International Finance Corporation (IFC), the private investment arm of the World Bank, has proposed to make debt investments of up to $450 million (around Rs 3,465 crore) in two Indian non-bank lenders, Cholamandalam Investments & Finance Company Limited and Manappuram Finance Limited.
“The proposed IFC investment comprises up to $350 million investment in Cholamandalam Investments & Finance Company Limited through a three-year US dollar-denominated senior secured loan. It will provide up to $150 million through its own account and mobilise up to $200 million from other lenders, with an unspecified greenshoe option. The fresh proceeds will support vehicle financing for micro, small and medium enterprises (MSME), with a focus on the low-income states and rural regions of India,” one of IFC’s disclosure mentioned.
In another disclosure it said, “IFC investment comprises a senior debt investment of up to $100 million in Manappuram Finance Limited for a tenor of up to three years. The fresh capital will be used to support underserved individuals in the economy with focus on directing a portion of the debt towards women borrowers.”
Early this month, IFC made $200 million investments in Tata Capital's two companies, Tata Capital Housing Finance Limited and Tata Cleantech Capital Limited.
“The proposed investment of up to $150 million in Tata Capital Housing Finance Limited will be used to expand the company’s home loan portfolio including loans for affordable homes and green homes.
On the other hand, the investment of up to $50 million in Tata Cleantech Capital Limited will be primarily used to finance wind and solar projects and to a limited extent sectors such as energy efficiency, e-mobility, green-warehousing and water,” IFC said in two separate disclosures.
Cholamandalam Financial Holdings Limited was incorporated in 1949 and is a part of the Murugappa Group, one of the diversified business conglomerates of India. It primarily focuses on the rural and semi-urban sector with 90 per cent presence across tier III and IV towns.
Cholamandalam’s investors include Norwest Venture Partners, Creador and Multiples Alternate Asset Management, among others.
Meanwhile, Kerala-based Manappuram General Finance & Leasing Limited (MAGFIL), a non-banking finance company promoted by the Manappuram Group was established in 1992. The company went public in August 1995 and has grown substantially since then. To facilitate the fund–based activities, the company accepts deposits, bonds and non–convertible debentures with attractive interest rates.
IFC, which has an active LP (limited partner) portfolio in India, also makes direct private equity-style investments and lends to companies in the country.
The World Bank’s private investment arm is planning to double down on its investments into Indian funds at around $200 million closing 5-7 deals including co-investments, according to Neha Grover, IFC's South Asia Lead for Private Equity.
As part of its overall India program, IFC has invested $1.6 billion to help companies keep the lights on, preserve jobs, and accelerate economic recovery from the Covid-19 crisis.
Around the same time, the World Bank unit also invested in a fund of mid-market private equity firm Faering Capital Advisors, South Asia-focused early-stage venture firm Jungle Ventures, Baring Private Equity Asia’s India-focused credit platform.
In January 2020, CDC Group Plc, the UK government’s development finance institution, invested Rs 400 crore ($57 million) in Cholamandalam Investment and Finance Company Ltd through 10-year masala bonds, VCCircle reported.
In February 2019, VCCircle reported that IFC plans to make a debt investment of up to Rs 540 crore ($75 million) in Manappuram Finance Ltd, in what will be its first funding for a gold loan-focussed company globally.
Earlier this month, IFC proposed to make an equity investment of up to $5 million in a full-stack technology platform, One Impression.