GuarantCo Guarantees for Development

Description:

GuarantCo has, jointly with FMO, partially guaranteed Deutsche Bank to provide support for a mezzanine tranche of a securitisation of asset backed notes issued by India’s largest financier of commercial vehicles – Shriram Transportation.  The securitisation consists of 6 portfolios of mainly nearly new commercial vehicles.Shriram finances small scale truck owner operators who cannot raise finance from commercial banks and would otherwise depend on unregulated and high cost money lenders.

Description:

Shriram needs to continually raise additional capital in line with the rising demand for its truck loans. Deutsche Bank were seeking to syndicate INR 2,500 million of Tier II capital to allow Shriram to expand their financing operations. Such capital issues compete with higher yielding assets for scarce capital in India, making obtaining reasonably priced capital funds a challenge

GuarantCo and FMO’s participation enabled Shriram to raise the capital at affordable rates which can be used to leverage much larger borrowings from commercial lenders

Shriram finances small truck owner-operators who would otherwise have to borrow from unlicensed money lenders. The finance enables thousands of poor truck drivers to purchase their own vehicles rather than remaining employees.
Shriram’s core business of commercial vehicle finance continues its strong growth. Shriram is also now seeking to expand its products to finance other small infrastructure equipment servicing India’s growing infrastructure requirements.