IFC to invest Rs 450 crore in Temasek's banking & financial services arm

Financial services company Fullerton India Credit Company Ltd (FICCL), a fully-owned subsidiary of Temasek, is set to raise about Rs 450 crore from International Finance Corporation (IFC), through non-convertible debentures (NCDs).

FICCL focuses on rural and urban micro lending, as well as catering to small and medium enterprises (SMEs). As of March this year, the Mumbai-headquartered company had 397 branches across India.

Temasek owns FICCL through its holding company, Fullerton Financial Holdings.

According to an IFC disclosure, it will invest up to Rs 450 crore (about $75 million) through subscription of secured NCDs, which will be rated, listed and tradable on BSE.

“IFC’s investment in FICCL will demonstrate its support to a non-banking financial company focused on providing financing to the base of the pyramid. It will increase FICCL’s reach in the rural and SME lending space,” IFC said, adding the investment would encourage other institutional investors to consider investing in the Indian financial sector.

As of March this year, FICCL’s overall assets under management stood at about $1 billion. The company caters to about 1.1 million customers. IFC’s investment will help it reach an additional 1.4 million customers through micro-lending, as well as 11,000 SME customers, by 2019. It is expected FICCL will provide about five million loans and distribute insurance products to half a million customers by 2019.

The company has 10 operating entities across eight countries in Asia. These entities serve about six million customers.

Till 2010-11, FICCL was primarily engaged in providing urban micro-lending products with small tenures. Now, it is rebalancing its loan book to include longer-tenured products.