Birla Sun and Ujji­van Strike Se­cu­ri­ti­sa­tion Deal

The Economic Times - - Companies: Pursuit Of Profit - At­madip.Ray @times­group.com

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.

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