GuarantCo provides $20m facility to Shriram Transportation to support Tier II capital issuance - September 2010 


In September 2010, GuarantCo joined FMO and Deutsche Bank in a $50m equivalent facility in rupees for Shriram Transportation (STFL), a specialist commercial vehicle financer in India. STFL has a strong track record of over three decades in commercial vehicle finance, and presently has nearly $5.5bn assets under management.

 

Despite the presence of one of the worlds’ widest rail networks, roads carry 65% of India’s freight traffic. Much of that traffic is carried by small truck operators, whose employees often work under difficult conditions with poor pay. These employees lack economic mobility, being unable to save enough capital and lacking access to the bank finance necessary to purchase their own vehicles. STFL finances such poor truck drivers and enables thousands to become owner-operators rather than remaining employees.

 

In line with India’s rapid economic growth, STFL’s core business of commercial vehicle finance is continuing its strong growth, and it is now seeking to expand its business to other small infrastructure equipment servicing India’s growing infrastructure requirements. To fund this business growth, STFL needs to continually raise additional funding and Tier II capital; such Tier II capital however competes with higher yielding assets for scarce capital in India, making obtaining reasonably priced capital funds a challenge

 

GuarantCo and FMO’s facility enabled Shriram to raise Tier II capital at affordable rates which STFL will use to leverage much larger borrowings from commercial lenders.

 

Please click here to access the Shriram Website: Shriram Website Link