What we do
Specialised Investment Managers
IFMR Investment Managers Private Limited’s primary objective is to facilitate investments into high quality companies impacting low income households.
IFMR Investment Managers comes with the IFMR Group’s in-depth understanding of the Indian retail finance space with the collective experience of due diligences on over 100 MFIs and “principal” investment experience in over 30 MFIs apart from experience in sectors like affordable housing, SME finance, vehicle financing, agri finance etc. These entities have outperformed the industry and displayed high degree of resilience due to their strong underwriting and origination processes; high focus on risk management; strong field operations and local presence.
Backed by strong underwriting criteria and credit risk and social performance evaluation tools, IFMR Investment Managers has laid down stringent filters on potential investee companies.
Expertise in Microfinance Sector
The IFMR Group has successfully facilitated close to USD 800 mn of debt financing over the last five years cumulatively, to the Indian microfinance sector, with zero default till date. IFMR Capital was the largest debt capital markets arranger and financier for microfinance institutions as of fiscal year end 2011 and 2012 and was behind the first multi-originator securitisation (MOSEC™) of micro-loans in the world. The group has also been a pioneer in capital market innovations, having completed the first ever listing of securitised paper on January 15, 2013 on the Bombay Stock Exchange. IFMR Capital invests in each securitisation transaction using its own balance sheet, typically taking positions that are subordinated to senior investors, which enjoy repayments only after the senior investors are fully paid out. Till date, IFMR Capital’s exposures in such subordinated instruments have amounted to c. USD 59 mn.
In addition to participating in the securitisation transactions, IFMR Capital has also taken balance sheet exposures on its partner MFIs in the form of term loans and working capital lines. The cumulative amount funded through this medium has been c. USD 53 mn.
Group companies of IFMR Trust have demonstrated zero defaults and zero NPAs through the last four years. The average collection efficiency demonstrated by the underlying micro-loan pools has been over 98%.
Zero default track record
This track record has been made possible because of our high quality origination, adequate risk incentives for all parties in a deal to ensure continued performance and strong on going risk monitoring and field surveillance. IFMR Trust has partnered only with high quality originators, who have been selected using our stringent underwriting guidelines that have been developed and refined based on our collective experience in the microfinance sector. The guidelines have been developed on the basis of several due diligence visits on MFIs and have also been constantly refined, based on our continuous active risk management activities and interactions over the past five years. We periodically assess each potential investee’s credit quality as well as capability to service the portfolio via regular field monitoring visits.
Expertise in Affordable Housing Sector
Group companies of IFMR Trust have facilitated financing to 9 housing finance companies (HFCs) operating in the housing sector. The financing ranges from both own balance sheet exposure and syndication for investee institutions covering short term to long term debt capital. Majority of the potential investee entities have a pan India presence with business models varying from housing microfinance for individual and retail borrowers to project based financing targeting the low income and informal segments of the population. Till date, the finance facilitated stands at c. INR 750 million through various channels.
Expertise in SME and Vehicle Financing
Group companies of IFMR Trust have facilitated financing to 11 institutions in SME and vehicle financing sector. The financing to these entities cover both own balance sheet exposure and syndication for partners, as well as financing through structured instruments. Till date, the finance facilitated stands at c. INR 1640 million across 18 transactions.
The steps involved in the process of investment by the Investment Manager are briefly described below:
Entities are screened based on preliminary information obtained and publicly sourced information against the eligibility norms.
2. In-principle approval
In principle approval is accorded to entities which meet the eligibility norms and areas for further evaluation during the detailed due diligence are identified.
3. Detailed due diligence
Entities meeting the eligibility criteria are taken up for detailed due diligence and evaluated based on the underwriting guidelines.
4. Investment Approval
After the detailed due diligence, based on the risk perceived, the terms and conditions of the investment are decided. Subsequently, investments are made after execution of the requisite documentation
Due diligence framework
The Underwriting Guidelines have been developed and refined based on our collective experience in the retail financial sectors which are discussed and agreed upon with the Investment Manager for each fund. These guidelines are the cornerstone of our work in the Indian retail finance space and have been developed on the basis of several due diligence visits on retail finance companies. The purpose of the underwriting is to ensure that we are able to identify the organisations that meet our benchmarks of best practices, transparency and governance.
The underwriting guidelines assess the following broad areas in an organisation:
The pre-Due Diligence selection and screening criteria to qualify for investment by the Fund are based on he potential investee company’s Legal form, Compliance level, Experience, Governance level, Business Plan, ESG compliance, Origination quality and outlook on long-term institutional sustainability.
The Underwriting Guidelines will cover the following aspects in detail:
The Investment Manager recognizes the role that monitoring and risk analytics plays in curtailing post investment risks. The continuous system of monitoring by Investment Manager has a pivotal role to play not only in its investment management process, but also in guiding the Portfolio Entities towards achieving industry best practices. The Post-Investment Monitoring team will periodically assess the portfolio under various scenarios – both external and internal to detect early warning signals that may have the potential to adversely affect the portfolio.
The portfolio is monitored through extensive field visits and desk based research covering both financial and operational performance. Our on-going monitoring efforts evaluate the entities on below principles on a regular basis to ensure continuous adherence to the covenants, post investment.
Our system of continuous post-investment monitoring has a pivotal role to play not only in our investment advisory process, but also in guiding the investee entities towards industry best practices. Through our post-investment monitoring framework, which includes quarterly field visits to investees spread across 3-4 days, the origination and risk management system of our investees is expected to evolve considerably. Improvement in internal audit processes in the investee institutions is expected to contribute to better asset quality. System/MIS have been upgraded leading to better reporting systems and ability to track granular details on each borrower.
Our continued focus on customer protection and transparency is expected to have the following results:
- Strengthening Customer protection & Fair Practice Code
- Customer grievance redressal processes in place
- Involvement of Senior management and Board in customer grievance redressal