India’s IFMR launches two debt funds

The Indian firm is targeting the retail finance sector in the country, which it views as under-served.

India’s IFMR Investment Managers, a subsidiary of non-banking financial company IFMR Capital, has launched two new debt funds targeting a total of up to INR8.5 billion ($127 million; €121 million).

The two funds will provide medium- and long-term loans, according to a release.

The IFMR Fimpact Long Term Credit Fund is a 10-year alternative investment fund targeting a size of INR2 billion with a hard cap of INR3.5 billion.

The fund will provide medium- to long-term senior and subordinated debt to high quality originators with the aim of allowing them to ride interest rate cycles.

The firm has also introduced a five-year debt fund named IFMR Fimpact Medium Term Opportunities Fund targeting a corpus of INR2.5 billion with a hard cap of INR5 billion.

Both funds will invest in retail finance investee companies in sectors such as microfinance, small business loan finance, affordable housing finance, commercial vehicle finance and agri-business finance, as well as in mid-sized corporates.

“The 10-year fund was a market need towards providing an investment avenue for stable long-term debt exposure while the five-year fund is set up to provide attractive post-tax returns with reduced risk. The new offerings will break new ground in providing growth capital to the Indian financial inclusion space,” said Vineet Sukumar, chief executive of IFMR Investments.

The funds will seek to draw commitments from domestic investors such as life insurance, general insurance, banks, non-banking financial companies and private wealth investors, according to a statement.

The investment manager and its parent company IFMR Capital will contribute at least 10 percent to the fund to guarantee adequate risk protection to other investors.

Prior to this, IFM Investment Managers has raised three similar funds totalling over INR4.5 billion since 2014. With the launch of the two new funds, the company’s assets under management are expected to reach INR12 billion.