IFMR Investment Managers raises third debt fund targeting microfinance firms

Chennai-based IFMR Investment Managers, a wholly owned subsidiary of IFMR Capital, is raising a Rs 100 crore (around $ 15 million) debt fund to invest in the microfinance businesses.

The fund, known as IFMR FImpact Medium Term Microfinance Fund, would primarily invest in debt and also have a small allocation for preference shares issued by microfinance firms, Mint quoted Kshama Fernandes, chief executive of IFMR Capital, as saying.

The category II alternative investment fund (AIF) was registered in February with its first close on 10 June. It plans to provide investment management services in asset classes that impact the financially excluded. 

Fernandes could not be reached immediately for comments.

The fund would have a tenure of three-and-a-half years and would look for investment gaps in the capital structure of microfinance institutions. Its focus on microfinance institutions is a departure from the multi-asset second fund it had raised in the past. 

In April, the company surpassed its target of raising Rs 250 crore ($38 million) for its second debt fund, known as IFMR FImpact Long Term Multi Asset Class Fund. This six-year fund had planned to invest in around 25 companies across sectors such as those offering small business loans, affordable housing finance, commercial vehicles finance and microfinance. Its predecessor fund focused only on the microfinance sector.

The second fund had said 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 Pvt. Ltd.

While Satin Creditcare and Saija Finance are microlenders, NeoGrowth is a non-banking financial company that offers small business loans to merchants that use point-of-sale machines.

It counted Birla Sun Life Insurance and Kotak Mahindra Old Mutual Life Insurance among its investors.

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