IFMR Capital, an affiliate of the India-based nonprofit Institute for Financial Management and Research (IFMR), recently completed a securitization of approximately 21,000 microloans originated by Ujjivan Financial Services, an India-based microfinance institution (MFI), that is valued at INR 173 million (USD 3.82 million). Omega Pioneer IFMR Capital 2011, the special purpose vehicle created for the transaction, has issued two tranches of securities rated by the Investment and Credit Rating Agency of India (ICRA) as follows: a 91 percent senior tranche rated “LBBB+ (structured obligation)” that was subscribed to by an unnamed bank and a nine-percent subordinated junior tranche rated “LBB (structured obligation)” that was purchased by IFMR Capital. Both tranches have expected maturities of 9 months. This is reportedly the third capital market transaction for Ujjivan and its first securitization.

As of December 2010, Ujjivan had total assets of USD 157 million and a gross loan portfolio of USD 138 million. As of 2009, Ujjivan reported return on equity (ROE) of 9.4 percent and return on assets (ROA) of 3.2 percent.

By Jacqueline Foelster, Research Associate

About Ujjivan Financial Services: Ujjivan Financial Services is a microfinance institution (MFI) based in Bangalore, India, that offers loans and insurance. It was founded in 2004 and focuses on low-income women in urban and semi-urban areas. Its products include business loans, educational loans, emergency loans and life insurance. As of December 2010, Ujjivan had total assets of USD 157 million and a gross loan portfolio of USD 138 million. As of 2009, Ujjivan reported return on equity (ROE) of 9.4 percent and return on assets (ROA) of 3.2 percent.

About Institute for Financial Management and Research (IFMR) Capital: IFMR Capital, previously known as IFMR Trust Guarantee Company, is an affiliate of Indian nonprofit Institute for Financial Management and Research. It aims to provide access to capital for institutions in sectors such as rural and urban financial services, municipalities, rural small and medium-enterprises, rural infrastructure and agriculture.

About Investment and Credit Rating Agency of India (ICRA) Limited: Formerly known as the Investment and Credit Rating Agency of India Limited, ICRA Limited was established in 1991 through the collaboration of commercial banks, investment companies and financial services institutions. It is a public limited company with shares listed on the Bombay Stock Exchange and the National Stock Exchange of India. Its largest shareholder is Moody’s Investors Service of the US.

Source and Additional Resources:

[1] IFMR Trust, blog entry, “IFMR Capital structures microloan securitization with Ujjivan”, http://www.ifmr.co.in/blog/2011/05/23/ifmr-capital-structures-microloan-securitisation-with-ujjivan/

MicroCapital.org Brief, January 10, 2011, “Ujjivan Financial Services Raises $8.8m of Debt Capital Through Non-Convertible Debenture (NCD) Issuance to Developing World Market’s Member Company DWM (Cyprus) Limited”, http://www.microcapital.org/microcapital-brief-ujjivan-financial-services-raises-8-8m-of-debt-capital-through-non-convertible-debenture-ncd-issuance-to-developing-world-market%E2%80%99s-member-company-dwm-cyprus-limited/

MicroCapital.org Brief, June 16, 2010, “Indian Microfinance Institution Ujjivan Financial Services Reduces Interest Rates, Following Lead of Bandhan Financial Services Private Limited”, http://www.microcapital.org/microcapital-brief-indian-microfinance-institution-ujjivan-financial-services-reduces-interest-rates-following-lead-of-bandhan-financial-services-private-limited/

MicroCapital Universe Profile: Ujjivan Financial Services, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ujjivan

MicroCapital Universe Profile: Institute for Financial Management and Research (IFMR) Capital, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=IFMR+Capital

MicroCapital Universe Profile: Investment and Credit Rating Agency of India (ICRA) Limited, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ICRA

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