The Chennai-based NBFC, IFMR Capital has successfully executed the issuance of an External Commercial Borrowing (ECB) for Satin Creditcare Network Limited (“Satin”), one of its long standing clients. The USD 10 Million borrowing for a tenor of 8 years was sanctioned and disbursed by U.S.-based lender World Business Capital, Inc. (“WBC”), and was partially guaranteed by Overseas Private Investment Corporation (“OPIC”), the U.S. Government’s Development Finance Institution.
The RBI had recently eased access to foreign investment by allowing NBFC-MFIs to raise ECB’s through the automatic route. This transaction is consistent with IFMR Capital’s mission of providing access to debt capital for institutions impacting financially excluded households and sectors.
The borrowing will contribute to Satin consolidating its position as North India’s largest Microfinance Institution (MFI) and the 6th largest nationwide. The ECB was backed by a full currency swap, provided by a leading private sector bank in the country. 35% of the sanctioned amount was in the form of unsecured subordinated debt, while the balance 65% of the borrowing was in the form of a senior secured loan.
Speaking on the transaction Dr. Kshama Fernandes, CEO, IFMR Capital said, “The ECB by Satin is an affirmation of the significant strides made by the company in recent times. We are happy to have played a role in facilitating the fund raise. The transaction also marks WBC’s second long-term loan in the Microfinance sector in India and is testament to the sector’s growing acceptability to the international investor community.”
Speaking on the successful closure of the transaction, Mr H.P. Singh, Chairman and Managing Director, Satin said, “We are thankful to World Business Capital and OPIC for providing the External Commercial Borrowing (ECB) of US $ 10 million to Satin. This is the first ECB transaction for the Company. Financing through ECB will open a new source of funding for the Company. Out of total US $ 10 million, US $ 3.5 million is Tier-II Capital which will help us increase our outreach. The 8 year tenor offered by the lender will help us improve the asset liability management (ALM) of the Company. We are also thankful to IFMR Capital for having helped us close the transaction smoothly.”
Speaking on the deal, Brett N. Silvers, President and Chief Executive Officer, WBC, said, “We are very pleased and proud to welcome Satin as a client and support the expansion of their highly successful micro-lending business. World Business Capital’s India Lending Team continues to seek opportunities to offer medium and long-term loans for Indian financial institutions and middle market businesses in a wide variety of industries.”
IFMR Capital has so far structured, arranged and co-invested in more than 200 capital market transactions, including securitization’s, senior and subordinated bond issuances, commercial paper issuances, ECBs and preference shares. Over time, IFMR Capital has leveraged its extensive investor reach to raise senior as well as subordinated capital for its clients from institutional and private wealth markets.
IFMR Capital has successfully used its underwriting expertise and structuring strengths in creating new products suitable to its client base, such as the Multi Originator Securitisation, Collateralised Bond Obligation, Assignment with Risk Participation etc. Through these structures, IFMR Capital has been able to grow its business and placement volumes by 133% in the first three quarters of FY 2015.