Standard Chartered Private Equity, SCPE in short, has released $17 million as the first tranche of an estimated $50 million investment in IFMR Capital, the Non-Banking Financial Corporation (NBFC) which offers structured finance products such as term loans and cash credits, besides commercial borrowing services and collateralized pooled bond programmes. With existing investor Leapfrog partially selling its stake in the company, IFMR Capital has raised a sum of $104 million since 2014.
IFMR Capital offers financial services to the under-banked in India. This latest round of fundraising by IFMR Capital follows a $25 million investment by Eight Roads Ventures in November this year. Eight Roads Ventures is the proprietary investment arm of Fidelity International Ltd. In March 2014, the company raised $29 million from ‘impact investment fund’ Leapfrog Investments, according to this report. IFMR Capital services micro-lenders, offers affordable housing financiers, lends to small businesses, supports agricultural finance companies and vehicle financiers, and invests in existing and emerging debt capital markets.
Udai Dhawan, MD and country head, India at SCPE stated that the business model of IFMR Capital was one of the factors they felt was worthy of an investment. He went on to state,”“They (IFMR Capital) have a differentiated business model, which offers a very strong value proposition to both the originators (NBFCs, MFI etc.) as well as the investors which invest in these companies through instruments arranged by IFMR Capital. It is not only providing credit solutions to lenders, but they are also putting their own capital on the line, which is a unique business model.”
IFMR Capital said it plans to use this new funding to improve its existing service and to attract new customers. The NBFC was also looking for new clients in sectors such as financial technology and education finance. Kshama Fernandes, MD and CEO of IFMR Capital stated,”We need the capital because we are primarily investors in the space. While we do a lot of structured finance, our role goes beyond being the structurer, arranger and the syndicator and has primarily been that of an investor. That premise will continue going forward.”
IFMR Capital has enabled over 100 financial institutions, termed ‘originators’, to raise debt from the capital market, as well as facilitating debt financing of more than Rs35,000 crore to its originators. It ended the FY 2015-16 riding on profits of almost Rs60 crore against revenue of Rs246 crore. IFMR Capital employs about 110 people with offices at Chennai, Mumbai, Gurgaon and Bangalore. It will hope to open more in the future, given its microfinance nature of business.