MICROCAPITAL BRIEF: Institute for Financial Management Research Mezzanine Finance Private Limited (IFMR Mezz) Provides $221k in Subordinated Debt to Saija Finance Private Limited
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Monday, December 13, 2010

MICROCAPITAL BRIEF: Institute for Financial Management Research Mezzanine Finance Private Limited (IFMR Mezz) Provides $221k in Subordinated Debt to Saija Finance Private Limited

The Institute for Financial Management Research (IFMR) Mezzanine Finance Private Limited (IFMR Mezz), a microfinance investment arm of the nonprofit IFMR, has provided funds worth INR 10 million (approximately USD 221,000) to Saija Finance Private Limited, a non-banking finance company providing microfinance services in northern India, in the form of unsecured, subordinated debt. The debt is characterized as Tier: II capital, also known as “quasi equity,” meaning that IFMR Mezz will not be repaid first should Saija face financial difficulties resulting in its closure. IFMR Mezz views this investment as an alternative to both traditional debt capital, which can be difficult for any microfinance institution (MFI) to attract, and equity capital, which is generally only made available to larger MFIs and would dilute the equity stakes of pre-existing shareholders. The investment has a tenor 7.5 years with quarterly interest payments and a bullet, or complete, principal repayment due at the end of the term. Saija reports 2,860 borrowers and a gross portfolio equivalent to USD 256,597 as of 2010.

About the Institute for Financial Management and Research (IFMR): Institute for Financial Management and Research (IFMR) is a non-profit organization established in 1970 by ICICI, the House of Kotharis, and other major industrial groups. It is based in Chennai, India. The institute focuses on three main areas, including academic programs, research and innovation, as well as executive training and consulting. Its affiliated research centers include: Centre for Micro Finance (CMF), Centre for Development Finance (CDF), Small Enterprice Finance Centre (SEFC), Centre for Insurance & Risk Management (CIRM), Center for Advanced Financial Studies (CAFS), Centre for Innovative Financial Design (CIFD) and Jameel Poverty Action Lab (J-PAL).

About IFMR Mezzanine Finance: IFMR Mezzanine Finance Private Limited is a non-banking finance subsidiary of IFMR Trust. Registered with the Reserve Bank of India, IFMR Mezzanine Finance focusses exclusively on subordinate funding for microfinance institutions, including managing co-investments.

About Saija Private Limited: Saija Finance Private Limited is a Non Banking Finance Company that provides microfinance services to the poor in Northern India. Founded in April 2008, it aims to cater specifically to the states of Bihar, Jharkhand, Delhi, Rajasthan, Chhattisgarh and parts of Uttar Pradesh and Madhya Pradesh. Saija claims to have 2860 borrowers, total loans disbursed equivalent to USD 1.2 million, a gross portfolio equivalent to USD 256,597 and total assets of INR 11 million (equivalent to USD 240,000).

By Christopher Maggio, Research Associate

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

MicroCapital Universe. Saiji Private Limited: http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Saija+Finance+Private+Limited

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