International Finance Corporation (IFC), the private investment arm of the World Bank, has proposed to make debt investments of up to $450 million (around Rs 3,465 crore) in two Indian non-bank lenders, Cholamandalam Investments & Finance Company Limited and Manappuram Finance Limited.
“The proposed IFC investment comprises up to $350 million investment in Cholamandalam Investments & Finance Company Limited through a three-year US dollar-denominated senior secured loan. It will provide up to $150 million through its own account and mobilise up to $200 million from other lenders, with an unspecified greenshoe option. The fresh proceeds will support vehicle financing for micro, small and medium enterprises (MSME), with a focus on the low-income states and rural regions of India,” one of IFC’s disclosure mentioned.
In another disclosure it said, “IFC investment comprises a senior debt investment of up to $100 million in Manappuram Finance Limited for a tenor of up to three years. The fresh capital will be used to support underserved individuals in the economy with focus on directing a portion of the debt towards women borrowers.”
Early this month, IFC made $200 million investments in Tata Capital’s two companies, Tata Capital Housing Finance Limited and Tata Cleantech Capital Limited, reported VCCiRCLE.
Cholamandalam Financial Holdings Limited was incorporated in 1949 and is a part of the Murugappa Group, one of the diversified business conglomerates of India. It primarily focuses on the rural and semi-urban sector with 90 per cent presence across tier III and IV towns.
Cholamandalam’s investors include Norwest Venture Partners, Creador and Multiples Alternate Asset Management, among others.
Meanwhile, Kerala-based Manappuram General Finance & Leasing Limited (MAGFIL), a non-banking finance company promoted by the Manappuram Group was established in 1992. The company went public in August 1995 and has grown substantially since then. To facilitate the fund–based activities, the company accepts deposits, bonds and non–convertible debentures with attractive interest rates.
IFC, which has an active LP (limited partner) portfolio in India, also makes direct private equity-style investments and lends to companies in the country.
The World Bank’s private investment arm is planning to double down on its investments into Indian funds at around $200 million closing 5-7 deals including co-investments, according to Neha Grover, IFC’s South Asia Lead for Private Equity.
As part of its overall India program, IFC has invested $1.6 billion to help companies keep the lights on, preserve jobs, and accelerate economic recovery from the Covid-19 crisis.