MICROCAPITAL BRIEF: Pahal raises equity and debt with Huruma Fund, Magallanes Impacto, Northern Arc to extend microfinance to women farmers in India

Spanish firm Gawa Capital recently disbursed €6 million ($6.5 million) from Huruma Fund, a public-private partnership also based in Spain, to buy an undisclosed size minority stake in Pahal Financial Services. , a microfinance institution based in the city of Ahmedabad, India. Among the investment objectives are to help Pahal roll out an agriculture-specific loan product and set up an environmental performance monitoring system.

Pahal has also borrowed about $1.75 million each from India’s Northern Arc Capital and Magallanes Impacto, a fund managed by Spain’s Magallanes Value Investors and advised by Gawa.

Tomás Ribé, Chief Investment Officer at Gawa Capital, said Pahal has “a strong financing impact on smallholder farmers and producer organizations thanks to a solid entity with huge growth potential”.

Established in 2011, Pahal offers low-income families joint and individual loans as well as health and life insurance, all aimed at helping them “bring a qualitative change in their standard of living and status in society”. Loans from Pahal are intended to be used for business, housing renovation, agriculture, livestock, education, consumption and vehicles. As of 2022, Pahal has 210 branches, 350,000 customers – almost all women – total assets of INR 10 billion (USD 130 million). Its other investors are Base of Pyramid Asia and Dia Vikas Capital.

Huruma’s goal is to improve financial access for smallholder farmers in Africa, Asia, Latin America and the Caribbean. The fund is led by Spain’s Compañia Española de Financiación del Desarrollo (COFIDES), a government-backed development finance institution. Gawa Capital is the fund’s investment advisor. Huruma has a volume of 120 million euros ($140 million), three-quarters of which comes from private investors. By April 2022, it had deployed 45 million euros ($50 million) in debt and equity investments.

By Hasnat Aslam, Research Associate

Sources and additional resources

COFIDES press release
https://cofides.es/en/noticias/notas-de-prensa/huruma-fund-invests-6-million-euro-pahal-and-acquires-minority-stake

Live Mint Article
https://www.livemint.com/brand-stories/pahal-financial-services-raises-usd-10-million-in-equity-and-debt-capital-11649850414083.html

Pahal homepage
https://www.pahalfinance.com/

Pahal’s Finances
https://www.pahalfinance.com/investors-information/investors/

Huruma homepage
https://fondohuruma.com/

Magallanes Value Investors Homepage
https://magallanesvalue.com/

North Arc Capital Home Page
https://www.northernarc.com/

Gawa homepage
https://www.gawacapital.com/

Previous article by MicroCapital on Huruma
https://www.microcapital.org/microcapital-brief-microserfin-to-boost-farm-microinsurance-microloans-in-panama-with-2-3m-in-debt-finance-from-huruma-fund/

Previous article by MicroCapital on Pahal
https://www.microcapital.org/microcapital-brief-pahal-financial-services-borrowing-3-5m-from-grameen-credit-agricole-foundation-for-microfinance-for-women-in-india/

Did you know that MicroCapital publishes the MicroCapital Monitor every month? Learn more at https://www.microcapital.org/products-page/.

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John A. Bogar