Cholamandalam Investment and Finance Co. Ltd. (CIFCL), a Murugappa Group company, has received a total investment of $222 million from a group of foreign investors, anchored by the International Finance Corp. (IFC).
IFC, in a statement, said that it has contributed $92 million of the total of $222 million, while the rest has come from First Abu Dhabi Bank ($50 million), MUFG Bank Ltd ($50 million), National Bank of Ras Al-Khaimah PJSC ($20 million) and CTBC Bank Company Ltd ($10 million).
The funding will help the finance company to expand access to finance for micro and small borrowers, especially in the rural and semi-urban parts of India.
“Cholamandalam’s wide reach amongst small road transport operators and MSMEs makes it the right partner for us to reach these underserved segments,” said Jun Zhang, IFC country head, India. Notably, this is IFC’s third investment in Cholamandalam after the funding rounds in 2010 and 2014.
“IFC’s strong commitment to the NBFC space and support in helping us access credit from foreign investors will reinforce the important role played by the NBFC sector in providing last-mile credit. This arrangement, led by IFC, has helped CIFCL tap a new investor base for its borrowings at competitive rates, which will support its growth plans,” said Arun Alagappan, executive director, Cholamandalam Investment.
Cholamandalam Investment said the transaction is its first dollar-syndicated deal since January 2019, when the Reserve Bank of India permitted non-banking finance companies (NBFCs) to tap into the offshore credit market.
Cholamandalam Investment’s core business is providing commercial vehicle finance and loan against properties. It had entered the affordable housing finance segment recently. Almost half of its clients are in low-income group and 80% of them are first-time buyers or drivers-turned-owners. The company currently has 900 branches across the country managing assets of over Rs 54,000 crore.
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