The used truck financier is preparing resources as he sees credit demand accelerate this year. The bonds are likely to have a term of five years. The proposed bond sale could be launched within the next two to four weeks.
Citi, Deutsche, JPMorgan, HSBC and MUFG, among others, help the company raise funds abroad.
Shriram Transport did not respond to ET’s request. Individual banks could not be contacted immediately for comment.
Earlier in December, the Shriram Group announced that Shriram Capital (SCL) and Shriram City Union Finance (SCUF) would merge with STFC as part of the group’s corporate restructuring plan. The proposal involved flattening the structure of the holding company by splitting up insurance and other non-lending activities.
For this reason, the Last Mile Lender has become the largest non-bank retail finance company in the country with a value of Rs 1.5 lakh crore of assets under management.
“The merger announcement reduces the surplus that existed on the company,” Emkay Research said in a note last month.
“While management expects Rs 200 crore in one-time integration costs, the merger benefits in terms of better cross-selling prospects improve the company’s growth prospects in the medium term,” a- he declared.
Shriram management expects 10% merger profit on net income in fiscal years 22-24 thanks to faster growth in assets under management through higher cross-selling opportunities between clients and an advantage lower cost of funds, with SCUF currently rated one notch lower than SHTF.
About a year ago, the company raised $ 500 million through offshore bonds. At that time, it was carrying a 5.375% coupon. The 10-year US Treasury, a global rate indicator, returned around 1.15%.
However, these bonds had a maturity of three and a half years. This time around, the company intends to lift papers at five years.
“The company can cancel the fundraiser if it doesn’t get the money in the long run,” one of the people named above said.
Although benchmark yield has increased over the past year, the spread of the Omicron virus has fueled doubts about a faster economic recovery. The yield hovered around 1.50% during the last week of December after hitting an annual high of 1.74% on March 19.
“This would be the right opportunity for Shriram to tap into a global pool of investors before rates start to rise in line with the increasing pace of economic recovery,” said another senior executive.
Reliance Industries is expected to hit the international market with a mega fundraising plan within two weeks, ET reported earlier.