IFC, the investment wing of the World Bank, which has committed an investment of $4.5 billion in India, made its latest investment in a Rajasthan-based non-banking finance company with $25-million debt for onward investment principally into medium and small private units.
Anup Agarwal, serior investment officer of IFC, told Business Line that the non-deposit taking NBFC, AU Financiers (India) Ltd, has got three rounds of equity investment from IFC since 2010.
“This month we are allowing the first debt funding to it,” he added.
The NBFC, which was mainly into vehicle financing, saw a business downturn with the economic slowdown in the country in the past couple of years. “So we supported them changing business track to the MSME sector. This has helped them go enlarge their loan book 11 times,” he said explaining how IFC has been canalising funds and expertise towards MSME sector in India.
IFC has been funding sector’s development institution SIDBI as well as large private banks such as ICICI Bank, HDFC Bank, Yes Bank and Kotak Mahindra to direct financing. It has also been financing NBFCs such as Cholamandalam, or Bandhan active in the sector.
Moreover, it has also channelled funds to private equity and venture capital funds of Motilal Oswal, Aavusgjar, Pragati, Venture East and Lighthouse for investments to the sector. It also made direct selective investment in small and medium enterprises or start-ups.
IFC’s equity investment (around 20 per cent) in Tata Capital’s special initiative in the green technology start-ups -- Tata Cleantech about three years ago has been significant in terms of results -- quantity, quality and development impact, Agarwal added.
This article was originally published in The Hindu Business Line.