World Bank’s International Finance Corporation (IFC) will make a debt investment of $150 million (about Rs 1,132 crore) in non-bank lender Bajaj Finance Limited, likely its third funding deal with the consumer finance company.
The five-year loan is essentially to support micro, small and medium enterprise (MSME) loans.
Bajaj Finance, through its own balance sheet, will direct 3x of the IFC’s loan towards the MSME segment thus enabling a combined MSME funding of $600 million (Rs 4,530 crore), IFC said in a disclosure.
In 2019, the World Bank arm, which has been a partner of the Bajaj group non-banking financial company (NBFC) since 2017, had announced an investment in Bajaj Finance for lending to SMEs.
The Bajaj Group holds 56.12% stake in Bajaj Finance through Bajaj Finserv Ltd, a holding company for its financial services businesses. Bajaj Finserv owned 52.74% of Bajaj Finance as on March-end 2021. Singapore’s GIC holds around 4.29%.
Established in 1987 in Pune with the primary objective of financing retail buyers of two-wheelers produced by group company Bajaj Auto, Bajaj Finance is the third largest NBFC in India with $4.9 billion equity base and $22.3 billion asset base as of December 31, 2020.
With a customer base of over 46 million, it has a network of 1,210 urban locations, 1,604 rural locations and over a lakh distribution points.
IFC is an active debt and equity finance provider in financial services and other industries in India.
Earlier this month, it proposed to invest $100 million (about Rs 755 crore) in secured debt in two-wheeler and MSME financier Hero Fincorp Ltd.
Among financial services firms, IFC has invested in Fullerton India Credit Company Ltd; Aavas Financiers Ltd; Arohan Financial Services Pvt. Ltd; Ashiana Housing Finance India Ltd; Aptus Value Housing Finance India Ltd; Avanse Financial Services; and Angel Broking Ltd.
Among Indian banks, IFC has investments in Axis Bank, RBL Bank Bandhan Bank, and Au Small Finance Bank, from which it made a partial exit last year.
It had also provided debt financing to stressed real estate financier Altico Capital, now acquired by Ares SSG Capital.
IFC has also made direct private equity-style investments and lends to companies in the country. This month, it proposed to invest in homegrown private equity firm Everstone’s largest ever fund and the third fund of mid-market private equity company Faering Capital Advisors.
Last month, IFC made a commitment to invest $50 million in private equity firm Gaja Capital’s fourth fund.