M&G Investments announces that its Catalyst strategy has invested in India’s first securitisation fund, which aims to expand and improve access to finance for underserved small and medium enterprises (SMEs) and millions of low-income households across the country, with a particular focus on women-owned SMEs.

M&G will provide $75 million towards the launch of the Vivriti India Retail Asset Fund (“VIRAF”) through a strategic partnership with Vivriti Asset Management and International Finance Corporation. The fund will focus on scaling investment in securitised debt securities with SME-backed assets, primarily through the issuance of microloans to SMEs.

A particular focus will be on addressing the gender gap in access to traditional finance in India. Addressing this challenge, the partnership is designed to cater to the needs of female-run SMEs with at least 45 percent of the fund’s proceeds earmarked for such businesses.

VIRAF will target around $250 million of Assets Under Management, with microloans accounting for approximately 90% of its portfolio. Catalyst, which has made the investment, is a purpose-led flexible private assets strategy, investing in innovative solutions to some of the world’s biggest environmental and social challenges.

Matthew O’Sullivan, M&G’s Head of Asia Pacific Private Investments comments: “Small and mid-sized non-banking finance companies are at the forefront of India’s financial inclusion initiatives, allowing entrepreneurs to start and grow businesses, and low-income families to manage their finances. M&G Catalyst is a strategy which aims to deliver positive impact to society and the environment alongside financial returns, so we are particularly pleased that VIRAF is focusing on ESG assessment and engagement with the NBFCs, helping them to become exemplary responsible and sustainable businesses.”

Vineet Sukumar, Founder and MD at VAM comments: “VIRAF aims to deepen and develop India’s ABS markets, by intermediating large global capital pools to last-mile financing, thereby setting a prototype for more such vehicles. Our research indicates that Indian ABS have outperformed internationally better rated ABS, which makes Indian ABS a compelling opportunity for global investors. M&G and IFC’s participation serves as a validation of the huge and untapped potential of Indian ABS as an asset class, stability of the regulatory environment, and India’s positive macro-outlook.”

Allan Forlemu, Regional Industry Director for Financial Institutions Group, Asia and the Pacific, at IFC, said: “Supporting IFC’s systematic approach, this investment will increase confidence in India’s NBFCs and attract greater institutional funding to the sector, contributing to the financial sector’s resilience while also strengthening MSMEs post-pandemic. The fund will further showcase the viability of this model, catalyzing similar innovative vehicles, expanding financial inclusion and fostering greater integration in India’s capital markets.”