IFMR Capital initiates first capital market transaction for MUDRA

Deal marks MUDRA's maiden exposure to securitisation

IFMR Capital has facilitated the first ever capital market transaction for MUDRA (Micro Units Development & Refinance Agency), which focuses on providing low cost loans to microfinance and non-banking financial institutions.

IFMR Capital has exclusively structured and arranged a securitisation transaction Mjolnir IFMR Capital enabling Mudra to invest Rs 50 crore in the A (-) rated senior tranche of securitised MSME loan portfolio of Janalakshmi Financial Services, the Bangalore-based micro finance company.

Read more from our special coverage on "MUDRA"

• Chhattisgarh disburses over Rs 1,800 crore under MUDRA Yojana

This will be a short term transaction with tenure of 1.5 years. IFMR Capital also participated as investor through their investment in the subordinated j tranche. This marks the first of many such capital transactions for MUDRA, which in turn will gain exposure to over 100 high quality MFIs and NBFCs in the country that IFMR Capital currently works with.

Small enterprises across the country continue to lack access to institutional credit. This is despite nearly 80% of the total estimated demand of Rs 32,50,000 crore originating from the informal sector, said IFMR.

The MUDRA-IFMR Capital association would facilitate accelerated impact on the sector by leveraging MUDRA’s capital and risk appetite. IFMR Capital’s initiatives have fuelled the growth of microfinance and SME financing asset class among capital market investors.

IFMR Capital has facilitated over Rs 28,000 crore of debt for its MFI and NBFC partners, attracting newer class investors. The latest deal with MUDRA is a shot in the arm for structured finance and testimony to a widening investor base, for enterprises catering to the underserved. It reinforces a vision of a financial system where the role of apex institutions is to facilitate market development through structures which best leverage its capital.

Kshama Fernandes, MD &CEO of IFMR Capital said "With this transaction, MUDRA demonstrates a crucial facilitating role in ensuring that NBFCs providing microfinance and small business finance are able to access domestic capital in an efficient manner. Going forward, with the benefit of MUDRA’s rating and support in capital market structures, these NBFCs’ ability to provide last mile support to small borrowers / MSMEs through sustainable financing structures will receive further impetus.”

The association between IFMR Capital and MUDRA commenced early August 2015. The teams jointly developed products and processes to harness the power of capital markets for financial inclusion. The first securitization by MUDRA is a significant step towards deepening the market’s confidence in the MSME finance sector. 

IFMR has structured a total of 18 securitisation and assignment transactions till date with Janalakshmi Financial Services, to raise over Rs 2,000 crore. Speaking on the latest transaction, V.S Radhakrishnan, MD &CEO, Janalakshmi Financial Services Limited said, “At JFS, we continue to be bullish in accessing the power of capital markets to further our growth ambition. Securitization has been a key enabler in our journey and we are happy to have benefited from IFMR Capital’s efforts and MUDRA’s initiative in the MSME or the ‘missing middle’ space.”