Profectus Capital, a non-banking finance company focused on micro, small, and medium enterprises (MSMEs), has raised $25 million through the issuance of non-convertible debentures (NCDs) to International Finance Corporation (IFC), a member of the World Bank Group.
This is IFC’s first investment to finance energy-efficient (EE) machinery for MSMEs in India, a niche asset class in the financial services sector.
Since the proceeds will be used to fund green assets, the NCDs have been labelled as green bonds, and Profectus Capital has developed a Green Bond Framework in line with the International Capital Market Association’s Green Bond Principles. IFC’s support will enable Profectus Capital to scale up EE equipment financing for MSMEs, which is key to India’s climate goals.
IFC’s investment is complemented by advisory services under the European Union’s regional initiative Accelerating Climate Smart & Inclusive Infrastructure in South Asia (ACSIIS) program. As part of this, IFC will provide targeted advisory support to help the company identify EE assets in its current portfolio, build the capacity of its operations teams and management, and create a growth plan, contributing towards reduced greenhouse gas emissions.
K V Srinivasan, Founder, CEO & Whole-time Director of Profectus Capital said, “We are delighted to partner with IFC, a member of the World Bank Group. It is an honor for us and an affirmation of the robustness of our business model and performance that a prestigious institution like IFC has expressed faith and confidence in us. This partnership is of immense significance and value to us given that this is the first investment by IFC in India to finance purchase of energy-efficient equipment by MSMEs. It will go a long way in aiding MSME capital investment in India. Since the commencement of our operations in 2018, we have progressed well in all dimensions including business growth, asset quality, and profitability despite many macro headwinds. With IFC’s investment in our green bonds, we look forward to further consolidate our position in the MSME market.”
Wendy Werner, IFC Country Head for India said, “IFC’s investment in this asset class will help develop the market for EE finance for small businesses. Supporting the country’s climate targets, we are confident that the funding will pave the way for similar engagements, boosting competitiveness, creating jobs, and improving access to MSME finance. Green bonds are still relatively new borrowing instruments for financial institutions in India. Our partnership with Profectus will highlight the viability of commercial lending to the energy efficiency segment, fostering green, inclusive, and resilient growth.”
