2 days ago
Japan's SMBC Fund invests $7 million in Shivalik SFB
Kolkata:
SMBC Asia Rising Fund
, a corporate venture capital fund cofounded by Japan's
Sumitomo Mitsui Banking Corporation
, has picked a 4.99% stake in
Shivalik Small Finance Bank
, the only small finance bank in India to have transformed from a cooperative entity. The fund has invested $7 million, or about ₹60 crore, for the stake, making the bank's enterprise value around ₹1,200 crore, Shivalik managing director and chief executive officer Anshul Swami told ET.
The existing investors of Shivalik such as
Accel
, Quona, Lightspeed and Sorin Investments have also participated in this round, having put in another ₹40 crore between them on a pro-rata basis, taking the total equity raise to ₹100 crore. "The fresh equity will be used as growth capital," Swami said. "We are building a strong digital foundation to serve the MSME and retail customers across Bharat."
The funds will be utilised to strengthen the bank's technology stack and expand its workforce across critical functions such as product, engineering, and operations, he said.
Rajeev Ranka, partner at SMBC Asia Rising Fund, said the fund seeks "partnerships with regulated entities that can enable our portfolio companies to collaborate and co-create products." "Shivalik's partner-first model aligns well with this objective," he told ET.
This was the third
equity raise by Shivalik
since its transition into a bank. It had raised ₹100 crore in June last year from global venture capital firm Lightspeed and Sanjay Nayar-founded Sorin Investments along with participation from existing investors Accel India VII (Mauritius) and Quona Accion Inclusion Fund III. Accel and Quona first invested in the bank in FY22.
At present, institutional investors together have a 29.31% interest in the bank while the promoters hold around 40%. The balance is with retail investors, who are mostly old cooperative members. The bank is not listed on the stock exchanges.
The capital infusion will boost the bank's capital adequacy ratio to 24% from 19% at present and support a 35-40% targeted business growth target this fiscal. The investment in Shivalik is SMBC Asia Rising Fund's sixth in India.
The fund was cofounded by SMBC along with Incubate Fund of Singapore for the purpose of accelerating business development and partnerships through investments in high potential Asian startups.
Rajeev Kannan, managing executive officer and head of India division at SMBC, said the group is "committed to contributing to the broad-based growth of the Indian economy."
Shivalik, an urban cooperative bank since 1997, got itself converted into a small finance bank in 2021. It has a retail banking legacy.
Now, it serves over 900,000 customers across 79 branches and 114 business correspondent outlets in 11 states. Its business size crossed ₹6,700 crore and manpower count rose to 1,000. It earned a revenue of ₹423 crore in FY25.
Besides organic expansion, Swami said, the bank management is open to acquisitions for faster growth.
"We are open to acquiring a small entity in the affordable housing finance space or in the secured MSME lending space," he said. "People keep approaching us. But there is nothing concentre on the table at this point."
About 90% of the bank's business is secured lending while 50% consists of affordable home loans, business loans and gold loans.
