IFMR raises $36M debt fund, invests in 3 firms

IFMR Investments said on Monday it has closed its Rs 250 crore ($36 million) debt fund to provide working capital for financial inclusion enterprises and has invested in three companies so far.

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. The fund is registered with capital markets regulator Securities and Exchange Board of India as a Category II Alternative Investment Fund. The category includes private equity funds and debt funds.

The fund has lent money to three companies via non-convertible debentures. 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. While Satin Creditcare and Saija Finance are microlenders, NeoGrowth is a non-banking finance company that offers small business loans to merchants that use point-of-sale machines.

“The new fund will address the need for long-term debt and hybrid capital in the target sectors,” said Vineet Sukumar, CEO of IFMR Investments.

NeoGrowth counts Omidyar Network and Aspada Investments among investors. It also raised Rs 15 crore from Frontier Investment last year, taking the total fundraising to Rs 96 crore.

Satin Creditcare, which last year got approval from capital markets regulator SEBI for listing on stock exchange, attracted Rs 51.3 crore funding from SBI FMO Emerging Asia Financial Sector Fund Pte Ltd. It has also raised funds from US-based WorldBusiness Capital, ShoreCap II Ltd (managed by Equator Capital), Danish Microfinance Partners, Microvest Mauritius Ltd. and Norwegian Microfinance Initiative Fund III.

Saija is backed by Accion while IFC also holds some stake in the firm via Delhi-based Pragati India Fund. The company had previously raised Rs 50 crore from IFMR for expansion.

IFMR Investments 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. The company said that the second fund follows a similar structure as the first fund, which includes a first loss support, fund rating, low fixed management fee with no profit share and daily calculation of net asset value.

AIFs have seen quite a success in the past three years since SEBI created these new types of funds. The regulator has allowed more than 158 entities to set up AIFs in three categories.

An analysis of SEBI data shows the funds invested Rs 14,706 crore in the April-September period of 2015, a jump of 73 per cent from a year earlier.

IFMR’s fundraising comes a few months after Trifecta Capital, a Delhi-based venture debt fund raised about Rs 200 crore for its category II AIF fund.

Trifecta Venture Debt Fund I, which has a final target corpus of Rs 500 crore (around $76 million), aims to close its fund in the next quarter.

IFMR, which has raised more than Rs 19,500 crore from clients till date, is also working with Asian Development Bank and IndusInd Bank to fund MFIs. The Manila-based ADB had, in October, tied up with IFMR to provide a guarantee cover of $20 million to MFIs for initial allocation by IndusInd Bank.

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