GuarantCo provides $20m facility to Au Financiers Ltd for long term senior debt –March 2013
In March 2013, GuarantCo provided a $20m equivalent guarantee facility to support rupee denominated unsecured Non Convertible Debentures issued by Au Financiers (India) Ltd (AuF), a specialist commercial vehicle financer in India. The facility was part of a $60m equivalent facility structured by Deutsche Bank A.G. India, and lead-arranged by FMO (the Netherlands Development Finance Company), who also participated in the facility with $20m. CDC Group plc (the UK’s development finance institution) provided the balance facility of $20m. Talking about the facility, Sanjay Agarwal, managing director and founder of AuF, said "We are overwhelmed, and welcome such elite lending agencies in our family. I am sure this association with go a long way in supporting AuF's growth & progress."
AuF provides financing predominantly for small entrepreneurs engaged in commercial passenger/ goods transport services in rural and semi urban areas of India. AuF was started in 1996 by local entrepreneur Sanjay Agarwal, and has since attracted Private Equity investments from Warburg Pincus, IFC, Motilal Oswal Private Equity and Chrys Capital. AuF had c. INR 3,229 Cr (USD 600m) of assets under management as on December 31, 2012, around 50% of which are in Rajashtan, one of India’s poorest, albeit rapidly growing, states.
The small entrepreneurs supported by AuF play an important role in the provision of transportation services in rural and semi urban India, but are unable to get financing from banks due to their lack of credit history and small loan sizes. Such small entrepreneurs are usually lowly paid employees working in the transportation sector, and AuF’s financing provides them an opportunity for social and economic mobility by owning their own vehicles or other productive assets.
AuF is a rapidly growing company, reflecting its dynamic and ambitious management, and also the under-served nature of its core market. Besides growing its core business of transportation services financing, AuF is also diversifying into providing financing for housing and small businesses (usually linked to the transportation sector).
AuF’s debt requirements grow in line with its portfolio growth, and its strong track record and good portfolio quality has meant it has been able to raise financing from Indian banks and financial institutions when required. However to ensure that its funding arrangements keep pace with its growth plans, AuF needed to diversify its sources of funding. The facility provided by GuarantCo, FMO and CDC Group will provide AuF with stable long term funds with which it can continue providing affordable loans to small entrepreneurs.
Please click here to access AuF’s website: http://www.aufin.in