IFMR Investment Managers Pvt. Ltd, a subsidiary of IFMR Capital Finance Pvt. Ltd, has floated two debt funds to raise a total of up to Rs 850 crore ($127 million).
The two funds will take exposure to retail finance companies in sectors such as microfinance, small business loans, affordable housing finance, commercial vehicle finance and agri-business finance, as well as in mid-sized corporations, the company said in a statement.
The funds have been set up as Category II Alternative Investment Funds as per the norms of the Securities and Exchange Board of India, and will seek to provide medium to long-term senior and subordinated debt.
The IFMR FImpact Long Term Credit Fund is a 10-year debt-focused fund with a target size of Rs 200 crore. It has an option to increase the size to Rs 350 crore.
The IFMR Fimpact Medium Term Opportunities Fund is a five-year fund that aims to raise Rs 250 crore with an option to increase it to Rs 500 crore.
The funds aim to meet investor appetite for participating in India’s growing financial inclusion sector. IFMR Investment said it hopes to attract investments from domestic investors such as life and general insurance firms, banks, non-banking finance companies and wealthy private investors.
With the new launches, IFMR Investment’s assets under management will cross Rs 1,200 crore.
“The new funds are being launched to cater to evolving market needs, both for originators as well as investors,” said Kshama Fernandes, CEO at IFMR Capital. “We believe that they will be able to address the longer term funding requirements of originators to better address their asset-liability match. The funds are also a vehicle for long term investors to participate in the financial inclusion space.”
Vineet Sukumar, CEO at IFMR Investments, said the two new funds are a continuation of efforts to bring more capital and investors to India’s financial inclusion sector. “The 10-year fund was a market need towards providing an investment avenue for stable long-term debt exposure while the five-year fund is set up to provide attractive post tax returns with reduced risk.”
The new funds come after the company last month closed its Rs 250 crore ($36 million) debt fund to provide working capital for financial inclusion enterprises.
The IFMR FImpact Long Term Multi Asset Class Fund focuses on affordable housing finance, SME finance and microfinance. Kotak Old Mutual Life Insurance and IFMR Capital, the parent of IFMR Investments, are among the investors in the fund.
It invested Rs 25 crore each in Mumbai-based NeoGrowth Credit Pvt Ltd and Delhi-based Satin Creditcare Network Ltd, and Rs 20 crore in Patna-based Saija Finance Private Ltd.
IFMR Investment had launched its maiden fund in 2014 with a corpus of Rs 100 crore to lend to microfinance institutions. The second fund will also invest in non-MFI firms.
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