ICICI Prudential AMC invests in Equitas, first mutual fund Investment in Indian micro finance Industry

ICICI Prudential Asset Management has subscribed to a majority of the securities in an Rs 48 crore micro loan securitisation transaction in Equitas Micro Finance. This is the first time a mutual fund industry is investing in micro finance in India.The transaction is backed by over 55,000 micro-loans originated by Equitas Micro Finance and was structured by IFMR Capital. Axis Bank, Dhanalakshmi Bank, and IFMR Capital also participated in the transaction.

On November 18, FC broke the news that a mutual fund and two banks are participating in the transaction. http://www.mydigitalfc.com/stock-market/equitas-micro-raise-fund-banks-m...

"We are pleased to be the originator in the first ever microfinance securitisation programme to reach capital market investors. This is an important milestone in diversifying the sources of funds for microfinance companies, and will benefit a large number of microfinance borrowers over time,” S Bhaskar, chief operating officer of Equitas said in a statement.

“We have invested in the senior A1 tranche based on our analysis of risk and reward. We believe the issue is fairly priced, provides adequate security and is highly rated,” Nilesh Shah, deputy managing director of ICICI Prudential Asset Management said.

Primary credit enhancement is provided by Equitas in the form of cash collateral, and will absorb any realised losses up to 10.6 per cent of the portfolio cash flows.

“This transaction has allowed Equitas to access funding at a rate significantly lower than its average cost of funds,” said Sucharita Mukherjee, Chief executive of IFMR Capital.