Shriram Finance in talks with ADB, AIIB to raise $250 mn in long-term debt funds: Executive Vice-Chairman Umesh Revankar

Umesh Revankar, Shriram Finance Ltd Executive Vice-Chairman (Illustration- Moneycontrol)

Shriram Finance Ltd (SFL) is in talks with Asian Development Bank (ADB) and Asian Investment Infrastructure Bank (AIIB) to raise around $250 million (Rs 2,067 crore at today exchange rate) in long-term debt funds, said a senior company executive.

These funds will be used to diversify the company’s liabilities and boost growth, said Executive Vice-Chairman Umesh Revankar.

The ADB funding would be rupee-denominated, while the one from AIIB would be advance dollar-denominated, he added. Queried on the terms and tenor, he said the details were still being worked out.

Shriram Finance, which came into being following the merger of Shriram Transport and Shriram City Union Finance, has assets under management (AUM) of Rs 1.7 lakh crore as of September, 2022. Its liabilities broadly comprise five components – retail deposits (20 percent), securitisation (15 percent), term loans from banks (27 percent), capital market borrowing (22 percent) and external commercial borrowings or ECBs (16 percent), according to a CARE Ratings note.

The tangible net worth (TNW) of SFL stood at Rs 36,156 crore as on September 30, 2022. The capital adequacy ratio (CAR) for SFL stood at 23.10 percent as on September 30, 2022. The profit after tax (PAT) is reported at Rs 2,900 crore.

Shriram Finance has been on a fund-raising spree recently.

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Earlier this month, it raised $224 million (Rs 1,852 crore) from a consortium of banks led by HSBC. This has a tenor of three-and-a-half years. Revankar, however, did not disclose the details of the loan.
Four months ago, it raised a 10-year loan worth $250 million (Rs 2,067 crore) from SACE of Italy.

SACE specialises in supporting Italian companies, especially SMEs, who want to grow in Italy and in the global markets. SACE funds are to be used to support Italian products. According to Revankar, SACE expects SFL to finance the purchase of Italian products.

Shriram is also keen to drive up the proportion of retail deposits to 25 percent of its liabilities by 2030, said Revankar. Currently, the retail deposit base of the company is in the vicinity of Rs 32,000 crore. It has six lakh depositors. He is hopeful that this deposit base would go beyond Rs 75,000 crore by 2030.

In the new context of a bloated entity following the merger, Shriram Finance Ltd would continue to focus on the “bottom of the pyramid which suffers from high cost of credit and lack of timely access to capital”, Revankar said.

(NOTE: Today’s exchange rate: $1 = Rs 82.66)