The International Finance Corporation (IFC) plans to invest up to $75 million (around Rs 398 crore) in Dakshin, an NBFC, or its subsidiary through an equity or a quasi equity instrument.
According to IFC’s project disclosure, the proposed fund raising will support the company's expansion across its existing and new business lines.
IFC proposes to make an investment of up to $75 million in the company or its subsidiary through equity or a quasi equity instrument, it said in the disclosure.
The fund infusion will increase access to finance for small and medium enterprises (SME) in India who have limited access to formal sector lending.
The company's diversified product offerings would also lead to an increase in access to affordable housing finance which has a much lower penetration of mortgage finance in India, compared to other emerging markets.
“IFC will also support the company in developing best practice operational processes and standards to build a profitable franchise given the risks inherent in SME financing as well as the high transaction costs,” IFC said in a statement.
Dakshin's lending business is primarily limited to the SME sector and housing finance. The company has exposure to private equity businesses. Overall, the existing and proposed lending portfolio present potentially limited adverse environmental or social risks or impacts that will be few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures, the IFC said in the disclosure.