Mumbai-based Shriram Finance has achieved a significant milestone by raising $300 million through an innovative transaction model. This marks the first-of-its-kind transaction in India. Shriram Finance raised the funds by securitizing a portion of its loan portfolio and selling it to international investors. The investors were spread across Asia, reflecting the firm demand for the debt being sold by the company. The transaction had a maturity of 6.5 years and was priced at 5.85%, lower than the initial pricing guidance of 6.15%. The deal was arranged by HSBC, Standard Chartered Bank, Barclays, Deutsche Bank, and JP Morgan.

The ABS transaction employed by Shriram Finance offers several advantages to the issuer. Firstly, it enhances the credit rating, making the debt more attractive to investors. Additionally, the model involves an offshore entity purchasing an onshore ABS and converting it to US dollars using a foreign exchange swap. This mechanism allows Shriram Finance to tap into international markets effectively and secure funds at a lower interest rate.

The success of this transaction highlights the confidence of international investors in Shriram Finance and its strong creditworthiness. The company has positioned itself as a leading non-bank lender in India, serving a diverse range of customers with their financing needs. Shriram Finance’s ability to attract international investors and secure funds at competitive rates showcases its strong reputation and financial stability.

This innovative ABS transaction serves as an example of how non-bank lenders like Shriram Finance can access global capital markets and diversify their funding sources. It opens up new avenues for raising funds and provides a mechanism to optimize borrowing costs.

Moving forward, Shriram Finance’s success in this transaction could encourage other non-bank lenders to explore similar opportunities and tap into the potential of international markets. The ability to raise funds at lower interest rates can have a significant impact on their growth and profitability.

In conclusion, Shriram Finance’s $300 million fundraise through an innovative ABS transaction demonstrates the company’s strong financial position and the robust demand for its debt offerings. This transaction not only strengthens Shriram Finance’s balance sheet but also paves the way for other non-bank lenders to explore similar avenues for raising capital.