Shriram Finance Targets $1 Billion Overseas Fundraise to Drive Growth

Shriram Finance plans to secure USD 1 billion from international sources to support its business expansion over the next six months. This includes immediate plans to raise USD 300 million and additional funding of USD 500-700 million by the end of the financial year. The funds will be procured from various institutions, contingent on market conditions.

Shriram Finance aims to raise USD 1 billion (about Rs 8,300 crore) from international markets over the next six months to fuel its business growth.

'We plan to secure USD 300 million in the next few weeks, possibly by October, and the remaining USD 500-700 million during the rest of the current financial year,' stated Shriram Finance Managing Director and CEO Y S Chakravarti to PTI.

The funding will also involve loans from institutions like the Asian Development Bank, Kfw, and United States Development Finance Corporation (DFC), depending on market conditions, he added.

To support its business growth, the Non-Banking Financial Company (NBFC) leverages diverse funding sources including public deposits, bank finance, and domestic market financing.

Chakravarti projects a 15 to 16 percent loan growth in the current financial year. As of June 2024, the company's Assets Under Management (AUM) stood at Rs 2.33 lakh crore. Q1 FY25 disbursements aggregated to Rs 37,710 crore, up from Rs 30,455 crore in Q1 FY24.

In November 2023, the Reserve Bank of India (RBI) mandated higher capital reserves for all loans extended to NBFCs, making bank funding more expensive, particularly for smaller NBFCs.

Chakravarti noted that Shriram Finance, which provides loans for commercial vehicles and SMEs, hasn't faced funding pressures owing to its high credit rating and diversified borrowing sources.

'Smaller players rated below AA are feeling the squeeze. For us, it's not a significant issue as bank borrowings constitute just 24 percent of our total liabilities,' he explained.

Regarding its gold loan business, he mentioned plans to expand from 1,500 branches by adding 500 more within the next two years.

(With inputs from agencies.)