IFMR FImpact Investment Fund

The broad objective/purpose of the Fund is to promote financial inclusion in India by facilitating development of the Indian microfinance sector. The Fund seeks to achieve this by investing in various securities/instruments of microfinance institutions and its underlying assets.

The microfinance sector in India is one of the largest financial access movements in the world and is poised to overtake direct efforts by the banking sector to provide essential financial services to the under-banked populations. The sector in India has been stymied by the lack of access to a diversified source of growth capital, especially with a medium to long term tenor, which in turn can be attributed in part, to a nascent finance market-place.

IFMR identifies this market need as an opportunity to channel institutional domestic and offshore capital to the emerging asset class of Indian microfinance debt instruments. The focus of the first fund series is to facilitate growth and development of the Indian microfinance sector, by selecting from a set of high quality microfinance institutions (MFIs) that operate in India.

Financial description

The fund will invest in medium to long term senior and mezzanine debt of microfinance institutions. The fund will be close ended and will follow a passive hold to maturity strategy with active post investment monitoring. The hold to maturity strategy will significantly cut down interest rate and reinvestment risks.