Valuation services for equity investment

Many MFIs find it difficult to grow as they lack equity capital. Typically they do not have any experience with private equity or hybrid instruments. At the same time they are attractive equity investment destinations given their unique proposition of social as well as economic returns. We offer to help such MFIs value their equity and negotiate with investors.  We have done the valuation for one of the leading MFIs in India (ESAF).  Some other valuation assignments are in the pipeline.

Due Diligence and pre-investment surveys

We undertake due-diligence on behalf of the investors who wants to fund MFIs. Our professional advice ensures that investments realize required returns. The broad areas, which are investigated, are as follows.

1.   Profile of the promoters and the key people/organizations associated with the MFI/proposed MFI.
2. Legal structure
3. Business as well as revenue model
4. Business plans
5. Operating strategies
6. Competition in the current and proposed market areas
7. Existing and proposed sources of finances
8. Existing liabilities
9. Human resources
10. MIS, accounting and internal control systems

Monitoring

It is important for the investors to monitor performance of MFIs on a periodic basis. We undertake on-site and off-site monitoring on behalf of investors who engage us so as to ensure optimum utilization of funds and safety of investments.

Some of the parameters, which are monitored, are as follows.

1.   Changes in the legal and organizational structure.
2.    Growth in operations
3.    Changes in strategies
4.    Performance vis-à-vis business plans
5.   Changes in the human resource profile
6.   Changes in the quality of management systems
7.   Changes in the portfolio quality
8.   Changes in equity and liability structure
9.   Changes in profitability and capital adequacy
10. Change in the risk profile

Capacity building needs assessments

Many MFIs require capacity enhancements in order to perform professionally on a sustainable basis. We undertake capacity building needs assessments for the MFIs in order to point out specific areas for improvement.