Shriram Finance Ltd. is in advanced talks to secure a substantial offshore loan of $1.25 billion. This would be the largest-ever offshore loan by an Indian shadow lender, marking a major milestone for the company.
Details of Shriram Finance’s offshore loan
The loan will be structured as a multitranche deal, covering various currencies such as the dollar, euro, and dirham. The terms will range from three to five years, providing Shriram Finance with much-needed flexibility. This deal follows the Indian central bank’s tightening of local borrowing regulations in 2023, pushing many Indian shadow lenders toward international markets.
Rise of offshore debt in India’s shadow lending sector
Indian shadow lenders have increasingly sought access to offshore debt to fuel their growth. With tighter local regulations, global markets offer better capital access and higher yields, making them attractive for investors. Shriram Finance is capitalising on this trend, expanding its global presence.
Shriram Finance’s previous debt transactions
Earlier this year, Shriram Finance raised $468.4 million and issued two dollar bonds, totalling $1.25 billion. These successful transactions have solidified Shriram Finance’s position in global financial markets, setting the stage for this new loan deal.
Prominent global lenders involved in the deal
A variety of leading financial institutions are backing Shriram’s latest loan. These include DBS Group Holdings, First Abu Dhabi Bank, HSBC Holdings, Mitsubishi UFJ Financial Group, SMBC Nikko Securities, and Standard Chartered. The loan will also receive a $250 million contribution from the International Finance Corporation.
Impact on India’s shadow lending industry
If Shriram Finance draws the full amount, it will surpass India Infrastructure Finance Co.’s $1.2 billion deal from 2009. This would set a new benchmark for offshore loans in India’s shadow lending sector, highlighting the growing importance of these lenders in the economy.
