IFMR Capital Partners With SMBC to Promote Japanese Investments in the Inclusive Finance Sector in India

Chennai based NBFC, IFMR Capital, has signed a Memorandum of Understanding (MoU) with Japanese multinational banking and financial services company Sumitomo Mitsui Banking Corporation (SMBC) to facilitate investments in India’s priority sector. As per the MoU, SMBC would utilize IFMR Capital’s relationships, product structuring capability, risk management and credit underwriting processes in acquiring priority sector assets in the country. The partnership will play a key role in developing interest amongst Japanese and other investors from the APAC region in financially excluded sectors in India.

Speaking about the strategic nature of the partnership post the MoU signing in Singapore, Dr. Kshama Fernandes, MD & CEO of IFMR Capital said “We are very excited about partnering with an entity of SMBC’s repute to explore and participate in the growth story of emerging sectors in India. This partnership is of strategic importance to both organisations as we expand our footprint in promoting financial inclusion globally. It is also a vote of confidence in the strong capital markets approach created by IFMR Capital for providing access to finance for all. We believe this will be a harbinger of increased interest from other investors in the APAC region.”

For IFMR Capital, this is the second association with a foreign financial institution in the APAC region. This, coupled with the close association with Asian Development Bank, other FIIs and over 100 domestic NBFCs/MFIs (originators) is a testimonial of the spreading goodwill of IFMR Capital, both domestically and internationally.

Currently, SMBC operates through its sole branch in New Delhi. The Japanese Bank is all set to open its second branch in Mumbai, soon. Mr. Shosuke Mori, Managing Director & Head of Asia Pacific Division of SMBC stated that“With our expanding footprint and growing business in India, it is imperative to find sustainable solutions to overcome the challenge of Priority Sector Lending. Towards this, we strongly believe that through our partnership with IFMR Capital – an unique NBFC of International repute - we can certainly achieve our objective, successfully”.

IFMR Capital is Raising $50M Funding from Standard Chartered Private Equity

IFMR Capital, a leader in providing access to capital markets to financial institutions serving excluded individuals and businesses, is raising $50 million from Standard Chartered Private Equity (SCPE), with the first tranche of $17 million already completed. This is close on the heels of IFMR Capital’s second institutional funding of $25 million raised from Eight Road Ventures in November, 2016. This investment will take the total funds raised by IFMR Capital to $104 million since 2014. The fresh round of investment will help the company further strengthen its business in unbanked sectors including affordable housing finance, small business, vehicle finance, agriculture finance, microfinance etc. It will also enable the company to bolster its product innovation, and address the capital needs of a growing breed of new-age financial institutions in other sectors. As part of the transaction, existing investor Leapfrog has partially sold its stake in the company. Leapfrog invested $29 million in IFMR Capital in 2014 and will remain a key investor.

Since inception in 2008, IFMR Capital has enabled over 100 financial institutions (originators)to raise debt from the capital market. It has facilitated debt financing of more than $6 billion to its originators serving over 25 million individuals in 500 plus districts of the country. IFMR Capital has also launched three domestic alternative investment funds offering mid to long-term debt funding to these originators.

IFMR Capital is a pioneer in devising structured products for NBFC-MFIs, HFCs and NBFCs in India. The innovative financial structures designed by IFMR Capital have been a fulcrum in building institutional investors’ confidence and fueling their appetite to invest in financial institutions catering to low income households and small enterprises. Over 100 large investors (banks, asset managers, insurance companies, DFIs, private wealth etc.) have continued to invest in transactions structured and arranged by IFMR Capital.

Kshama Fernandes, Managing Director and CEO, IFMR Capital said “This is a significant milestone for IFMR Capital, as we aim to create a robust debt platform in India for connecting high-quality financial institutions operating in under-banked markets with capital market investors. SCPE’s equity investment will strengthen our ability to work with a much larger number of originators across asset classes in the coming years and make access to financial services a reality for millions of low-income households and small enterprises in India.”

“IFMR Capital’s innovative approach to developing and providing complete capital markets solutions helps high quality originators build successful businesses that provide efficient and reliable access to finance for excluded households. The closure of this equity round with Eight Roads and SCPE empowers IFMR Capital to build new frontiers in capital markets for financial inclusion including building out new investor markets as well as driving liquidity and most efficient price discovery in these markets.” said, Sucharita Mukherjee, CEO, IFMR Holdings and Vice Chair, IFMR Trust.

Vijay Chakravarthi, Executive Director, SCPE, who leads the Financial Services vertical for the firm, said “We are quite optimistic about the growth prospects of IFMR Capital’s target market, which is focused on financial inclusion in under-penetrated credit segments. IFMR Capital is by far the market leader in the segment and we are excited to partner with a management team which is truly best-in-class”.

“IFMR Capital is an incredible business that is uniquely extending the footprint of financial inclusion in India. It is impacting both lives and country economics,” said Michael Fernandes, Partner and co-leader of LeapFrog’s Asian investments. “The level of innovation and delivery of pioneering products is testament to the incredible management team in place. We look forward to continuing the journey with IFMR Capital as they extend their reach to millions of underserved people.”

IFMR Capital Raises $25M Funding from Eight Roads Ventures

Chennai based IFMR Capital, a leader in providing capital market access to financial institutions serving the bottom of the pyramid, has raised funding from Eight Roads Ventures, the proprietary investment arm of Fidelity International Limited which will be investing up to $25M in the company. The deal marks IFMR Capital’s second round of institutional funding. The fresh round of investment will help IFMR Capital grow its existing business and explore other opportunities across new products and sectors. Kabir Narang, Partner and Head of Technology & Financial Services at Eight Roads Ventures India will join the Board of IFMR Capital. As part of the transaction, existing investor Leapfrog has partially sold its stake in the company. Leapfrog invested $29M in IFMR Capital in 2014.

Announcing the fund raise, Kshama Fernandes, Managing Director and CEO, IFMR Capital said “IFMR Capital helps connect high quality financial institutions working with underserved segments to debt capital markets. These segments are largely catered to by specialized NBFCs who often find it difficult to raise capital. As investors with deep understanding of these sectors, we underwrite risk and connect these originators to the right pools of capital, enabling them to grow in a sustainable manner. We are excited to partner with Eight Roads Ventures and leverage its deep knowledge of the financial services sector to foray into new sectors and develop innovative products that will further serve the needs of our partner originators.”

In India, a large proportion of institutions addressing financial exclusion lack access to institutional credit themselves. There is-a significant “missing middle” segment, left out by the mainstream credit delivery channels which financial institutions with specialised models of lending to the informal segment require. IFMR Capital serves as the irreplaceable bridge for such institutions, enabling them to raise funds from the capital market.

IFMR Capital was established in 2008 with a focus on the microfinance sector. It has pioneered many innovative financial structures including the country’s first multi-originator securitization (MOSECTM). Today, IFMR Capital has expanded its client base to more than 100 financial institutions across affordable housing, small business, vehicle, agriculture finance, small finance banks and microfinance, serving over 25 million clients located in more than 500 districts of the country. Over the last eight years, IFMR Capital has facilitated debt financing of more than Rs 30,000 crore to these institutions. In addition to expanding its originator and investor coverage, IFMR Capital has successfully launched three domestic funds offering mid to long term debt funding to its partner originators.

Kabir Narang, Partner and Head of Technology & Financial Services at Eight Roads Ventures India commented, “The non-bank financial services market in India remains an attractive segment for investment and we have been actively evaluating opportunities in this sector. IFMR Capital stood out for its unique business model and exceptional management team. The company is a pioneer in the financial inclusion sector and the largest organized company providing credit to NBFCs from its own balance sheet and from the balance sheets of other leading financial institutions. We look forward to working with the company as it builds on its leadership position in the market.”

Michael Fernandes, Partner at Leapfrog Investments remarked, “We are delighted to be part of IFMR Capital’s rapid growth story. This inspiring story of both profit and purpose proves that meeting the need for financial inclusion in India is a compelling investment proposition. We look forward to continuing our close partnership with this exceptional management team as they reach increasing millions of underserved people across the country.”