Birla Sun and Ujjivan Strike Securitisation Deal
Kolkata: Birla Sun Life Mutual Fund and Ujjivan have struck a securitisation deal thereby opening up the possibility of easier financing options for lenders at the bottom of the pyramid. The size of the deal is ₹ 150 crore.
This is the first instance, after the Andhra Pradesh microfinance crisis of 2010, of a mutual fund investing in a se- curitisation deal initiated by a micro lender. The deal could give a fillip to the securitisation market with mutual fund houses showing interest to invest as government bond yields have been falling over the past one year. “It’s encouraging as mutual funds have started coming back to invest in microfinance loan pools after the 2010 crisis,” said IFMR Capital Chief Executive Officer Kshama Fernandes. “It’s a purely commercial play for mutual funds as they look to maximise returns.”
Bond yields dipped almost 65-100 basis points since April 2016. A premium of 50 to 100 basis points is what is received by an investor from a securitised paper compared to a plain bond.
The Ujjivan-Birla Sun Life deal took place in the last week of January, just a week before Ujjivan began operations as a small finance bank. IFMR Capital arranged the deal.
“The securitisation transaction is a testimony to the company’s inherent strength and excellent risk management amid the challenges of demonetisation.