Background to the Fund
While microfinance is an important bedrock for financial inclusion in India, the second fund launched by IFMR Investments seeks to go beyond just microfinance in addressing the problem of low formal finance credit penetration in India. Towards this, the fund invests in microfinance, small business loan finance, affordable housing finance, commercial vehicle finance and agri-business finance sectors. The idea is to address the entire gamut of retail finance and make a significant contribution to promoting the penetration of formal financial services through a multi-sector strategy.
The broad objective/purpose of the Fund is to invest in a diversified pool of securities in sectors like microfinance, affordable housing, small business loans, commercial vehicle finance and agri-business finance and earn higher risk-adjusted returns.
The investment strategy of the Fund is provided as follows:
- Investing in a mix of securities – Providing growth capital for Portfolio Entities in the form of investments in senior secured bonds, unsecured bonds, subordinated debt, redeemable preference shares, commercial papers, pass through certificates (PTCs), debt funds and other permissible securities accordance with the Regulations and other Applicable Laws.
- Alternate source of domestic funding – The Fund seeks to enable diversification by way of both funding sources and type of funding for its Portfolio Entities.
- Access to bond market – The Fund will help in the development of bond markets in India.