IFC proposes investment in Temasek’s India NBFC

The investment would be structured as a subscription to secured non-convertible debentures (NCDs), according to a filing. IFC already backs several Indian NBFCs and sees them as a means of supporting lending to small and medium-sized enterprises (SMEs) that often struggle to get financing through traditional channels.

FICC has around $1 billion in assets under management and has reached out to more than 1.1 million customers. It is headquartered in Mumbai and has 397 branches nationwide. The NBFC has a strong focus on rural and urban micro-lending as well as catering to mid-size SMEs.

At present, FICC's loan book is nearly two thirds urban and rural microfinance, 21% mortgages, 10% SMEs and emerging corporate lending and 5% vehicle finance. The long-term plan is to rebalance the business focus and include more longer-tenure products aimed at SMEs.

Between 2014 and 2019, FICC expects to reach an additional 1.4 million micro-lending customers and 11,000 SMEs, providing over five million loans and distribute insurance products to an additional 500,000 customers.

IFC has held stakes in NBFCs Magma Fincorp, Bandhan Financial Services and Au Financiers from 2011 onwards. In February, IFC subscribed to NCDs in each one, lending $35 million, $30 million and $26 million to Magma, Au Financiers and Bandhan, respectively. It then participated in an equity round for Au Financiers alongside other investors, as well as subscribing to a further $25 million in NCDs.

Also this year, IFC invested approximately $50 million in Cholamandalam Investment & Finance, an NBFC that focuses on the rural and semi-urban sector, through an NDC subscription. The company first received funding from IFC in 2010. Several months after subscribing to the NCDs, IFC sold some of its shares in Cholamandalam to WestBridge Capital.

NBFCs have received substantial funding from private equity firms, while some investors, including KKR, have set up their own financing operations, providing structured credit solutions to SMEs.

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• Topics
• Expansion
• North Asia
• Southeast Asia
• Financials
• NBFCs
• India
• IFC
• Growth capital
• Financial Services