IFMR Capital Structures the First Multi Originator Securitisation in Microfinance

CHENNAI, India, January 18 - IFMR Capital recently concluded a multi-originator securitisation of
micro-loans originated by four microfinance institutions in India. The Rs.
308 million (US$6.5 million) transaction is backed by around 42,000
micro-loans originated by Asirvad Microfinance Pvt Ltd, Sahayata Microfinance
Pvt Ltd, Satin Creditcare Network Ltd, and Sonata Finance Pvt Ltd.

IFMR Capital was the structurer, arranger and an investor in the
subordinated strip of the transaction. "Using the multi-originator
securitisation structure, we have been able to help a number of MFIs access
mainstream capital markets. Given the sizes of the institutions and the
limited availability of capital to generate unencumbered portfolios,
accessing capital markets on their own is an unviable option for most small
and medium MFIs," said Sucharita Mukherjee, CEO of IFMR Capital. "By pooling
together the loan portfolios of these high-quality MFIs, we have demonstrated
that these MFIs can access funding at a much lower cost than their average
cost of funds. To the best of our knowledge, this is the first
multi-originator securitisation of micro-loans in the world."

IFMR Capital Mosec I, the multi-originator Special Purpose Vehicle, has
issued two tranches of securities: a 77 percent senior-rated tranche with an
expected maturity of 6 months, and a 23 percent subordinated strip with an
expected maturity of 11 months. CRISIL has assigned the highest short term
rating of P1+ (so) to the senior tranche, to which Dhanalakshmi Bank
subscribed. The closing of this transaction has resulted in the emergence of
a new pricing benchmark in the less-than-6-month-maturity asset class.

Regarding their investment in the senior tranche, Amitabh Chaturvedi, MD
and CEO of Dhanalakshmi Bank, said, "Our initiative towards microfinance
serves both social and organizational commitment. This transaction shows how
a business investment can be innovatively driven with sustainable
objectives."

As per the waterfall mechanism in the structure, the senior tranche will
be fully paid out before the subordinated strip begins to receive cash flows.
The IFMR Capital Mosec I securitisation has an average credit enhancement of
13 percent in the form of cash collateral provided by the four MFIs. The
senior tranche has additional credit enhancement provided by the junior
strip, to which IFMR Capital subscribed. The originators will continue to
service the underlying loans. The structure has been designed to align the
interests of the originator and structurer with the interests of investors.

"This is a landmark transaction for emerging MFIs like Asirvad as it
opens the door to a whole new set of investors and also enables us to
leverage our resources in the most efficient way," said Mr SV Raja
Vaidyanathan, Chairman of Asirvad Microfinance.

Ajay Verma, CEO of Sahayata Microfinance, said, "This transaction
provides a new source of funding for emerging MFIs. Access to reliable funds
from the capital markets will allow Sahayata to achieve their business plan
targets and better leverage their balance sheet."

"This structure will help financial institutions like Satin to diversify
their sources of funds by accessing the capital markets through innovative
financial instruments that were earlier not available leading to more
structured low-cost capital. It will eventually lead to reduced cost to the
ultimate beneficiaries - the end-borrowers," said H P Singh, Chairman cum
Managing Director of Satin."

Mr Anup Singh, MD, Sonata Finance said, "After the spurt of private
equity investments in small MFIs like Sonata, this is an equally welcome
development. I am happy that the structure developed by IFMR Capital enables
us to directly access mainstream capital markets."

For press queries, please contact: Susmitha Chakkungal
(Susmitha.Chakkungal@ifmr.co.in), Mobile: +91-90030-62231

For press queries, please contact: Susmitha Chakkungal (Susmitha.Chakkungal at ifmr.co.in), Mobile: +91-90030-62231