IFMR Capital recently closed its first securitisation deal in the commercial vehicles finance sector in India. The transaction marks a significant event for IFMR Capital as it represents its foray into commercial vehicles securitisation. It is also yet another instance of IFMR Capital taking an originator to the securitisation markets for the very first time.
The transaction – Protos IFMR Capital 2013 – was backed by a loan pool of Rs.185 Million originated by EssKay Auto Finance Private Limited, a company based in Jaipur with operations in Rajasthan and Gujarat. EssKay primarily provides loans to first time buyers and small transporters for purchase of used vehicles. A large number of borrowers are owners cum drivers. The underlying pool in the Protos IFMR Capital transaction was a mix of used LCV, MUV, HCV and three wheelers that typically ply in the shorter haul and transport agricultural and other goods for local consumption.
The SPV (Special Purpose Vehicle) issued two tranches of PTCs (Pass Through Certificates). The senior tranche was rated A- (SO) by ICRA. Hinduja Leyland Finance, a leading NBFC providing commercial vehicle finance, invested in the senior tranche. True to its mission of providing capital markets access to high quality institutions that impact the financially excluded and aligned in its role as structurer, arranger and investor, IFMR Capital invested in the subordinated tranche of the transaction.
“In a very short span of time, we have grown comfortable working with the IFMR Capital team. We appreciate their analysis and insights, and how they have represented us to external investors and the capital markets. We definitely hope for more of this in the months to come, and look forward to many more transactions.” Mr. Rajendra Setia, MD, EssKay Auto Finance Private Limited said on their first securitisation transaction.
Discussing the reasons behind Hinduja Leyland Finance’s first investment in the securitisation market, Mr. Sachin Pillai, COO, Hinduja Leyland Finance, said, “Our understanding of the commercial vehicle finance business, adequate credit enhancement and comfort in IFMR Capital’s underwriting process and alignment with us, prompted us to make this investment.”
Commenting on the landmark deal, Dr. Kshama Fernandes, CEO, IFMR Capital, said, “This transaction is a great demonstration of how our understanding of risks has evolved from one asset class to another, all the while keeping the core of our investment philosophy unchanged.”
One Response
Hi, I understand QIBs are only allowed to invest in the PTCs that are issued under the securitisation structure. FIIs come under the definition of QIBs. They are allowed to invest in listed securities. Can they invest in PTCs, especially if they are listed. I suspect they are not listed instruments/securities at the moment. Can you throw some light on this issue. I am interested in Mezz tranches.