Avendus picks up 84% of Tamil Nadu MFI's loan portfolio

CHENNAI: In what is being called the largest debt investment in the microfinance sector by private wealth managers, Avendus Capital has bought a major chunk of the Rs 10.8 crore loan portfolio of Tiruchi-based Grama Vidiyal Micro Finance Ltd.

Avendus bought 84% of the portfolio, which was formed by 11,304 microloans. The deal was structured and arranged by IFMR Capital, an NBFC, which also picked up the remainder of the loan portfolio.

Securitisation is the process by which lenders pool the receivables from loans and then sell the same to financial institutions (banks, mutual funds and wealth managers).

The micro finance securitisation market hit a roadblock after the trouble in the microfinance industry in Andhara Pradesh.

Nikhil Kapadia, CEO-Wealth Management, Avendus Capital, said "We were the first wealth management firm in India to identify the opportunity in subscribing to these securitised papers, now our investor base has increased its allocations to such customized instruments."