Ifmr Capital Ppt

IFMR TrustDr. Kshama Fernandes

The bigger picture… ICICI Bank (Funding)

IFMR Trust has a mission of ensuring that every individual and every enterprise has complete access to financial services. We are a team of about 100 people with skills across the spectrum of commercial banking, microfinance, structured finance and private equity, all driven by the common belief that well-functioning financial markets and universal access to finance is fundamental for economic development.

Agenda

Who are we?

What do we do?

Our People

What we offer?

What are we looking for?

3

2

1

4

5

Who are we?

About IFMR Capital

• IFMR Capital is a financial institution mentored by Dr. Nachiket Mor in 2008

• Our objective is to provide liquidity and develop access to debt capital markets to institutions that impact poor households like

Rural and urban micro finance institutions Small and medium enterprises

• We aim to link these institutions with capital markets and built microfinance as a new asset class.

• We are pioneers in rated securitization of micro-loans. We did the first rated securitization of micro finance assets earlier this year and are currently working on what could be the first rated multi originator securitization in the country.

• We use financial tools such as Securitization & Credit enhancement Developing new rating methodologies along with rating agenciesDebt structuring

Other Ventures in the pipeline…

Commodity Finance

1

Debt Syndication 2

SME Lending 3

Low-Income Housing

4

Developing innovative commodity backed warehouse financing to farmers and traders

Pilot project in Kadi, Gujarat

Providing debt syndication to Microfinance institutions

Developing new financing models for housing in collaboration with private and government agencies

Bill refinancing & sub-debt financing to microenterprises

What do we do?

IFMR Capital: Rated Securitisation model

Assigns and maintains rating for the portfolio

Rating Agency

MFI (originator)

Special Purpose Vehicle

FLDG (from MFI)

Investors

Repayment cash flows

Repayment cash flows

FundsFunds

SLDG

• IFMR Capital conducts detailed due diligence on the MFI, which involves an in-depth analysis of quality of management, operations, systems, and financial performance.

• The PTCs are typically rated by Crisil

AA senior Notes(80%, purchased by

bank)

BBB junior notes(20%, purchased by

IFMR Capital)

Case Study: Equitas Microloan SecuritisationFirst rated securitisation of micro-loans (March – 09)


CRISIL

Equitas Micro Finance


Cash Collateral

(FLDG by Equitas:11.7% of principal)

Rs. 16 croreRs. 16 crore

Credit enhancement

Senior note • Cash collateral by the MFI• Junior note fully subscribed by

IFMR Capital• EIS provided by IFMR CapitalJunior note • Cash collateral by Equitas

Portfolio ofmicrofinance

loans

Securities withperiodic principal

and interest payments

AA senior Notes(targeted at banks)

BBB junior notes(held by IFMR Capital)

Case Study: Multi originator Securitization First rated securitization of multiple originator micro-loans (Nov – 09)


CRISIL


Cash Collateral

Rs. 40 croreRs. 40 crore

Credit enhancement

Senior note • Cash collateral by the MFIs• Junior note fully subscribed by

IFMR Capital• Diversification happens in the

BBB

Portfolio ofmicrofinance

loans

Securities withperiodic principal

and interest payments

MFI 5MFI 4

MFI 3MFI @

MFI 1

Liquidity trancheLiquidity tranche

Promoting microfinance as an asset class

• Superior quality: <3% credit loss, attributed to concept of social collateral, shorter maturity of products and continuous follow-up

• Strong underlying business model: group liability

• Low prepayment risk: enables premium structures

• Diversification: low correlation with other asset classes

• Within asset class - very high granularity of loans

• High growth rate: three of the largest MFIs in India – SKS, Share Microfinance and Spandana have shown near 100% YoY growth rates

• Maturing market that is now ready for structured finance products: securitization, CDOs, guarantees, NCDs etc.

IFMR Capital Approach

Our People

TeamNachiket Mor (Chairman, IFMR Trust)Nachiket Mor is a Yale World Fellow (2004); has a Ph.D. in Economics from the University of Pennsylvania with a specialization in Finance from the Wharton School; a Masters degree in Management from the Indian Institute of Management, Ahmedabad and an undergraduate degree in Physics from the Mumbai University. While completing his Ph.D., he was associated with a Philadelphia based hedge fund (Quantitative Financial Strategies) for three years. He has worked with ICICI since 1987 in a variety of jobs, including, Corporate Planning, Project Finance, Treasury and Rural Banking and was a member of ICICI Bank’s Board from 2001-2007. He is currently President of the ICICI Foundation for Inclusive Growth. In addition to his work with the ICICI Foundation, he is a member of the Boards of CRISIL, RUDI (SEWA), FINO, IndiaMart, Shorecap Exchange (USA) and the India Advisory Board of Intuit (USA).

Bindu Ananth (President, IFMR Trust)Bindu Ananth has a master in public administration and International development from Harvard University, John F. Kennedy School of Government (2007). She has worked with ICICI Bank in its microfinance practice between 2001 and 2005 and was Head of the new product development group within the bank's rural finance business in 2007. She founded the Centre for Microfinance, IFMR, and has published in the Small Enterprise Development Journal, the Economic and Political Weekly, the OECD working paper series and the IFMR working paper series.

Sucharita Mukherjee (CEO of IFMR Capital)Sucharita led the origination and structuring effort in credit derivatives & structured finance for corporates at Morgan Stanley in London. Her work includes developing innovative asset-backed financing structures in such areas as intellectual property and health-care receivables. She was also part of the credit derivatives team at Deutsche Bank in London, structuring credit-derivatives-linked repackaged investments for financial institutions. She graduated from the Indian Institute of Management in Ahmadabad and holds an undergraduate degree in Economics from LSR.

Team

We are a team of 18 highly dynamic and motivated individuals working for a common cause.

Other people include:Prominent Academicians (advisor and consultant to MoF, NSE, NSCCL,

World Bank, Chicago Mercantile Exchange, various Banks and Mutual Funds)

Diversified team from INSEAD, Morgan Stanley, Bear Stearns, Massachusetts Institute of Technology (MIT), IIM Ahmedabad, IIM Bangalore, NLS Bangalore, IRMA and LSR Delhi

What do we offer?

Differentiating factors

Opportunity to work on the entire cycle of the deal Underwriting standards Due diligenceStructuring Pricing RatingInvestor Relations & Road showsMarket development

Opportunity to rise faster: No hierarchy & informal yet professional work environment Complete ownership & responsibility of the projectExponential learning curve: Experiencing rural India Opportunity for further employment with IFMR Capital

Projects

Pricing 1

Risk Management2

Private Wealth3

Structuring 4

• Modeling fundamental pricing of PTC securities

• Modeling credit risk and prepayment risk

• Modalities of building this asset class with private investors

• Structuring live-deals

New Models of Securitisation

5• Feasibility of revolver form of securitisation

If you have…

• Belief in our mission• Enterprise and creativity• Analytical bend of mind• Good communication skills• Flexibility in terms of travel and location• Ability to work across multiple teams

IFMR Mezzanine Finance

Agenda

IFMR Mezzanine Finance 1

Products, Structures & Clients 2

Team 3

Offer 4

What are we looking for? 5

• IFMR Mezzanine Finance (Mezz Co) is being set up as a wholly owned subsidiary of the IFMR Trust.

– Initial capital base of Rs. 200 million

– In advanced stages of acquiring a NBFC

– Will commence business towards the end of October 2009

• The main objective of Mezz Co is to strengthen the delivery of financial services to rural households and urban poor by making investments in local financial institutions such as MicrofinanceInstitutions

• Mezz Co will

– Provide medium to long term capital to MFIs to enable them to grow

– Create a new liability side instrument for local financial institutions that will enable MFIs to meet their regulatory capital requirement


Products, Structures & Clients

• Mezz Co will use quasi equity instruments such as

– Subordinated debt structures and convertible debts

– Guarantee based instruments such as First Loss Deficiency Guarantee

– Subscribe to Junior tranches in a securitization deal

• Mezz Co will primarily have the following as its clients

– MFIs such as Trusts, societies or Sec-25 companies that are willing to convert to NBFCs

– Mezz Co. may also look for smaller MFIs in their initial phase of growth(start-ups)

– All entities engaged in micro and rural finance that have stableprocesses and need to shore up capital either for expansion or to meet current CAR norms

Products, Structures and Clients

The Team

The Board

Bindu Ananth (President, IFMR Trust)

Bindu has a master in public administration and International development from Harvard University, John F. Kennedy School of Governance (2007). She has worked with ICICI Bank in its microfinance practice and was Head of the new product development group within the bank's rural finance business in 2007. She founded the Centre for Microfinance, IFMR, and has published in the Small Enterprise Development Journal, the EPW, the OECD working paper series and the IFMR working paper series.

Puneet Gupta (CEO of IFMR Mezzanine Finance)

Puneet started his career with ICICI Bank where he worked for a period of 7 years in the areas of microfinance and rural finance. He was responsible for identification and development of new channels and products for reaching out micro financial services to rural households and was involved in developing models for attracting private equity investment in the Microfinance sector. Puneet is on the Board of Rural Technology Business Incubator of IIT, Madras.

The Board

• Sucharita Mukherjee (CEO of IFMR Capital)– Sucharita led the origination and structuring effort in credit derivatives & structured finance for

corporates at Morgan Stanley in London. Her work includes developing innovative asset-backed financing structures in such areas as intellectual property and health-care receivables. She was also part of the credit derivatives team at Deutsche Bank in London, structuring credit-derivatives-linked repackaged investments for financial institutions. She graduated from the Indian Institute of Management in Ahmadabad and holds an undergraduate degree in Economics from LSR.

• Anil SG (CEO of IFMR Rural Finance)– Anil Kumar started his career in Canara Bank. He joined ICICI Bank in 1996 and his last assignment was as

Head of the Microfinance Institutional Development Team, which created over 200 MFIs across the country in 25 states. He is a Board Member in Grameen Capital India and Member - Project Management Committee, MicroSave India.

• Dave Wallack (Head Branding and Advocacy)– Dave Wallack worked for over 10 years as an Executive Coach and Organizational Design Advisor for

various private sector and political clients in the US. He specializes in building and motivating organizations to operate effectively in rapidly changing environments.

The Offer

Environment & Offer

• Mezz Co is a start-up. Exposure to:

– Work on various aspects of the deal including identification of MFIs, due diligence, developing term sheets, completing transaction documents, monitor existing investments, deal with other investors, etc.

– Work on setting up/ refining processes at the Mezz Co

– Mezz Co does not have any formal hierarchical structures. All employees work as a team and different people take leadership for various things that come-up as a part of the day to day responsibilities

• This ensures that everyone has a chance to get significant roles

• Also ensures that everyone has a very steep learning curve.

• Further employment opportunities at Mezz Co

Projects

Risk Management 1 The project will involve understanding the various

risks of IFMR Mezzanine and assisting the portfolio manager in mitigating the same

StructuringMezzanineFinancingProducts

2 The project will involve developing structures for Mezzanine Finance products. A part of the role will be to examine structures used in the past by other entities.

What we are looking for?


• We believe you already have what it takes to work with us. We are looking for individuals who – Are team players– Would thrive in situations that are not completely defined and

certain– Would look at situations beyond what is obvious– Are willing to travel on work (may require you to travel to remote

villages to get a sense of the operations of rural financial institutions)– Share our passion and commitment to ensure that everyone has

access to financial services

Thank you

1, Cenotaph Road | Teynampet | Chennai - 18

www.mezzanine.ifmr.co.in

Ifmr Capital Ppt

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