International Finance Corporation is looking to invest up to Rs 480 crore ($75 million) in non-banking finance company Cholamandalam Investment and Finance Company Ltd via subscription of masala bonds.
Chennai-based Cholamandalam will use the funds to extend loans to small road transport operators and to small and medium enterprises in low-income states, the private-sector investment arm of the World Bank said in a disclosure.
The investment proposal will be placed before IFC’s board on 10 January 2018.
Cholamandalam aims to raise $125 million to $200 million via masala bonds—rupee-denominated securities sold overseas—and IFC may act as the anchor investor, the disclosure showed. This will be the first masala bond issue by Cholamandalam Investment.
Incorporated in 1978, Cholamandalam Investment is the financial services arm of Murugappa Group. It offers vehicle loans and home equity loans, and also provides corporate finance and stock broking services. It focuses on rural and semi-urban areas.
Cholamandalam manages assets worth Rs 37,500 crore. It operates through 725 branches in 25 states across the country.
Vehicle finance contributes more than 60% of its assets under management. Loans to small and medium enterprises and corporate mortgage finance constitute a small portion of the portfolio.
As on September 2017, IFC held a 1.9% stake in the non-banking finance company, according to stock-exchange data.
IFC’s recent bets
Earlier this month, IFC said it planned to invest $41 million (Rs 266.6 crore) in projects of Delhi-based developer Ashiana Housing.
In October, IFC had invested $50.68 million to help Mahindra Lifespace Developers Ltd set up three industrial clusters.
In September, IFC said it planned to invest up to $20 million (Rs 128 crore) in organic food exporter Suminter India Organics Pvt. Ltd for an equity stake.