Avendus Capital, an Indian investment bank, recently reported that it purchased INR 108 million (USD 2.4 million) in securitized debt from Grama Vidiyal Microfinance, a microfinance institution (MFI) operating in India’s state of Tamil Nadu. Securitization is a process by which lenders pool the receivables from loans for sale to investors such as banks, mutual funds and wealth managers. According to Indian newspaper The Economic Times, the debt buyout included approximately 11,300 microloans, 84 percent of which were bought by Avendus Capital. The transaction was arranged by IFMR Capital, a non-banking finance company based in India, which bought the remaining 16 percent of the securitization.
Nikhil Kapadia, CEO of Wealth Management, Avendus Capital, said, “We were the first wealth management firm in India to identify the opportunity in subscribing to these securitized papers, now our investor base has increased its allocations to such customized instruments.”
As of March 31, 2010, Grama Vidiyal reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 134 million, a gross loan portfolio of USD 134 million, approximately 772,000 borrowers, return on assets (ROA) of 3.7 percent and return on equity (ROE) of 25.5 percent.
By Carol Kim, Research Associate
About Avendus Capital: Avendus Capital is an investment bank in India that provides financial services in the areas of financial advisory, capital markets, wealth management and alternative asset management to clients including institutional investors, corporations and high-net worth families. Financial information on the firm is not available.
About Grama Vidiyal Microfinance: Grama Vidiyal is a microfinance institution (MFI) based in the Indian state of Tamil Nadu. Since 1993, Grama Vidiyal, in partnership with Activists for Social Alternatives (ASA), has provided small loans to women without access to formal credit and who typically have daily incomes of less than INR 80 (USD 2). As of March 31, 2010, Grama Vidiyal reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 134 million, a gross loan portfolio of USD 134 million, approximately 772,000 borrowers, return on assets (ROA) of 3.7 percent and return on equity (ROE) of 25.5 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. Founded in 2008, IFMR Capital connects investors in established and emerging debt capital markets with microfinance institutions (MFIs) and other institutions lending to small-scale farmers and small and medium-sized enterprises (SMEs).
Sources and Additional Resources:
The Economic Times: “Avendus Capital buys 84% of Tamil Nadu Grama Vidiyal Micro Finance Co’s loan assets”, June 2011, http://articles.economictimes.indiatimes.com/2011-06-04/news/29620863_1_securitisation-loan-portfolio-finance-loans
MicroCapital.org: “MICROCAPITAL BRIEF: To Counter Liquidity Crunch in India, Grameen Koota, Bandhan, SKS Securitize Loans Disbursed to Women”, May 23, 2011, https://www.microcapital.org/microcapital-brief-to-counter-liquidity-crunch-in-india-grameen-koota-bandhan-sks-securitize-loans-disbursed-to-women/
MicroCapital.org: “MICROCAPITAL BRIEF: Avendus Capital of India Invests $8.25m in Securitized Microloans”, October 1, 2010, https://www.microcapital.org/microcapital-brief-avendus-capital-of-india-invests-8-25m-in-securitized-microloans/
MicroCapital’s Universe Profile: Avendus Capital, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Avendus+Capital
MicroCapital’s Universe Profile: Grama Vidiyal Microfinance, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Grama+Vidiyal
MicroCapital’s Universe Profile: Institute for Financial Management and Research (IFMR) Capital, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=IFMR+Capital
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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