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IFMR Capital has crossed two milestones this month – the closing of its seventh securitisation transaction with Janalakshmi Financial Services and the rating upgrade received by IFMR Capital Pioneer III, a transaction it completed for Grameen Financial Services (Grameen Koota) in March this year.

Latest securitisation for Janalakshmi brings NBFC investor to microfinance

The latest transaction closed on August 18th, Delta Pioneer IFMR Capital 2010, is with Bengaluru based microfinance institution (MFI) Janalakshmi Financial Services. With this INR 250 million transaction, IFMR Capital brings a new class of investors into its fold-NBFCs. This takes the total funding facilitated by IFMR Capital for this sector to more than INR 2.1 billion. The transaction is backed by 35,560 microloans originated by Janalakshmi, an new-age urban MFI that uses smart-card technology to better capture client information and control risk.

The securitised instruments have been issued in the form of senior, AA(so) rated securities, subscribed by a new bank treasury and one of the largest  NBFCs, and an unrated subordinated piece subscribed by IFMR Capital.  As in all transactions till date, IFMR Capital is a primary investor with investment in the subordinated piece, signalling its commitment to connecting high-quality institutions with capital markets. Through this structure and IFMR Capital’s investment in the subordinated piece, a new, more reliable and cost-effective window of funding has been opened for Janalakshmi.

IFMR Capital Pioneer III receives rating upgrade 5 months post securitisation

CRISIL has upgraded the rating of IFMR Capital Pioneer III securitisation with Grameen Koota as the originator, in less than 5 months after the transaction. CRISIL revised the rating of the AA(so) rated senior tranche to AAA(so) and that of the BBB(so) rated subordinated tranche to A(so), citing strong collection performance and amortisation of the pool as reasons for the upgrade. The increased cover to investors offered by the unutilised cash collateral and subordinated cash-flows because of the over 99% collection efficiency triggered the upward rating revision. Prior to this, the Pioneer I and Pioneer II transactions received significant rating upgrades. These regular upward revisions in rating of microloan-backed securities reflects the high performance of this asset class as well as the increased confidence and comfort level of investors with it.

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3 Responses

  1. It is time that NABARD, SEBI and RBI (being regulators) come together and sort out the pending issue pertaining to MFIs being treated as NBFCs. A separate law was to be enacted at least three years back, but for all obvious reasons, there has been enough delay.

    MFIs are growing in strength day by day while Commercial Banks are still vying with the idea of plugging the gaps of Financial Exclusion. IFMR is extending wonderful knowledge dissemination on microfinance but let there not be a situation arising that MFIs go mushrooming and pooling huge funds from the market in IPOs etc., but continue to lend at high rates of interest (above 25% pa).

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