FINO to raise up to $20 mn from private equity funds

Mumbai-based Financial Information Network and Operations (FINO), which provides technology solutions such as biometric smart cards for banks, plans to raise as much as $20 million (Rs102 crore) from private equity funds to increase the number of customers it serves fivefold in two years.
“We are in the process of dialogue with a few people. We are looking to raise $15-20 million and it should be finalized in the next couple of weeks,” said Rishi Gupta, chief financial officer and president (sales and marketing) of FINO. Gupta declined to reveal the identities of the likely investors. He said two parties would be infusing funds into the company, whose technology solutions have so far helped financial institutions to reach five million customers. FINO is targeting increasing the number to 25 million by 2011.

Client focus: Rishi Gupta of technology solutions provider FINO. He says that the firm is looking to deepen its base with all its customers.Private sector institutions including ICICI Bank Ltd, ICICI Lombard General Insurance Co. Ltd and IFMR Trust hold 30% of FINO. Public sector entities such as Life Insurance Corp. of India Ltd and Union Bank of India hold 30%.
The remaining 40% is owned by institutional investors such as International Finance Corp. (IFC), the private sector arm of the World Bank, and Intel Capital, the investment arm of chip maker Intel Corp.
FINO was founded in July 2006 with the aim of providing a shared pan-India technology infrastructure linking clients and financial services providers, reducing their cost of client acquisition and servicing. It aims to take financial services to under-served and unbanked populations.
“Given that this firm (FINO) has already raised $20 million in 2007 and with a credible set of investors such as IFC and Intel Capital, and also given that microfinance is doing well despite the economic downturn, I don’t see any reason about their raising funds now,” said Arun Natarajan, founder and chief executive officer, Venture Intelligence, an information and networking services provider to private equity and venture capital investors in India.
FINO currently works with 12 public and private sector banks, three insurance companies and on government schemes such as the National Rural Employment Guarantee Scheme, which promises at least 100 days of work yearly to at least one adult from each rural family.
“We are looking to deepen our base with all our customers. We are looking at cross-selling of products,” said Gupta.
FINO has developed so-called micro deposit machines in association with Ohio-based NCR Corp., which would be installed at various locations to enable small customers to save money by making regular deposits and will also help in assisted cash withdrawals.These machines, named FINO Tijori-NCR Easy Point, are movable machines that would be handled by agents such as shopkeepers.
These agents would target people such as autorickshaw drivers and others who earn daily wages to encourage them to save regularly. These machines would be located ideally near a bank branch so that opening an account and depositing money becomes easier. The agents would help customers carry out all the transactions and receive a commission of Rs2 for every transaction carried out.
The company launched a pilot project in Mumbai last month and is planning to set up at least 300 such machines at various places across the country.