Mumbai: IFMR Capital, which helps financial institutions serving poor people raise funds, has received $25 million in funding from Eight Roads Ventures, the proprietary investment arm of Fidelity International Ltd.
This is Chennai-based IFMR Capital’s second round of institutional funding. The company raised $29 million from impact investment fund Leapfrog Investments in March 2014. Leapfrog has made a partial exit through the latest round of funding.
IFMR Capital connects high-quality non-banking financial companies working among financially excluded households and businesses, such as microfinance, affordable housing finance, small business finance, agricultural finance and vehicle finance, with investors in existing and emerging debt capital markets.
IFMR Capital was established in 2008.
The fresh round of investment will help IFMR Capital grow its existing business and explore other opportunities across new products and sectors. “We are keen on expanding our focus into more sectors and some of the areas that we are keenly looking at are MSME lending and fintech firms. We believe that with our credit underwriting experience and use of data, we can help these firms to be ready to tap the capital markets as they grow,” said managing director and chief executive Kshama Fernandes.
The firm will also be looking at introducing newer products. “We are working on various structured finance products and we will be introducing them soon. We do not believe in creating exotic one-off structured products, and so the focus is on creating structures that can be replicated across clients,” said Fernandes.
The company ended 2015-16 with a profit of almost Rs60 crore on revenue of Rs246 crore, she said.
The financial services market for debt products is a $1.3 trillion in India and has been growing at an annual average pace of more than 15% over the past decade.
“In India, a large proportion of institutions addressing financial exclusion lack access to institutional credit themselves. There is-a significant ‘missing middle’ segment, left out by the mainstream credit delivery channels, which financial institutions with specialized models of lending to the informal segment require,” Fernandes added. “IFMR Capital serves as the bridge for such institutions, enabling them to raise funds from the capital market.”