IFC invests $76 mn in Fullerton India's masala bond

World Bank Group member IFC today said it has invested USD 76 million (Rs 500 crore) in 5-year unrated masala bond issuances of Fullerton India Credit Company.

The investment will further strengthen Fullerton India's reach in the underserved retail and micro, small, and medium enterprise segment, especially in developing states, International Finance Corporation (IFC) said in a statement.

"IFC is using masala bonds to support companies in diversifying their funding sources, thus expanding a newly opened market to attract private investment for a sector that faces a funding gap," it said.

IFC said it helped create the masala bond market through its own first issuance in November 2014.

The total revenue of Fullerton India for the fiscal ending March 2017 stood at Rs 1,608 crore. As on June 30, 2017, the asset under management of the company stood at Rs 11,752 crore, serving 15.2 lakh customers through a network of 526 branches spread across 22 states and three union territories.

IFC's earlier investment in 2015 helped the company increase its support to MSME segment and strengthen the systems and processes to lend to this segment, said Anand Natarajan, Head of Strategy and Business Execution, Fullerton India.

"IFC's renewed support, via masala bonds strengthens our relationship and paves the way for steady and inclusion led growth of the company’s MSME loan portfolio," he said.

IFC's country head for India Jun Zhang said that MSME financing is a strategic focus area for IFC to promote financial inclusion, create jobs, and drive economic growth.

"Our investment in Fullerton India Credit Company through long-term capital markets instruments will set a market precedent and enhance the path for other similar institutions, to issue local currency bonds offshore," said the IFC official.

Specific to SME finance, IFC has invested close to USD 1 billion in financial intermediaries in India to enable credit financing for SMEs.

Since 1956, IFC has invested in over 400 companies in India, providing USD 17 billion in financing to the private sector.