Chennai-based non-banking finance company IFMR Capital has concluded an Rs 33.9 crore multi-originator micro-loan securitisation with three micro finance institutions Sahayata Fintrade, Satin Creditcare and Asirvad Microfinance, in which ICICI Prudential Asset Management has subscribed.

This is the third time where a mutual fund house is participating in a securitisation transaction involving micro finance intuitions.

IFMR Capital Mosec II, the special purpose vehicle, issued two tranches of securities backed by 36,972 microloans that were originated by Sahayata Fintrade, Satin Creditcare and Asirvad Microfinance. ICICI Prudential has subscribed to the senior P1+ rated tranche and IFMR Capital invested in the subordinated piece.

“We are immensely pleased that with just the second multi-originator transaction we have facilitated mutual fund investment in the primary issue and a much lower market linked cost of funding for our partners. This gives us the confidence to set the bar even higher for future transactions,” said Sucharita Mukherjee, chief executive officer of IFMR Capital.

Securitisation is the process through which financial institutions will be able to pool the receivables from loans and sell the same to third parties in the form of banks, mutual funds and insurance companies. This is the most common practice through which non-banking finance companies raise money. So far, micro finance institutions have been raising money via securitisation through banks and the latest transaction is the third time where a mutual fund has invested in commercial paper of a micro finance institution.

In February, Hyderabad-based micro finance institution Spandana Sphoorty Financial (SSFL) had placed Rs 25 crore worth of commercial paper with Canara Robeco Asset Management. In November 2009, ICICI Prudential Asset Management had subscribed to a majority of the securities in an Rs 48 crore micro loan securitisation transaction in Equitas Micro Finance. Axis Bank, Dhanalakshmi Bank and IFMR Capital also participated in the transaction.