IFMR Trust

Dr. Kshama Fernandes

The bigger picture… ICICI Bank (Funding)

IFMR Trust has a mission of ensuring that every individual and every
enterprise has complete access to financial services. We are a team of
about 100 people with skills across the spectrum of commercial banking,
microfinance, structured finance and private equity, all driven by the
common belief that well-functioning financial markets and universal access
to finance is fundamental for economic development.
Agenda

1
Who are we?

2
What do we do?

3
Our People

4
What we offer?

5
What are we looking for?
Who are we?
About IFMR Capital
• IFMR Capital is a financial institution mentored by Dr. Nachiket Mor in 2008

• Our objective is to provide liquidity and develop access to debt capital markets to institutions
that impact poor households like
¾ Rural and urban micro finance institutions
¾ Small and medium enterprises

• We aim to link these institutions with capital markets and built microfinance as a new asset
class.
• We are pioneers in rated securitization of micro-loans. We did the first rated securitization of
micro finance assets earlier this year and are currently working on what could be the first
rated multi originator securitization in the country.

• We use financial tools such as

¾ Securitization & Credit enhancement
¾ Developing new rating methodologies along with rating agencies
¾ Debt structuring
Other Ventures in the pipeline…

1 ¾ Developing innovative commodity backed warehouse

Commodity
Finance financing to farmers and traders
¾ Pilot project in Kadi, Gujarat

2
Debt Syndication ¾ Providing debt syndication to Microfinance
institutions

3
SME Lending ¾ Bill refinancing & sub-debt financing to micro
enterprises

4 ¾ Developing new financing models for housing in

Low-Income
Housing collaboration with private and government agencies
What do we do?
 IFMR Capital: Rated Securitisation model

FLDG
(from MFI)

Repayment Repayment
cash flows cash flows
MFI Special
(originator) Purpose Investors
Vehicle
Funds Funds

Assigns and  SLDG 
maintains rating 
for the portfolio 
• IFMR Capital conducts detailed due diligence on
the MFI, which involves an in-depth analysis of
quality of management, operations, systems, and
financial performance.
• The PTCs are typically rated by Crisil
Rating Agency
Case Study: Equitas Microloan Securitisation
First rated securitisation of micro-loans (March – 09)

Cash
Collateral
(FLDG by Equitas:
11.7% of principal)
Securities with
Portfolio of periodic principal
microfinance and interest
loans payments
Special AA senior Notes
Equitas Micro (80%, purchased by
Finance Purpose bank)
Vehicle
Rs. 16 crore Rs. 16 crore
BBB junior notes
(20%, purchased by
Credit enhancement IFMR Capital)
Assigns and
Senior note maintains rating
• Cash collateral by the MFI for the portfolio
• Junior note fully subscribed by
IFMR Capital
• EIS provided by IFMR Capital CRISIL
Junior note
• Cash collateral by Equitas
Case Study: Multi originator Securitization
First rated securitization of multiple originator micro-loans (Nov – 09)

Cash
Liquidity 
Collateral
tranche
Securities with
Portfolio of periodic principal
microfinance and interest
loans payments
Special AA senior Notes
MFI 5 Purpose (targeted at banks)
MFI 4
MFI 3 Vehicle BBB junior notes
MFI @ Rs. 40 crore Rs. 40 crore
MFI 1 (held by IFMR Capital)

Credit enhancement Assigns and

Senior note maintains rating
• Cash collateral by the MFIs for the portfolio
• Junior note fully subscribed by
IFMR Capital
• Diversification happens in the CRISIL
BBB
 Promoting microfinance as an asset class
• Superior quality: <3% credit loss, attributed to concept of social collateral,
shorter maturity of products and continuous follow-up
• Strong underlying business model: group liability
• Low prepayment risk: enables premium structures
• Diversification: low correlation with other asset classes
• Within asset class - very high granularity of loans
• High growth rate: three of the largest MFIs in India – SKS, Share
Microfinance and Spandana have shown near 100% YoY growth rates
• Maturing market that is now ready for structured finance products:
securitization, CDOs, guarantees, NCDs etc.
IFMR Capital Approach
Our People
 Team
Nachiket Mor (Chairman, IFMR Trust)
Nachiket Mor is a Yale World Fellow (2004); has a Ph.D. in Economics from the University of Pennsylvania with a
specialization in Finance from the Wharton School; a Masters degree in Management from the Indian Institute of
Management, Ahmedabad and an undergraduate degree in Physics from the Mumbai University. While completing his
Ph.D., he was associated with a Philadelphia based hedge fund (Quantitative Financial Strategies) for three years. He
has worked with ICICI since 1987 in a variety of jobs, including, Corporate Planning, Project Finance, Treasury and
Rural Banking and was a member of ICICI Bank’s Board from 2001-2007. He is currently President of the ICICI
Foundation for Inclusive Growth. In addition to his work with the ICICI Foundation, he is a member of the Boards of
CRISIL, RUDI (SEWA), FINO, IndiaMart, Shorecap Exchange (USA) and the India Advisory Board of Intuit (USA).

Bindu Ananth (President, IFMR Trust)

Bindu Ananth has a master in public administration and International development from Harvard University, John F.
Kennedy School of Government (2007). She has worked with ICICI Bank in its microfinance practice between 2001 and
2005 and was Head of the new product development group within the bank's rural finance business in 2007. She
founded the Centre for Microfinance, IFMR, and has published in the Small Enterprise Development Journal, the
Economic and Political Weekly, the OECD working paper series and the IFMR working paper series.

Sucharita Mukherjee (CEO of IFMR Capital)

Sucharita led the origination and structuring effort in credit derivatives & structured finance for corporates at Morgan
Stanley in London. Her work includes developing innovative asset-backed financing structures in such areas as
intellectual property and health-care receivables. She was also part of the credit derivatives team at Deutsche Bank in
London, structuring credit-derivatives-linked repackaged investments for financial institutions. She graduated from the
Indian Institute of Management in Ahmadabad and holds an undergraduate degree in Economics from LSR.
 Team

‰ We are a team of 18 highly dynamic and motivated individuals working

for a common cause.

‰ Other people include:

¾ Prominent Academicians (advisor and consultant to MoF, NSE, NSCCL,
World Bank, Chicago Mercantile Exchange, various Banks and Mutual
Funds)
¾ Diversified team from INSEAD, Morgan Stanley, Bear Stearns,
Massachusetts Institute of Technology (MIT), IIM Ahmedabad, IIM
Bangalore, NLS Bangalore, IRMA and LSR Delhi
What do we offer?
Differentiating factors
‰ Opportunity to work on the entire cycle of the deal
¾ Underwriting standards
¾ Due diligence
¾ Structuring
¾ Pricing
¾ Rating
¾ Investor Relations & Road shows
¾ Market development
‰ Opportunity to rise faster: No hierarchy & informal yet professional work
environment
‰ Complete ownership & responsibility of the project
‰ Exponential learning curve: Experiencing rural India
‰ Opportunity for further employment with IFMR Capital
Projects
1
Pricing • Modeling fundamental pricing of PTC securities

2
Risk Management • Modeling credit risk and prepayment risk

3
Private Wealth
• Modalities of building this asset class with private
investors
4
Structuring • Structuring live-deals
5
New Models of • Feasibility of revolver form of securitisation
Securitisation
What are we looking for?
If you have…
• Belief in our mission
• Enterprise and creativity
• Analytical bend of mind
• Good communication skills
• Flexibility in terms of travel and location
• Ability to work across multiple teams
IFMR Mezzanine Finance
Agenda

1
IFMR Mezzanine Finance

2
Products, Structures & Clients

3
Team

4
Offer

5
What are we looking for?
IFMR Mezzanine Finance
IFMR Mezzanine Finance
• IFMR Mezzanine Finance (Mezz Co) is being set up as a wholly
owned subsidiary of the IFMR Trust.
– Initial capital base of Rs. 200 million
– In advanced stages of acquiring a NBFC
– Will commence business towards the end of October 2009
• The main objective of Mezz Co is to strengthen the delivery of
financial services to rural households and urban poor by making
investments in local financial institutions such as Microfinance
Institutions
• Mezz Co will
– Provide medium to long term capital to MFIs to enable them to grow
– Create a new liability side instrument for local financial institutions
that will enable MFIs to meet their regulatory capital requirement
Products, Structures & Clients
Products, Structures and Clients
• Mezz Co will use quasi equity instruments such as
– Subordinated debt structures and convertible debts
– Guarantee based instruments such as First Loss Deficiency Guarantee
– Subscribe to Junior tranches in a securitization deal

• Mezz Co will primarily have the following as its clients

– MFIs such as Trusts, societies or Sec-25 companies that are willing to
convert to NBFCs
– Mezz Co. may also look for smaller MFIs in their initial phase of
growth(start-ups)
– All entities engaged in micro and rural finance that have stable
processes and need to shore up capital either for expansion or to
meet current CAR norms
The Team
The Board
Bindu Ananth (President, IFMR Trust)
Bindu has a master in public administration and International development
from Harvard University, John F. Kennedy School of Governance (2007). She
has worked with ICICI Bank in its microfinance practice and was Head of the
new product development group within the bank's rural finance business in
2007. She founded the Centre for Microfinance, IFMR, and has published in
the Small Enterprise Development Journal, the EPW, the OECD working paper
series and the IFMR working paper series.

Puneet Gupta (CEO of IFMR Mezzanine Finance)

Puneet started his career with ICICI Bank where he worked for a period of 7
years in the areas of microfinance and rural finance. He was responsible for
identification and development of new channels and products for reaching out
micro financial services to rural households and was involved in developing
models for attracting private equity investment in the Microfinance sector.
Puneet is on the Board of Rural Technology Business Incubator of IIT, Madras.
The Board
• Sucharita Mukherjee (CEO of IFMR Capital)
– Sucharita led the origination and structuring effort in credit derivatives & structured finance for
corporates at Morgan Stanley in London. Her work includes developing innovative asset-backed financing
structures in such areas as intellectual property and health-care receivables. She was also part of the
credit derivatives team at Deutsche Bank in London, structuring credit-derivatives-linked repackaged
investments for financial institutions. She graduated from the Indian Institute of Management in
Ahmadabad and holds an undergraduate degree in Economics from LSR.

• Anil SG (CEO of IFMR Rural Finance)

– Anil Kumar started his career in Canara Bank. He joined ICICI Bank in 1996 and his last assignment was as
Head of the Microfinance Institutional Development Team, which created over 200 MFIs across the
country in 25 states. He is a Board Member in Grameen Capital India and Member - Project Management
Committee, MicroSave India.

• Dave Wallack (Head Branding and Advocacy)

– Dave Wallack worked for over 10 years as an Executive Coach and Organizational Design Advisor for
various private sector and political clients in the US. He specializes in building and motivating
organizations to operate effectively in rapidly changing environments.
The Offer
Environment & Offer
• Mezz Co is a start-up. Exposure to:
– Work on various aspects of the deal including identification of MFIs, due
diligence, developing term sheets, completing transaction documents,
monitor existing investments, deal with other investors, etc.
– Work on setting up/ refining processes at the Mezz Co
– Mezz Co does not have any formal hierarchical structures. All employees work
as a team and different people take leadership for various things that come-
up as a part of the day to day responsibilities
• This ensures that everyone has a chance to get significant roles
• Also ensures that everyone has a very steep learning curve.

• Further employment opportunities at Mezz Co

Projects

1 The project will involve understanding the various

Risk Management risks of IFMR Mezzanine and assisting the portfolio
manager in mitigating the same

2 The project will involve developing structures for

Structuring
Mezzanine Mezzanine Finance products. A part of the role will
Financing
Products be to examine structures used in the past by other
entities.
What we are looking for?
What are we looking for?
• We believe you already have what it takes to work with us. We are
looking for individuals who
– Are team players
– Would thrive in situations that are not completely defined and
certain
– Would look at situations beyond what is obvious
– Are willing to travel on work (may require you to travel to remote
villages to get a sense of the operations of rural financial institutions)
– Share our passion and commitment to ensure that everyone has
access to financial services
Thank you

1, Cenotaph Road | Teynampet | Chennai - 18

www.mezzanine.ifmr.co.in