IFMR Capital has structured, arranged and co-invested in a Rs 106.38-crore securitisation of 105,422 micro-credit loans given by the Chennai-headquartered microfinance institution, Equitas Micro Finance India Pvt Ltd.
Gamma Pioneer IFMR Capital 2010, a special purpose vehicle created for the transaction, has issued three tranches of securities rated by Crisil, according to an IFMR release. These include a 53 per cent senior tranche rated P1+ that was subscribed to by UTI Mutual Fund, 32 per cent senior tranche rated AA (so) subscribed to by HDFC Bank and Reliance Capital and a 15 per cent junior tranche rated BBB (so) subscribed to by Reliance Capital and IFMR Capital.
The P1+(so) tranche has an expected maturity of 10 months, the AA(so) tranche an expected maturity of 15 months and the BBB (so) an expected maturity of 20 months.
“At Rs 106 crore, this is the largest microfinance securitisation in the sector till date,” said Sucharita Mukherjee, chief executive officer, IFMR Capital.
The size, performance of microfinance securitisations in the capital markets and wide investor base had all contributed to a successful placement at about half the credit spread (over the P1+ commercial paper benchmark) as compared to the previous deal, she said, adding that the microfinance receivables were increasingly being treated on par with other asset classes.
S Bhaskar, chief operating officer, Equitas, said that it did this third securitisation transaction not only to diversify the source of funding by going to the capital market but also to bring in market-related pricing to such highly-rated instruments.
For Equitas, it would also mean a lower cost of funds as and when the market for such rated securitised instruments sufficiently expands, and the benefit of such lower cost could then reduce the cost to the ultimate borrowers, he said.
