International Finance Corp. (IFC), the private sector investment arm of the World Bank, has proposed to invest up to $100 million in securities issued by Mahindra and Mahindra Financial Services Ltd, the non-banking financial company (NBFC) run by Mahindra group.
IFC will invest via five-year non-convertible debentures (NCDs) to be issued by Mahindra and Mahindra Financial Services, IFC said in a disclosure. The investment will support lending by the NBFC to the farm sector. It will go towards financing the purchase of farm equipment, mainly tractors, and a range of utility and commercial vehicles. The debt facility will primarily benefit borrowers in rural and semi-urban locations, largely in lower-income states, the disclosure said.
Mahindra and Mahindra Financial Services is a financier of vehicles (primarily tractors, utility vehicles and cars). It is a publicly traded unit of Mahindra and Mahindra Ltd, which is India’s largest tractor and utility vehicle manufacturer and holds a 51.2% stake in the NBFC. “Providing asset finance to agro-related small and micro business will enable them (to) expand operations and create more employment opportunities,” IFC said.
“Availability of tractors and other farm equipment will support agricultural mechanization and improved farm productivity and efficiency and boost production,” it added.
As on 31 March 2017, the firm had financed 4.7 million customers and had assets under management of $6 billion. It has 1,182 branches in India.
Recently, IFC announced it would invest as much as $200 million in India’s largest mortgage lender Housing Development Finance Corp. Ltd by subscribing to five-year NCDs or masala bonds, which are rupee-denominated bonds sold overseas.
It also proposed to invest up to $150 million in Bajaj Finance Ltd, subscribing to secured, fixed, rated and listed NCDs, IFC said in a disclosure.