IFMR Capital Raises $25M Funding from Eight Roads Ventures

Chennai based IFMR Capital, a leader in providing capital market access to financial institutions serving the bottom of the pyramid, has raised funding from Eight Roads Ventures, the proprietary investment arm of Fidelity International Limited which will be investing up to $25M in the company. The deal marks IFMR Capital’s second round of institutional funding. The fresh round of investment will help IFMR Capital grow its existing business and explore other opportunities across new products and sectors. Kabir Narang, Partner and Head of Technology & Financial Services at Eight Roads Ventures India will join the Board of IFMR Capital. As part of the transaction, existing investor Leapfrog has partially sold its stake in the company. Leapfrog invested $29M in IFMR Capital in 2014.

Announcing the fund raise, Kshama Fernandes, Managing Director and CEO, IFMR Capital said “IFMR Capital helps connect high quality financial institutions working with underserved segments to debt capital markets. These segments are largely catered to by specialized NBFCs who often find it difficult to raise capital. As investors with deep understanding of these sectors, we underwrite risk and connect these originators to the right pools of capital, enabling them to grow in a sustainable manner. We are excited to partner with Eight Roads Ventures and leverage its deep knowledge of the financial services sector to foray into new sectors and develop innovative products that will further serve the needs of our partner originators.”

In India, a large proportion of institutions addressing financial exclusion lack access to institutional credit themselves. There is-a significant “missing middle” segment, left out by the mainstream credit delivery channels which financial institutions with specialised models of lending to the informal segment require. IFMR Capital serves as the irreplaceable bridge for such institutions, enabling them to raise funds from the capital market.

IFMR Capital was established in 2008 with a focus on the microfinance sector. It has pioneered many innovative financial structures including the country’s first multi-originator securitization (MOSECTM). Today, IFMR Capital has expanded its client base to more than 100 financial institutions across affordable housing, small business, vehicle, agriculture finance, small finance banks and microfinance, serving over 25 million clients located in more than 500 districts of the country. Over the last eight years, IFMR Capital has facilitated debt financing of more than Rs 30,000 crore to these institutions. In addition to expanding its originator and investor coverage, IFMR Capital has successfully launched three domestic funds offering mid to long term debt funding to its partner originators.

Kabir Narang, Partner and Head of Technology & Financial Services at Eight Roads Ventures India commented, “The non-bank financial services market in India remains an attractive segment for investment and we have been actively evaluating opportunities in this sector. IFMR Capital stood out for its unique business model and exceptional management team. The company is a pioneer in the financial inclusion sector and the largest organized company providing credit to NBFCs from its own balance sheet and from the balance sheets of other leading financial institutions. We look forward to working with the company as it builds on its leadership position in the market.”

Michael Fernandes, Partner at Leapfrog Investments remarked, “We are delighted to be part of IFMR Capital’s rapid growth story. This inspiring story of both profit and purpose proves that meeting the need for financial inclusion in India is a compelling investment proposition. We look forward to continuing our close partnership with this exceptional management team as they reach increasing millions of underserved people across the country.”