IFMR Capital (presently known as Northern Arc Capital) completed its second securitisation transaction with Bengaluru based microfinance institution (MFI), Grameen Financial Services Private Limited (previously called Grameen Koota) on June 23rd. This is IFMR Capital’s sixth securitisation transaction as a structurer, arranger and primary investor. The 311.5 million rupee securitisation transaction involved over 27,000 microloan contracts of Grameen Koota being pooled and issued as debt securities by Alpha Pioneer IFMR Capital 2010, the special purpose vehicle or SPV created for this purpose. The securities were issued in two tranches with the P1+(so) rated senior tranche being subscribed by a large Indian mutual fund. With this deal, funding facilitated by the Chennai based inclusive-finance company for the microfinance sector has reached about INR 3 billion.
The market conditions were a trial for IFMR Capital’s securitisation product, handed with the task of bringing market investors in such a liquidity strained scenario and ensuring a cost reduction for the MFI. The company is satisfied that this transaction achieved both. Grameen Koota achieved a cost of funding much lower than what was possible through bank funding. IFMR Capital played the role of the structurer and arranger, apart from that of a primary investor by investing in the P4+(so) rated subordinated tranche.
IFMR Capital looks forward to meeting many more such challenges in future and to continue providing access to capital markets for high quality microfinance institutions.