MUMBAI: Tata Capital is looking to tap offshore markets for raising debt through dollar bonds as well as the external commercial borrowing route to diversify its liabilities, a top company executive said.
Through its various subsidiaries, the financial services arm of Tata Group is involved in retail and commercial lending and other financial services such as asset management and private equity.
“We want to be diversified on both, assets and liabilities. We want to be present in all modes of raising money," Rajiv Sabharwal, managing director and chief executive of Tata Capital said in an interview.
Sabharwal said that the company is working on getting a foreign currency rating and once the rating process is over, it will start exploring the dollar bond market.
“How much we raise from each of the routes is a function of the price that we get. We fully hedge all our foreign borrowing; so we factor in the hedging cost while raising funds," he said.
With its plans to raise offshore debt through the bond route, the company joins other lenders who have tapped this route to raise debt, at a time when domestic liquidity has been a challenge for non-bank lenders.
Mint reported on 24 June that Mahindra Finance is working on plans to tap the dollar bond market and could raise around $300 million through bonds this fiscal. In February, commercial vehicle financier Shriram Transport Finance raised $400 million through its maiden dollar bond issuance.
In the last few months, Tata Capital has tapped the external commercial borrowing route for its subsidiaries—Tata Cleantech Capital and Tata Capital Housing Finance Ltd—said Sabharwal, adding the group is now also looking at raising debt through ECB for Tata Capital Financial Services Ltd (TCFSL). TCFSL may raise around $100-150 million through the ECB route in the coming months, a person close to the development said, requesting anonymity. TCFSL provides loans to individuals and businesses across products such as personal loans, loan against property, used-car loans, two-wheeler loans and unsecured business loans.
TCFSL raised around ₹3,500 crore in its maiden public NCD sale in September last year. That is now being followed up with the second tranche of up to ₹ 4,126 crore, which opens on 13 August. The company is offering a coupon rate of between 8.35% and 8.85% annually, depending on the investor class and tenor.
Proceeds from the NCD issue will be primarily used for on-lending and for repayment of interest and principal of existing borrowings of the company. According to Sabharwal, Tata Capital is looking at growth from various pockets such as two-wheeler financing, used cars and affordable housing finance.
“We are looking at growth from our unsecured lending business, two-wheeler and used cars, and equipment financing and leasing as that market on the SME side has been doing well. We are also looking at growth from affordable housing loans because that market continues to be robust and we are trying to further grow that portfolio," said Sabharwal.
The growth in lending, which comes at a time when the credit markets in India are going through a liquidity crunch, has been supported by strong equity infusion by the Tata group.
In the last two financial years, Tata Sons has infused equity funding worth ₹5,300 crore into Tata Capital.
“Our parent has been pretty supportive of this strategy of growing responsibly. Last year, they had put in ₹2,500 crore of capital and as far as this year is concerned, they will support us depending on what we need for growth," said Sabharwal.