International financing company Mpower has raised debt capital worth $100 million from the American investment bank, Goldman Sachs. The debt will be used to fund loans with a long term goal of growth in India.
It is the second time the US-Based firm has raised hefty debt capital after raising a $100 million loan from Community Investment Management in December last year, and an undisclosed amount in an equity round from Gray Matters Capital whose Executive Director Erika Norwood joined the board at Mpower.
MPower specializes in providing higher education loans ranging between Rs 140,000 and Rs 35,00,000 at an interest rate ( between 8.89% to 14.97%) decided at the time of loan agreement. The payback period remains ten years, and the company charges late payment fees if the students fail to repay the loan within the stipulated time.
As per Co-Founder CEO Emmanuel Smadja, one in five loans comes from India, and the country occupies 25% of the total loan book at Mpower financing.
The company is backed by Zephyr Management, Goal Structured Solutions, Gray Matters Capital, and University Ventures among others and is said to be in talks with corporates in India for training their employees and assisting them in their applications to universities abroad.
Taking an education loan for studying in foreign universities can be a problem for students in India as lack of debt providers and the uphill task of securing high-value collateral ( which is often a parental house or a hefty fixed deposit).
Apart from loans, the company also helps students with visa guidance and job assistance in its efforts to push the reach of higher education. The applicants need an F-1 student visa and attendance at one of the 350 partner universities of the company to be eligible for the loan.
The company charges a one time fee equal to 5% of the loan disbursed. Students can start the repayments with small EMIs while they’re still at Universities and Mpower reports those to US credit agencies helping students build up a credit score before they graduate.
ET reported this development first.