CRISIL has assigned its first credit opinion – equivalent to ‘Provisional CRISIL AA- (SO)' - to capital protection available to Class B unit holders of IFMR FImpact Medium-Term Opportunities Fund, a scheme of IFMR Finance for Freedom Fund IV, a Category II alternative investment fund (AIF).
Northern Arc Investment Managers Pvt Ltd is the investment manager of the scheme.
Well-structured AIFs are attractive to sophisticated investors because they satisfy the need for both, capital protection and appreciation, when investing in non-traditional asset classes.
AIFs typically deploy funds pooled from investors like high net worth individuals and family offices in private, unlisted instruments issued by firms that otherwise have restricted access to funds. AIFs did well in 2017 with commitment amounts raised doubling to Rs 1.4 lakh crore by 31 Dec 2017 compared to a year earlier. As of 23 April 2018, there are 395 registered AIFs in the market.
Said Krishnan Sitaraman, Senior Director, CRISIL Ratings, “CRISIL’s credit opinion can serve as an important decision-support tool available to AIF investors as it is arrived at after assessing the structural features, investment philosophy and potential portfolio composition of the schemes.”
Credit opinions on these complex structures would further boost investor confidence and enable greater fund flow into the sector.
Said Rohit Inamdar, Senior Director, CRISIL Ratings, “The first credit opinion assigned to an AIF reflects CRISIL’s continued commitment to supporting financial innovations for debt market participants. This dovetails with our stated mission of making markets function better.”
For the AIF where CRISIL has assigned its credit opinion to capital protection the credit opinion indicates the degree of certainty regarding timely repayment, by the maturity of the scheme, of the total capital contribution made to the scheme by Class B unit-holders. Class B unit holders are the senior unit holders in the AIF, while Class A unit holders are the subordinate unit holders.
IFMR FImpact Medium-Term Opportunities Fund will invest in debt instruments issued by microfinance institutions, affordable housing finance companies, small business loan finance companies, vehicle finance companies, corporate finance companies, agri-business finance companies.