the current close to 400. The Xpress brand on the other hand will be paced up to 2500 outlets from the current 500 in three years’ time frame. Cafe Coffee Day is present in 70 cities across India, and is branching out to foreign shores by setting up cafes in Vienna, Austria and is planning to set shops in West Asia, Eastern Europe, Eurasia, Egypt and South East Asia in the coming months, besides in Pakistan and the US.

Read the Business Standard article.

Firstsource Solutions, 24/7 Customer to merge

India’s fifth-largest BPO Firstsource Solutions (formerly ICICI OneSource) and 24/7 Customer, the tenth-largest, are planning to merge themselves in a move which would usher in a whole new era of consolidation in the Indian BPO / ITeS industry.

It is reported that Sequoia Capital is behind this action, which has substantial stakes in both companies. An array of strategic investments has been made in Firstsource by Sequoia, Temasek, Metavante and ICICI. In June 2003, Sequoia had led the $22 mn funding in 24/7 Customer. Firstsource employs over 10,717 people; 24/7 has 5500 people on its rolls.

Read the article in DNA Money.

FirstSource acquires US outsourcing company BPM for $30 mn; sells stake to US-based technology firm Metavante and hedge fund Galleon Partners

BPO company FirstSource Solutions, formerly known as ICICI OneSource, has acquired a Delaware-based healthcare claims’ outsourcing company called BPM and its two wholly-owned subsidiaries MedPlans 2000 and MedPlans Partners for an estimated $30 mn. This is FirstSource’s second US acquisition after it had acquired Account Solutions Group In September 2004.

The acquisition will allow FirstSource to penetrate the healthcare vertical with capabilities in complex claims’ adjudication. FirstSource will now offer clients database management, policy administration, claims processing and complex claims adjudication capabilities.

The company, by virtue of this acquisition, has also acquired a client portfolio that includes six Fortune 1000 companies and adds three centres in Rockford, Illinois; Fort Scott, Kansas and Louisville, Kentucky to its current 17 delivery centres globally which includes 11 in India, 3 in the US, 2 in the UK and 1 in Argentina. The company has a workforce of 9,018 full-time employees and 61 clients as of September 30, 2006. With this acquisition, the US headcount of FirstSource Solutions has risen to 800.

Read The Economic Times and Business Standard articles.

In a related development, the ICICI Group has divested around 19% stake in FirstSource to US-based banking technology solution provider Metavante and US hedge fund Galleon Partners in a pre-IPO placement. Metavante already holds an 11% stake in Firstsource which it had acquired in April last year through a combination of primary infusion and secondary purchase. The deal has been reported at $$75-80 mn; the ICICI spokesperson has confirmed the deal but declined to comment on its size.

Along with group companies ICICI Bank and ICICI Ventures, Sequoia Capital and Temasek Holdings also holds stake in FirstSource. Sequoia Capital has invested $17 mn in FirstSource for 11% stake and hopes to make $60 mn on its initial investment in the company’s upcoming IPO. Temasek Holdings has invested $50 mn for picking 11-12% stake in the company.

Metavante has picked up a 14% additional stake in the company, taking its total shareholding in the company to 25%. Galleon Partners has acquired 5.84%. FirstSource is planning a public issue of 95.6 mn equity shares, including a fresh issue of 60 mn equity shares and 35.6 mn equity shares, to be offered for sale by the ICICI Group.

Read The Economic Times article.

Makemytrip.com gets $13 mn from VC investors

Travel portal Makemytrip.com has raised $13 mn in a second round of funding. Helion Ventures, Sierra Ventures and existing investor SAIF Partners are the investors. The company has a projected turnover of Rs. 600 crores ($130 mn) for the current financial year, up from Rs. 200 crores ($42 mn) last year. Travel portals have been seeing a lot of money coming in of late. Recently, Travelguru.com raised $15 million from Battery Ventures and Sequoia Capital India. Cleartrip.com has also reportedly raised $8 million from DAG Ventures and Sherpalo Ventures.

Read ContentSutra.com for more.