Benefits of working with IFMR Investment Adviser
Organizations with focus on financial inclusion in India are heavily dependent on bank funding for their on-lending operations. There is increased realization, however, to diversify the sources of funding as a risk mitigating strategy. The capital market perception of dependence on a single source of funding also increases credit spreads as it places these institutions in a disadvantaged bargaining position. IFMR Investment Adviser seeks to play an important role in this situation to diversify the sources of funding. The opening of a new line of funding through the funds to be launched by us will be a significant step in reducing the skew towards bank funding. It is also expected that the addition of a new line of funding will over the medium term not only add to capital availability, but also reduce credit spreads for retail finance companies.
Diversification of funding sources also becomes important as bank lending to institutions in the financial inclusion space is primarily motivated by the priority sector lending (PSL) requirements, adherence to which is reported by the banks at the end of the fiscal year in March. This has resulted in a lopsided seasonality of bank funding. The funding requirement is, however, continuous. Moreover, the dependence on PSL leads to policy uncertainty of any classification changes by the RBI.
IFMR Investment Adviser also seeks to make available medium to long term debt capital to high quality entities that promote financial inclusion through the funds for which it advises the investment managers.
The potential investee companies will have a unique opportunity to get indirect access through funds not only to established Development Financial Institutions (DFIs), but also mainstream institutional and other investors, both onshore and offshore. IFMR Investment Adviser is planning to advise a series of subsequent fund launches of IFMR Investment Managers Pvt Ltd and such other fund managers in an attempt to establish a regular channel for funnelling international and domestic growth capital to the Indian financial inclusion sector.
For details on the investment recommendation process, please visit the Investment Recommendation Process section under ‘Our Work‘.
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