Press Release on Capital Trust Microfinance

Capital Trust launched it's microfinance operations in May 2008, prior to which it was engaged in hire-purchasing, leasing and two wheeler finance. In less than two years, Capital Trust has grown to serve more than 22,000 clients across 25 mini branches in three states: Delhi, Haryana and Uttar Pradesh. The company has grown from 4,157 members in December 2008 to 22,774 members in March 2010. The Gross Loan Portfolio outstanding at FYE 2009 was Rs. 41 million and grew to Rs. 124 million as of FYE 2010. Capital Trust reached profitability in its first year of microfinance

New Delhi, Delhi, May 4, 2010 /India PRwire/ -- The global microfinance sector has been growing at a torrid pace since the 1990s. 2005 was declared the "Micro Credit Year" by the United Nations and in 2006, Dr Mohammed Yunus was awarded the Nobel Peace Prize for his work founding Grameen Bank in Bangladesh. The concept was thus thrust into the mainstream and has become a priority for governments, banks and corporates alike. The business opportunity has also enticed investors worldwide.

Capital Trust launched it's microfinance operations in May 2008, prior to which it was engaged in hire-purchasing, leasing and two wheeler finance. In less than two years, Capital Trust has grown to serve more than 22,000 clients across 25 mini branches in three states: Delhi, Haryana and Uttar Pradesh. The company has grown from 4,157 members in December 2008 to 22,774 members in March 2010. The Gross Loan Portfolio outstanding at FYE 2009 was Rs. 41 million and grew to Rs. 124 million as of FYE 2010. Capital Trust reached profitability in its first year of microfinance

Founded in 1985, Capital Trust is publicly listed on the Bombay Stock Exchange. The company had its first public issue of Rs. 6 million in December 1985, which was oversubscribed and subsequently came out with rights issues in 1992 and 1994. The current managing director along with his associated companies increased their equity ownership in July 2009 from 39% to 69% by repurchasing stock from other major shareholders through a public offering of 1.5 million shares which was completed in October 2009. The stock received a slight boost after the October offering, but jumped significantly after the management's press release in February 2010 that described the company's microfinance plans. The company's stock closed at Rs. 62.10 on April 13th, 2010 with a market capitalization of Rs. 465.8 million.

Capital Trust is well positioned to take advantage of the strong microfinance growth in India. The company targets to reach Rs. 13,733 million of loans outstanding by the end of FYE 2015. The growth in the portfolio will come from the addition of new loan clients due to planned branch roll outs and from repeat lending of existing loan clients The company plans to expand into five additional states and have 1,585 mini branches by 2015. To meet the funds requirement in keeping with the proposed growth, Capital Trust has appointed a New York based investment consultants, Cedar Street Capital, to raise Rs 200 million foreign equity and Rs 360 million debt.

Capital Trust's long-term goal is to be the leading microfinance company in the Indian market and a key financial partner for the poor, underserved woman business owners of the region. Capital Trust intends to continue expanding its presence in Uttar Pradesh while also opening new mini branches in Rajasthan, Madhya Pradesh, Chhattisgarh, Gujarat and Orissa. The Company has already demonstrated initial successes in the microfinance market and is well positioned to achieve its goals with the anticipated capital infusion.

Notes to Editor

Capital Trust was established in 1985 by eminent bankers and industry professionals. Mr. K.R. Puri, Ex-Governor of the Reserve Bank of India and Mr. H.S. Beg, Ex-Chief Justice of India were two of the first professionals to join the firm.

Since inception, Capital Trust Ltd. had been engaged in hire-purchasing and leasing of plant and machinery, office equipment and two wheelers. However, in May 2008 the business strategy was shifted to focus exclusively on microfinance lending. Since then, the Company has been experiencing rapid growth from this initiative. Capital Trust currently operates 25 microfinance branches and serves over 22,000 clients with total loans outstanding of Rs. 124 million ($2.9 million) and a default rate of less than 1%. The Company reached profitability in the very first full year of implementing the microfinance strategy and is expecting to reach profit of Rs. 31 million ($0.7 million) in 2011.

Through the pilot program launched in May 2008, Capital Trust has completed a successful transition into a pure-play microfinance lender to women in India. The Company aims to utilize "best of breed" processes, technologies and well trained employees to bring their financial products to the microfinance market at the lowest possible cost and to build a viable institution with a high quality portfolio earning at least a 15% return on equity

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