Mumbai: International Finance Corp. (IFC), the private-sector investment arm of the World Bank, plans to make a debt investment of up to $75 million to Manappuram Finance Ltd, the IFC website shows.
Based in Kerala’s Thrissur district, Manappuram Finance is a non-banking financial company (NBFC) focused on providing gold loans. As on 31 December 2018, it had 4,314 branches across 24 states and four union territories with assets worth ₹17,783 crore under management.
“The proposed project comprises a three-year senior, secured debt funding of up to ₹540 crore ($75 million) to Manappuram Finance. IFC’s three-year loan will provide liquidity and support asset-liability management, especially as Manappuram Finance expands its portfolio into SME and commercial vehicle loans," IFC said on its website.
IFC will earmark $30 million for Kerala and $45 million for low-income states (LIS), it added. “The proposed project relates to supporting MFL in extending finance to the most vulnerable sections of Kerala after the state witnessed one of its worst floods, and for utilization in LIS of India," it added.
This is IFC’s first gold loan-focused investment, globally. “IFC’s investment would provide comfort to other lenders and investors in this segment," it said.
IFC has been a major lender to NBFCs in India. Last year, it had lent $100 million to Mahindra and Mahindra Financial Services Ltd (Mahindra Finance), to help the lender extend loans to individuals, including farmers, to purchase tractors, vehicles and other equipment, along with financing small and medium enterprises. In 2018, it had invested $25 million in Mahindra Rural Housing Finance Ltd.
In 2018, IFC had also backed Tata Cleantech Capital Ltd, a joint venture of IFC and Tata Capital Ltd. The two promoters invested ₹200 crore in Tata Cleantech, which funds renewable energy projects across assets, such as solar, wind, small hydro and biomass, as well as other green businesses, including energy efficiency and water treatment.