IFMR Capital raised INR 360 Million through its first issuance of senior non-convertible debentures (NCDs) listed on the Bombay Stock Exchange. This happened in a matter of weeks after having issued its first Commercial Paper (CP) of INR 74.5 Million. The CP issuance followed a short term rating of CARE A1, by CARE in October. The CP has a 6-month tenor and was privately placed.
Privately placed NCDs serve as a means of long-term funding and provide IFMR Capital with the ability to tap diversified sources of funding. The issuance of Commercial Paper serves as an alternative to bank credit for funding short-term capital requirements. Commercial Paper issuance lowers the cost of capital as only corporate borrowers rated above A-2 are eligible to raise short-term funds through capital markets.
These transactions are significant not only because it is the first time that IFMR Capital has raised funds through the capital markets route, but also because these allow the company access to newer funding sources that will enable it to support the growth of high quality originators that serve low-income households across India. With this transaction, IFMR Capital has demonstrated its capability to attract diversified sources of financing during a period when the sector has faced significant challenges.
Commenting on these landmark deals, Sucharita Mukherjee, CEO, IFMR Capital, said “These transactions represent significant milestones in IFMR Capital’s efforts in accessing the capital markets for itself and therefore, its clients. This will pave the way for the rapid growth of alternative and sustainable funding sources. These transactions will boost confidence amongst investors and funders as well.”
One Response
These are wonderful developments and speak to the strong steps being taken by IFMR Capital to demonstrate the confidence that its model, in which, the guarantee support it provides to front-line originators in the form of second loss capital is backed up by some very strong due diligence and monitoring, has inspired amongst diverse group of investors and multiple rating agencies.
It is my belief that institutions such as IFMR Capital provide a very important bridge between entities that gather public deposits or debt funds in multiple forms and therefore seek assume modest levels of risk in return for modest levels of returns and specialised and small sized financial institutions that have deep sectoral capabilities but by design raise money from wholesale markets.
I want to congratulate the IFMR Capital team on the careful way in which they have gone about building up an outstanding organistion which has much to do in the days ahead but thanks to the work of this team will do this standing on a strong foundation.