Dealflow | April 11, 2017

Indian microfinance firm Spandana is back from the brink

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Indian microfinance firm Spandana is back from the brink.

The Hyderabad-based firm has raised equity of $100 million and $170 million in debt that lets it fully repay its past loans.

Founded in 1998, Spandana was one of India’s largest microfinance lenders in the microfinance hotbed of Andhra Pradesh, until the market crashed in 2010 following the imposition of severe microfinance regulations in the state. (At the time, average household debt in the state was nearly 8.5 times the national average.)

Spandana had more than a half-billion dollars in outstanding loans and was forced to restructure its debt. “Our coping strategy was very simple: stay liquid when in stress,” said founder Padmaja Reddy.

Today, Spandana is one-third its size in 2010, operates in 13 Indian states and has expanded into distribution of mobile phones and solar lamps.

The equity raise was led by private equity firm Kedaara Capital and included the Ontario Teachers’ Pension Plan. Debt financing was provided by IndusInd Bank, Yes Bank, and ICICI Bank.

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