Microfinance Focus, June 6, 2011: Easing liquidity crisis in the sector, Avendus Capital recently made a debt investment worth Rs. 108 million (USD 2.4 million) by buying out 11, 304 microloans of Tamil Nadu based Grama Vidiyal Micro Finance.

In a securitization deal arranged by IFMR Capital, a Chennai based non-banking finance company, Avendus Capital bought over 84% of the Rs 10.8-crore loan portfolio of Grama Vidiyal Micro Finance.

Beta IFMR CAPITAL 2011, the Special Purpose Vehicle created for the transaction, issued two tranches of securities rated by ICRA: 84% senior tranche rated A1(SO) that was subscribed to by private wealth investors and 16% subordinated junior tranche rated A3(SO) that was subscribed to by private wealth investors and IFMR Capital.

Present in four states in South India, Grama Vidyal has disbursed more than USD 702 million in loan to its 1.15 million members as of March 2011.

The debt buyout has come at a time when the country’s microfinance sector is reeling under severe liquidity crunch. Lending banks have last week approved restructuring of loans worth Rs 5240 crores of five microfinance institutions including Spandana, Share microfinance, Asmitha, Trident and Future Financial.