I found the issue - I had to edit the machine.config by adding the following lines -
<runtime>
<assemblyBinding xmlns="urn:schemas-microsoft-com:asm.v1" appliesTo="v2.0.50727">
<dependentAssembly xmlns="urn:schemas-microsoft-com:asm.v1">
<assemblyIdentity name="IBM.Data.Informix" publicKeyToken="7c307b91aa13d208" culture=""/>
<bindingRedirect oldVersion="2.81.0.0" newVersion="3.0.0.2"/>
</dependentAssembly>
<dependentAssembly xmlns="urn:schemas-microsoft-com:asm.v1">
<assemblyIdentity name="IBM.Data.Informix.3.0.0" publicKeyToken="7c307b91aa13d208" culture=""/>
<bindingRedirect oldVersion="2.81.0.0" newVersion="3.0.0.2"/>
<codeBase version="3.0.0.2" href="C:\Program Files\IBM\Informix\Client-SDK\bin\netf20\specific\IBM.Data.Informix.3.0.0.dll"/>
</dependentAssembly>
</assemblyBinding>
<assemblyBinding xmlns="urn:schemas-microsoft-com:asm.v1" appliesTo="">
<dependentAssembly xmlns="urn:schemas-microsoft-com:asm.v1">
<assemblyIdentity name="IBM.Data.Informix" publicKeyToken="7c307b91aa13d208" culture=""/>
<bindingRedirect oldVersion="2.81.0.0" newVersion="3.0.0.2"/>
</dependentAssembly>
<dependentAssembly xmlns="urn:schemas-microsoft-com:asm.v1">
<assemblyIdentity name="IBM.Data.Informix.3.0.0" publicKeyToken="7c307b91aa13d208" culture=""/>
<bindingRedirect oldVersion="2.81.0.0" newVersion="3.0.0.2"/>
<codeBase version="3.0.0.2" href="C:\Program Files\IBM\Informix\Client-SDK\bin\netf20\specific\IBM.Data.Informix.3.0.0.dll"/>
</dependentAssembly>
</assemblyBinding>
</runtime>
<connectionStrings>
<add name="LocalSqlServer" connectionString="data source=.\SQLEXPRESS;Integrated Security=SSPI;AttachDBFilename=|DataDirectory|aspnetdb.mdf;User Instance=true" providerName="System.Data.SqlClient"/>
</connectionStrings>
<system.data>
<DbProviderFactories>
<add name="Microsoft SQL Server Compact Data Provider" invariant="System.Data.SqlServerCe.3.5" description=".NET Framework Data Provider for Microsoft SQL Server Compact" type="System.Data.SqlServerCe.SqlCeProviderFactory, System.Data.SqlServerCe, Version=3.5.0.0, Culture=neutral, PublicKeyToken=89845dcd8080cc91"/>
<add name="IBM Informix .NET Data Provider" invariant="IBM.Data.Informix" description="IBM Informix Data Provider for .NET Framework 2.0" type="IBM.Data.Informix.IfxFactory, IBM.Data.Informix, Version=3.0.0.2, Culture=neutral, PublicKeyToken=7c307b91aa13d208"/>
<add name="IBM Informix .NET Data Provider 3.0.0" invariant="IBM.Data.Informix.3.0.0" description="IBM Informix Data Provider 3.0.0 for .NET Framework 2.0" type="IBM.Data.Informix.IfxFactory, IBM.Data.Informix.3.0.0, Version=3.0.0.2, Culture=neutral, PublicKeyToken=7c307b91aa13d208"/>
</DbProviderFactories>
</system.data>